What is the primary purpose of these new agreements?

The primary purpose is to leverage Cheniere's existing regasification capacity at the Sabine Pass terminal by partnering with JPMorgan LNG Co. (LNGCo) to facilitate LNG trading and services, generating revenue for Cheniere and providing LNGCo with structured access to the LNG market.

What role does Cheniere Marketing play in these agreements?

Cheniere Marketing acts as a service provider, developing and presenting LNG trading opportunities to LNGCo, and providing operational and administrative services for LNG cargoes purchased by LNGCo. Cheniere Marketing will receive fees for these services.

What rights does LNGCo gain at the Sabine Pass terminal?

LNGCo gains the right to utilize a portion of Cheniere's storage and regasification capacity at Sabine Pass on a cargo-by-cargo basis, and has an option to secure a long-term terminal use agreement for approximately 0.5 Bcf/d.

What is the financial benefit for Cheniere Energy from these agreements?

Cheniere Marketing is set to receive a fixed fee from LNGCo, with the potential for additional fees based on the gross margins of the transactions. These agreements are expected to generate revenue and improve the utilization of Cheniere's infrastructure.

LNG 8-K: Material Agreements

Summary

Cheniere Energy, Inc. (LNG), through its subsidiaries Cheniere Marketing, LLC and Sabine Pass LNG, L.P., has entered into a series of material definitive agreements with JPMorgan LNG Co. (LNGCo), an indirect subsidiary of JPMorgan Chase & Co. These agreements, effective April 1, 2010, are designed to leverage Cheniere's existing regasification capacity at its Sabine Pass terminal. Under a two-year LNG Services Agreement, Cheniere Marketing will develop and present commercial LNG trading opportunities exclusively to LNGCo, providing operational and administrative services for any LNG cargoes LNGCo purchases. In conjunction with this, Cheniere Marketing will surrender a portion of its existing storage and regasification capacity at Sabine Pass to LNGCo on a cargo-by-cargo basis, allowing LNGCo to utilize these facilities for its purchased LNG. Furthermore, Sabine Pass has granted LNGCo rights to this capacity and an option to enter into a long-term terminal use agreement for approximately 0.5 Bcf/d at a set rate. These arrangements are expected to generate fees for Cheniere Marketing and potentially enhance the utilization of its Sabine Pass terminal infrastructure, while providing LNGCo with a structured way to engage in the LNG market.

Key Highlights

1Cheniere's subsidiary, Cheniere Marketing, entered into a two-year LNG Services Agreement with JPMorgan LNG Co. (LNGCo), effective April 1, 2010.
2Cheniere Marketing will present commercial LNG trading opportunities exclusively to LNGCo and provide associated operational and administrative services.
3Sabine Pass LNG, L.P. (a Cheniere subsidiary) granted LNGCo rights to utilize a portion of its existing storage and regasification capacity at the Sabine Pass terminal on a cargo-by-cargo basis.
4LNGCo has an option to enter into a terminal use agreement with Sabine Pass for approximately 0.5 Bcf/d, with a term extending to October 1, 2028, at a rate of $0.32 per MMBtu (subject to adjustments).
5Cheniere Marketing will receive fees from LNGCo, including a fixed fee and potential additional fees based on gross margins, for the services provided.
6The agreements aim to facilitate LNG trading activities for LNGCo and enhance the utilization of Cheniere's Sabine Pass terminal assets.

Cheniere Energy, Inc. 8-K Report, Material Agreement (Mar 31, 2010)

Summary

Key Highlights

Frequently Asked Questions