Related Party Transactions | RELATED PARTY TRANSACTIONS Below is a summary of our related party transactions as reported on our Statements of Operations (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 LNG revenues—affiliate Cheniere Marketing Agreements $ 1,328 $ 441 $ 3,173 $ 860 Contracts for Sale and Purchase of Natural Gas and LNG 48 12 95 18 Total LNG revenues—affiliate 1,376 453 3,268 878 LNG revenues—related party Natural Gas Transportation and Storage Agreements — — 4 — Cost of sales—affiliate Cheniere Marketing Agreements — — — 34 Cargo loading fees under TUA 12 10 37 32 Contracts for Sale and Purchase of Natural Gas and LNG 99 7 164 27 Total cost of sales—affiliate 111 17 201 93 Cost of sales—related party Natural Gas Transportation and Storage Agreements — — 1 1 Operating and maintenance expense—affiliate TUA 67 66 200 199 Natural Gas Transportation Agreement 20 21 60 61 Services Agreements 33 26 94 80 LNG Site Sublease Agreement — — 1 1 Total operating and maintenance expense—affiliate 120 113 355 341 Operating and maintenance expense—related party Natural Gas Transportation and Storage Agreements 18 12 45 34 General and administrative expense—affiliate Services Agreements 16 16 50 45 As of September 30, 2022 and December 31, 2021, we had $451 million and $232 million, respectively, of accounts receivable—affiliate under the agreements described below. LNG Terminal-Related Agreements Terminal Use Agreements We have a TUA with SPLNG to provide berthing for LNG vessels and for the unloading, loading, storage and regasification of LNG. We have reserved approximately 2 Bcf/d of regasification capacity and we are obligated to make monthly capacity payments to SPLNG aggregating approximately $250 million per year, continuing until at least May 2036. We obtained this reserved capacity as a result of an assignment in July 2012 by Cheniere Investments of its rights, title and interest under its TUA. CQP has guaranteed our obligations under our TUA. Cargo loading fees incurred under the TUA are recorded as cost of sales—affiliate, except for the portion related to commissioning activities which is capitalized as LNG terminal construction-in-process. Cheniere Marketing Agreements Cheniere Marketing SPA Cheniere Marketing has an SPA (“Base SPA”) with us to purchase, at Cheniere Marketing’s option, any LNG produced by us in excess of that required for other customers at a price of 115% of Henry Hub plus $3.00 per MMBtu of LNG. The Base SPA was subsequently amended to remove certain conditions related to the sale of LNG from Trains 5 and 6 of the Liquefaction Project and provide that cargoes rejected by Cheniere Marketing under the Base SPA can be sold by us to Cheniere Marketing at a contract price equal to a portion of the estimated net profits from the sale of such cargo. Cheniere Marketing Master SPA We have an agreement with Cheniere Marketing that allows us to sell and purchase LNG with Cheniere Marketing by executing and delivering confirmations under this agreement. Cheniere Marketing Letter Agreements In May 2022, we and Cheniere Marketing entered into a letter agreement for the sale of up to 32 TBtu of LNG to be delivered between 2023 and 2025 at a price of 115% of Henry Hub plus $3.00 per MMBtu. Cheniere Marketing has letter agreements with us to purchase up to 306 cargoes of LNG to be delivered between 2022 and 2027 at a weighted average price of $1.95 plus 115% of Henry Hub. We and Cheniere Marketing had a letter agreement for the sale of up to 30 cargoes of LNG that were delivered in 2021 at a price of 115% of Henry Hub plus $0.728 per MMBtu. Facility Swap Agreement We have an arrangement with subsidiaries of Cheniere to provide the ability, in limited circumstances, to potentially fulfill commitments to LNG buyers in the event operational conditions impact operations at either the Sabine Pass or Corpus Christi liquefaction facilities. The purchase price for such cargoes would be (1) 115% of the applicable natural gas feedstock purchase price or (2) a free-on-board U.S. Gulf Coast LNG market price, whichever is greater. Natural Gas Transportation and Storage Agreements To ensure we are able to transport adequate natural gas feedstock to the Sabine Pass LNG Terminal, we have transportation agreements to secure firm pipeline transportation capacity with CTPL, a wholly owned subsidiary of CQP, and third party pipeline companies. These agreements with CTPL have a primary term that continues until 20 years from May 2016 and thereafter continue in effect from year to year until terminated by either party upon written notice of one year or the term of the agreements, whichever is less. In addition, we have the right to elect to extend the term of the agreements for up to two consecutive terms of 10 years. Maximum rates, charges and fees shall be applicable for the entitlements and quantities delivered pursuant to the agreements unless CTPL has advised us that it has agreed otherwise. As of September 30, 2022 and December 31, 2021, we recorded due to affiliates of $7 million and $8 million, respectively, related to this agreement. We are also party to various natural gas transportation and storage agreements with a related party in the ordinary course of business for the operation of the Liquefaction Project, with initial primary terms of up to 10 years with extension rights. This related party is partially owned by the investment management company that indirectly acquired a portion of CQP’s limited partner interests in September 2020. We recorded accrued liabilities—related party of $8 million and $4 million as of September 30, 2022 and December 31, 2021, respectively, with this related party. Services Agreements As of September 30, 2022 and December 31, 2021, we had $125 million and $127 million of advances to affiliates, respectively, under the services agreements described below. The non-reimbursement amounts incurred under these agreements are recorded in general and administrative expense—affiliate. Cheniere Investments Information Technology Services Agreement Cheniere Investments has an information technology services agreement with Cheniere, pursuant to which Cheniere Investments’ subsidiaries, including us, receive certain information technology services. On a quarterly basis, the various entities receiving the benefit are invoiced by Cheniere Investments according to the cost allocation percentages set forth in the agreement. In addition, Cheniere is entitled to reimbursement for all costs it incurs that are necessary to perform the services under the agreement. Liquefaction O&M Agreement We have an operation and maintenance agreement (the “Liquefaction O&M Agreement”) with Cheniere Investments, a wholly owned subsidiary of CQP, pursuant to which we receive all necessary services required to operate and maintain the Liquefaction Project. After each Train of the Liquefaction Project is operational, the services include all necessary services required to operate and maintain the Train. Prior to the substantial completion of each Train of the Liquefaction Project, in addition to reimbursement of operating expenses, we are required to pay a monthly fee equal to 0.6% of the capital expenditures incurred in the previous month. After substantial completion of each Train, for services performed while the Train is operational, we are required to pay, in addition to the reimbursement of operating expenses, a fixed monthly fee of $83,333 (indexed for inflation) for services with respect to the Train through 2042. Liquefaction MSA We have a management services agreement (the “Liquefaction MSA”) with Cheniere Terminals pursuant to which Cheniere Terminals manages the operation of the Liquefaction Project, excluding those matters provided for under the Liquefaction O&M Agreement. The services include, among other services, exercising the day-to-day management of our affairs and business, managing our regulatory matters, managing bank and brokerage accounts and financial books and records of our business and operations, entering into financial derivatives on our behalf and providing contract administration services for all contracts associated with the Liquefaction Project. Prior to the substantial completion of each Train of the Liquefaction Project, we are required to pay a monthly fee equal to 2.4% of the capital expenditures incurred in the previous month. After substantial completion of each Train, we are required to pay a fixed monthly fee of $541,667 (indexed for inflation) for services with respect to such Train through 2042. LNG Site Sublease Agreement We have agreements with SPLNG to sublease a portion of the Sabine Pass LNG Terminal site for the Liquefaction Project. The aggregate annual sublease payment is $1 million. The initial terms of the subleases expire on December 31, 2034, with options to renew for multiple periods of 10 years with similar terms as the initial terms. The annual sublease payments will be adjusted for inflation every five years based on a consumer price index, as defined in the sublease agreements. Cooperation Agreement We have a cooperation agreement with SPLNG that allows us to retain and acquire certain rights to access the property and facilities that are owned by SPLNG for the purpose of constructing, modifying and operating the Liquefaction Project. In consideration for access given to us, we have agreed to transfer to SPLNG title of certain facilities, equipment and modifications, which SPLNG is obligated to operate and maintain. The term of this agreement is consistent with our TUA described above. We did not convey any assets to SPLNG under this agreement during the three and nine months ended September 30, 2022 and 2021. Contracts for Sale and Purchase of Natural Gas and LNG We have agreements with SPLNG, CTPL and Corpus Christi Liquefaction, LLC (“CCL”) that allow us to sell and purchase natural gas and LNG with each party. Natural gas purchased under these agreements is initially recorded as inventory and then to cost of sales—affiliate upon its sale, except for purchases related to commissioning activities which are capitalized as LNG terminal construction-in-process. Natural gas sold under these agreements is recorded as LNG revenues—affiliate. State Tax Sharing Agreement We have a state tax sharing agreement with Cheniere. Under this agreement, Cheniere has agreed to prepare and file all state and local tax returns which we and Cheniere are required to file on a combined basis and to timely pay the combined state and local tax liability. If Cheniere, in its sole discretion, demands payment, we will pay to Cheniere an amount equal to the state and local tax that we would be required to pay if our state and local tax liability were calculated on a separate company basis. To date, there have been no state and local tax payments demanded by Cheniere under the tax sharing agreement. The agreement is effective for tax returns due on or after August 2012. |