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What changed in Cheniere Energy Partners, L.P.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Cheniere Energy Partners, L.P.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+197 added−234 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-22)

Top changes in Cheniere Energy Partners, L.P.'s 2024 10-K

197 paragraphs added · 234 removed · 159 edited across 6 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

74 edited+10 added−9 removed128 unchanged
Biggest changeWhile substantially all of our long-term third party customer arrangements are executed with a creditworthy parent company or secured by a parent company guarantee or other form of collateral, we are nonetheless exposed to credit risk in the event of a customer default that requires us to seek recourse. 13 Table of Contents Additionally, our long-term SPAs entitle the customer to terminate their contractual obligations upon the occurrence of certain events which include, but are not limited to: (1) if we fail to make available specified scheduled cargo quantities; (2) delays in the commencement of commercial operations; and (3) under the majority of our SPAs, upon the occurrence of certain events of force majeure.
Biggest changeAdditionally, our long-term SPAs entitle the customer to terminate their contractual obligations upon the occurrence of certain events which include, but are not limited to: (1) if we fail to make available specified scheduled cargo quantities; (2) delays in the commencement of commercial operations; and (3) under the majority of our SPAs, upon the occurrence of certain events of force majeure.
Our financing costs could increase or future borrowings or equity offerings may be unavailable to us or unsuccessful, which could cause us to be unable to pay or refinance our indebtedness or to fund our other liquidity needs. We also rely on borrowings under our credit facilities to fund our capital expenditures.
Our financing costs could increase or future borrowings or equity offerings may be unavailable to us or unsuccessful, which could cause us to be unable to pay or refinance our indebtedness or to fund our other liquidity needs. We also may rely on borrowings under our credit facilities to fund our capital expenditures.
For example, in 2021 Colonial Pipeline suffered a ransomware attack that led to the complete shutdown of its pipeline system for six days. Should multiple of the third party pipelines which supply our Liquefaction Project suffer similar concurrent attacks, the Liquefaction Project may not be able to obtain sufficient natural gas to operate at full capacity, or at all.
For example, in 2021 Colonial Pipeline suffered a ransomware attack that led to the complete shutdown of its pipeline system for six days. Should multiple of the third party pipelines which supply our Liquefaction Project suffer similar concurrent attacks, our Liquefaction Project may not be able to obtain sufficient natural gas to operate at full capacity, or at all.
Natural gas and LNG prices have been, and are likely to continue to be, volatile and subject to wide fluctuations in response to one or more of the following factors: • competitive liquefaction capacity in North America; • insufficient or oversupply of natural gas liquefaction or receiving capacity worldwide; • insufficient LNG tanker capacity; • weather conditions, including temperature volatility resulting from climate change, and extreme weather events may lead to unexpected distortion in the balance of international LNG supply and demand; • reduced demand and lower prices for natural gas; • increased natural gas production deliverable by pipelines, which could suppress demand for LNG; • decreased oil and natural gas exploration activities which may decrease the production of natural gas, including as a result of any potential ban on production of natural gas through hydraulic fracturing; 16 Table of Contents • cost improvements that allow competitors to provide natural gas liquefaction capabilities at reduced prices; • changes in supplies of, and prices for, alternative energy sources which may reduce the demand for natural gas; • changes in regulatory, tax or other governmental policies regarding imported LNG, natural gas or alternative energy sources, which may reduce the demand for imported LNG and/or natural gas; • political conditions in customer regions; • sudden decreases in demand for LNG as a result of natural disasters or public health crises, including the occurrence of a pandemic, and other catastrophic events; • adverse relative demand for LNG compared to other markets, which may decrease LNG exports from North America; and • cyclical trends in general business and economic conditions that cause changes in the demand for natural gas.
Natural gas and LNG prices have been, and are likely to continue to be, volatile and subject to wide fluctuations in response to one or more of the following factors: • competitive liquefaction capacity in North America; • insufficient or oversupply of natural gas liquefaction or receiving capacity worldwide; • insufficient LNG tanker capacity; • weather conditions, including temperature volatility resulting from climate change, and extreme weather events may lead to unexpected distortion in the balance of international LNG supply and demand; 16 Table of Contents • reduced demand and lower prices for natural gas; • increased natural gas production deliverable by pipelines, which could suppress demand for LNG; • decreased oil and natural gas exploration activities which may decrease the production of natural gas, including as a result of any potential ban on production of natural gas through hydraulic fracturing; • cost improvements that allow competitors to provide natural gas liquefaction capabilities at reduced prices; • changes in supplies of, and prices for, alternative energy sources which may reduce the demand for natural gas; • changes in regulatory, tax or other governmental policies regarding exported LNG, natural gas or alternative energy sources, which may reduce the demand for exported LNG and/or natural gas; • political conditions in customer regions; • sudden decreases in demand for LNG as a result of natural disasters or public health crises, including the occurrence of a pandemic, and other catastrophic events; • adverse relative demand for LNG compared to other markets, which may decrease LNG exports from North America; and • cyclical trends in general business and economic conditions that cause changes in the demand for natural gas.
Other future legislation and regulations, such as those relating to the transportation and security of LNG imported to or exported from the Sabine Pass LNG Terminal or climate policies of destination countries in relation to their obligations under the Paris Agreement or other national climate change-related policies, could cause additional expenditures, restrictions and delays in our business and to our proposed construction activities, the extent of which cannot be predicted and which may require us to limit substantially, delay or cease operations in some circumstances.
Other future legislation and regulations, such as those relating to the transportation and security of LNG imported to or exported from the Sabine Pass LNG Terminal or climate policies of destination countries in relation to their obligations under the Paris Agreement or other national or international climate change-related policies, could cause additional expenditures, restrictions and delays in our business and to our proposed construction activities, the extent of which cannot be predicted and which may require us to limit substantially, delay or cease operations in some circumstances.
In addition, Cheniere is currently operating three Trains at a natural gas liquefaction facility near Corpus Christi, Texas and CCL has entered into fixed price SPAs with third-parties for the sale of LNG from this natural gas liquefaction facility, and may continue to enter in commercial arrangements with respect to this liquefaction facility that might otherwise have been entered into with respect to any of our future Trains.
In addition, Cheniere, through CCL, is currently operating three Trains at a natural gas liquefaction facility near Corpus Christi, Texas and CCL has entered into fixed price SPAs with third-parties for the sale of LNG from this natural gas liquefaction facility, and may continue to enter in commercial arrangements with respect to this liquefaction facility that might otherwise have been entered into with respect to any of our future Trains.
Additionally, we hold certificates under Section 7(c) of the NGA that grant us land use rights relating to the situation of our pipeline on land owned by third parties. If we were to lose these rights or be required to relocate our pipelines, our business could be materially and adversely affected.
Additionally, we hold certificates under Section 7(c) of the NGA that grant us land use rights relating to the situation of our pipeline on land owned by third parties. If we were to lose these rights or be required to relocate our pipeline, our business could be materially and adversely affected.
Cheniere’s directors and officers have a fiduciary duty to make these decisions in favor of the owners of Cheniere, which may be contrary to our interests: • our general partner controls the interpretation and enforcement of contractual obligations between us, on the one hand, and Cheniere, on the other hand, including provisions governing administrative services and acquisitions; • our general partner is allowed to take into account the interests of parties other than us, such as Cheniere and its affiliates, in resolving conflicts of interest, which has the effect of limiting its fiduciary duty to us and our unitholders; • our general partner has limited its liability and reduced its fiduciary duties under the partnership agreement, while also restricting the remedies available to our unitholders for actions that, without these limitations, might constitute breaches of fiduciary duty; • Cheniere is not limited in its ability to compete with us.
Cheniere’s directors and officers have a fiduciary duty to make these decisions in favor of the owners of Cheniere, which may be contrary to our interests: 21 Table of Contents • our general partner controls the interpretation and enforcement of contractual obligations between us, on the one hand, and Cheniere, on the other hand, including provisions governing administrative services and acquisitions; • our general partner is allowed to take into account the interests of parties other than us, such as Cheniere and its affiliates, in resolving conflicts of interest, which has the effect of limiting its fiduciary duty to us and our unitholders; • our general partner has limited its liability and reduced its fiduciary duties under the partnership agreement, while also restricting the remedies available to our unitholders for actions that, without these limitations, might constitute breaches of fiduciary duty; • Cheniere is not limited in its ability to compete with us.
However, future adverse weather events and collateral effects, or other disasters such as explosions, fires, floods or severe droughts, could cause damage to, or interruption of operations at our terminal or related infrastructure, which could impact our operating results, increase insurance premiums or deductibles paid and delay or increase costs associated with the construction and development of our other facilities.
However, future adverse weather events and collateral effects, or other disasters such as explosions, fires, floods or severe droughts, could cause damage to, or interruption of operations at our terminal or related infrastructure, which could impact our operating results, increase insurance premiums or deductibles paid and delay or increase costs associated with the construction and development of the Liquefaction Project or our other facilities.
As of December 31, 2023, Cheniere owned approximately 239.9 million of our common units. We also filed a registration statement for the resale of 202,450,687 common units owned by Blackstone and its affiliates in 2017. Any sales of these units could have an adverse impact on the price of our common units.
As of December 31, 2024, Cheniere owned approximately 239.9 million of our common units. We also filed a registration statement for the resale of 202,450,687 common units owned by Blackstone and its affiliates in 2017. Any sales of these units could have an adverse impact on the price of our common units.
In addition to restrictions on the ability of us and SPL to make distributions or incur additional indebtedness, the agreements governing SPL’s indebtedness also contain various other covenants that may prevent them from engaging in beneficial transactions, including limitations on their ability to: • make certain investments; 14 Table of Contents • purchase, redeem or retire equity interests; • issue preferred stock; • sell or transfer assets; • incur liens; • enter into transactions with affiliates; • consolidate, merge, sell or lease all or substantially all of its assets; and • enter into sale and leaseback transactions.
In addition to restrictions on the ability of us and SPL to make distributions or incur additional indebtedness, the agreements governing SPL’s indebtedness also contain various other covenants that may prevent them from engaging in beneficial transactions, including limitations on their ability to: • make certain investments; • purchase, redeem or retire equity interests; • issue preferred stock; • sell or transfer assets; • incur liens; • enter into transactions with affiliates; • consolidate, merge, sell or lease all or substantially all of its assets; and • enter into sale and leaseback transactions.
Any contest with the IRS may adversely impact the taxable income reported to our unitholders and the income taxes they are required to pay. As a result, any such contest with the IRS may materially and adversely impact the market for our common units and the price at which our common units trade.
Any contest with the IRS may adversely impact the taxable income or loss reported to our unitholders and the income taxes they are required to pay. As a result, any such contest with the IRS may materially and adversely impact the market for our common units and the price at which our common units trade.
To the extent possible under applicable rules, our general partner may pay such amounts directly to the IRS or, if we are eligible, elect to issue a revised Schedule K-1 to each unitholder with respect to an audited and adjusted return. No assurances can be made that such election will be practical, permissible, or effective in all circumstances.
To the extent possible under applicable rules, we may pay such amounts directly to the IRS or, if we are eligible, elect to issue a revised Schedule K-1 to each unitholder with respect to an audited and adjusted return. No assurances can be made that such election will be practical, permissible, or effective in all circumstances.
It is not possible at this time to predict how future regulations or legislation may address GHG emissions and impact our business. On February 28, 2022, the EPA removed a stay of formaldehyde standards in the NESHAP Subpart YYYY for stationary combustion turbines located at major sources of HAP emissions.
It is not possible at this time to predict how future regulations or legislation may address GHG emissions and impact our business. In 2022, the EPA removed a stay of formaldehyde standards in the NESHAP Subpart YYYY for stationary combustion turbines located at major sources of HAP emissions.
In addition, certain laws and regulations authorize regulators having jurisdiction over the construction and operation of our LNG terminal, docks and pipeline, including FERC, PHMSA, EPA and the United States Coast Guard, to issue regulatory enforcement actions, which may restrict or limit operations or increase compliance or operating costs.
In addition, certain laws and regulations authorize regulators having jurisdiction over the construction and operation of our LNG terminal, marine berths and pipeline, including the FERC, PHMSA, EPA and the United States Coast Guard, to issue regulatory enforcement actions, which may restrict or limit operations or increase compliance or operating costs.
If the IRS were to successfully challenge this method or new Treasury Regulations were issued, we may be required to change the allocation of items of income, gain, loss and deduction among our unitholders. 25 Table of Contents A successful Internal Revenue Service (“IRS”) contest of the federal income tax positions that we take, may adversely impact the market for our common units, and the costs of any contest will be borne by our unitholders and our general partner.
If the IRS were to successfully challenge this method or new Treasury Regulations were issued, we may be required to change the allocation of items of income, gain, loss and deduction among our unitholders. 25 Table of Contents A successful IRS contest of the federal income tax positions that we take, may adversely impact the market for our common units, and the costs of any contest will be borne by our unitholders and our general partner.
As an operator, we are required to: • perform ongoing assessments of pipeline safety and compliance; • identify and characterize applicable threats to pipeline segments that could impact a high consequence area; • improve data collection, integration and analysis; • repair and remediate the pipeline as necessary; and • implement preventative and mitigating actions.
As an operator, we are required to: • perform ongoing assessments of pipeline safety and compliance; 20 Table of Contents • identify and characterize applicable threats to pipeline segments that could impact a high consequence area; • improve data collection, integration and analysis; • repair and remediate the pipeline as necessary; and • implement preventative and mitigating actions.
Total expenditures related to environmental and similar laws and governmental regulations, including capital expenditures, were immaterial to our Consolidated Financial Statements for the years ended December 31, 2023, 2022 and 2021.
Total expenditures related to environmental and similar laws and governmental regulations, including capital expenditures, were immaterial to our Consolidated Financial Statements for the years ended December 31, 2024, 2023 and 2022.
Any significant impediment to the ability to continue to secure long term commercial contracts or deliver LNG from the United States could have a material adverse effect on our customers and on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects. 17 Table of Contents We face competition based upon the international market price for LNG.
Any significant impediment to the ability to continue to secure long term commercial contracts or deliver LNG from the United States could have a material adverse effect on our customers and on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects. We face competition based upon the international market price for LNG.
A unitholder’s share of our income, gain, loss and deduction, and any gain from the sale or disposition of our common units will generally be considered to be “effectively connected” with a U.S. trade or business and subject to U.S. federal income tax.
A unitholder’s share of our income, gain, 26 Table of Contents loss and deduction, and any gain from the sale or disposition of our common units will generally be considered to be “effectively connected” with a U.S. trade or business and subject to U.S. federal income tax.
The extent of our derivative position at any given time depends on our assessments of the markets for these commodities and related exposures. We currently account for our derivatives at fair value, with immediate recognition of changes in the fair value in earnings, as described in Note 3—Summary of Significant Accounting Policies of our Notes to Consolidated Financial Statements.
The extent of our derivative position at any given time depends on our assessment of risks and related exposures for these commodities. We currently account for our derivatives at fair value, with immediate recognition of changes in the fair value in earnings, as described in Note 3—Summary of Significant Accounting Policies of our Notes to Consolidated Financial Statements.
SPL and CQP operate with independent capital structures as further detailed in Note 11—Debt of our Notes to Consolidated Financial Statements.
SPL and CQP operate with independent capital structures as further detailed in Note 10—Debt of our Notes to Consolidated Financial Statements.
Our ability to fund our capital expenditures and refinance our indebtedness will depend on our ability to access additional project financing as well as the debt and equity capital markets.
Our ability to fund our capital expenditures and refinance our indebtedness may depend on our ability to access additional project financing as well as the debt and equity capital markets.
Revised, reinterpreted or additional laws and regulations that result in increased compliance, operating or construction costs or restrictions could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects. 20 Table of Contents Pipeline safety and compliance programs and repairs may impose significant costs and liabilities on us.
Revised, reinterpreted or additional laws and regulations that result in increased compliance, operating or construction costs or restrictions could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects. Pipeline safety and compliance programs and repairs may impose significant costs and liabilities on us.
Our partnership agreement also contains provisions limiting the ability of unitholders to call meetings or to acquire information about our operations, as well as other provisions limiting the unitholders’ ability to influence the manner or direction of management.
Our partnership agreement also contains provisions limiting the ability of unitholders to call meetings or to acquire 23 Table of Contents information about our operations, as well as other provisions limiting the unitholders’ ability to influence the manner or direction of management.
While certain contractual provisions in our SPAs can limit the potential impact of disruptions, and historical indirect losses incurred by us as a result of disruptions to our third party supply of natural gas have not been material, any significant disruption to our natural gas supply where we may not be protected could result in a substantial reduction in our revenues under our long-term SPAs or other customer arrangements, which could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects. 15 Table of Contents We may not be able to purchase or receive physical delivery of sufficient natural gas to satisfy our delivery obligations under the SPAs, which could have a material adverse effect on us.
While certain contractual provisions in our SPAs can limit the potential impact of disruptions, and historical indirect losses incurred 15 Table of Contents by us as a result of disruptions to our third party supply of natural gas have not been material, any significant disruption to our natural gas supply where we may not be protected could result in a substantial reduction in our revenues under our long-term SPAs or other customer arrangements, which could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.
Our business is and will be subject to extensive federal, state and local laws, rules and regulations applicable to our construction and operation activities relating to, among other things, air quality, water quality, waste management, natural resources and health and safety.
Our business is and will be subject to extensive federal, state and local laws, rules and regulations applicable to our construction and operation activities relating to, among other things, air quality, water quality, waste management, natural 19 Table of Contents resources and health and safety.
Tax-exempt entities should consult a tax advisor before investing in our common units. 26 Table of Contents Non-U.S. unitholders will be subject to U.S. taxes and withholding with respect to their income and gain from owning our common units.
Tax-exempt entities should consult a tax advisor before investing in our common units. Non-U.S. unitholders will be subject to U.S. taxes and withholding with respect to their income and gain from owning our common units.
However, we may not be able to purchase or receive physical delivery of natural gas as a result of various factors, including non-delivery or untimely delivery by our suppliers, depletion of natural gas reserves within regional basins and disruptions to pipeline operations as described in the risk factor Disruptions to the third party supply of natural gas to our pipelines and facilities could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.
However, we may not be able to purchase or receive physical delivery of natural gas as a result of various factors, including composition changes in the quality of feed gas received from third parties, non-delivery or untimely delivery by our suppliers, depletion of natural gas reserves within regional basins and disruptions to pipeline operations as described in the risk factor Disruptions to the third party supply of natural gas to our pipeline and facilities could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.
If the IRS makes audit adjustments to our income tax returns for tax years beginning after December 31, 2017, it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustment directly from us, in which case our cash available for distribution to our unitholders might be substantially reduced.
If the IRS makes audit adjustments to our income tax returns, it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustment directly from us, in which case our cash available for distribution to our unitholders might be substantially reduced.
On December 2, 2023, the EPA issued final rules to reduce methane and volatile organic compounds ( “VOC” ) emissions from new, existing and modified emission sources in the oil and gas sector. These regulations will require monitoring of methane and VOC emissions at our compressor stations.
On December 2, 2023, the EPA issued final rules to reduce methane and VOC emissions from new, existing and modified emission sources in the oil and gas sector. These regulations require monitoring of methane and VOC emissions at our compressor stations.
A shortage in the labor pool of skilled workers, remoteness of our site locations, general inflationary pressures, changes in applicable laws and regulations or labor disputes could make it more difficult to attract and retain qualified personnel and could require an increase in the wage and benefits packages that are offered, thereby increasing our operating costs.
A shortage in the labor pool of skilled workers, remoteness of our site locations, general inflationary pressures, changes in applicable laws and regulations or labor disputes could make it more difficult to attract and retain qualified personnel and could require an increase in the wage and benefits packages that Cheniere offers.
Some of these sources of energy may be available at a lower cost than LNG from the Liquefaction Project in certain markets. The cost of LNG supplies from the United States, including the Liquefaction Project, may also be impacted by an increase in natural gas prices in the United States.
Some of these sources of energy may be available at a lower cost than LNG from the Liquefaction Project in certain markets. The cost of LNG supplies from the United States, including the Liquefaction Project, may also be impacted by an increase in natural gas prices in the United States. As described in General in Items 1. and 2.
As described in Market Factors and Competition , it is expected that global demand for natural gas and LNG will continue to increase as nations seek more abundant, reliable and environmentally cleaner fuel alternatives to alternative fossil fuel energy sources such as oil and coal.
Business and Properties, it is expected that global demand for natural gas and LNG will continue to increase as nations seek more abundant, reliable and environmentally cleaner fuel alternatives to alternative fossil fuel energy sources such as oil and coal.
For tax years beginning after December 31, 2017, if the IRS makes audit adjustments to our income tax returns, it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustment directly from us.
If the IRS makes audit adjustments to our income tax returns, it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustment directly from us.
Such initiatives could affect the demand for or cost of natural gas, which we consume at our terminals, or could increase compliance costs for our operations.
Such initiatives could affect the demand for or cost of natural gas, which we consume at the Sabine Pass LNG Terminal, or could increase compliance costs for our operations.
It also could affect the amount of gain from our unitholders’ sale of common units and could have a negative impact on the value of the common units or result in audit adjustments to our unitholders’ tax returns without the benefit of additional deductions.
It also could affect the amount of gain from our unitholders’ sale of common units and could have a negative impact on the value of the common units or result in audit adjustments to our unitholders’ tax returns without the benefit of additional deductions. Additions or changes in tax laws and regulations could potentially affect our financial results or liquidity.
Risks Relating to Our Financial Matters An inability to source capital to supplement our available cash resources and existing revolving credit facilities could cause us to have inadequate liquidity and could materially and adversely affect our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.
Risks Relating to Our Financial Matters An inability to source capital to supplement our available cash resources and existing revolving credit facilities could cause us to have inadequate liquidity and could materially and adversely affect us.
In addition, our liquidity may be adversely impacted by the cash margin requirements of the commodities exchanges or the failure of a counterparty to perform in accordance with a contract.
In addition, our liquidity may be adversely impacted by the cash margin requirements of the respective commodity exchanges or over-the-counter arrangements, or the failure of a counterparty to perform in accordance with a contract.
In addition, we are also subject to increased competition for skilled workers from new entrants to the LNG market.
In addition, Cheniere is also subject to increased competition for skilled workers from new entrants to the LNG market.
Furthermore, some foreign purchasers or suppliers of LNG may have economic or other reasons to obtain their LNG from, or direct their LNG to, non-U.S. markets or from or to our competitors’ liquefaction facilities in the United States.
Furthermore, some foreign purchasers or suppliers of LNG may have economic or other reasons to obtain their LNG from, or direct their LNG to, non-U.S. markets or from or to our competitors’ liquefaction facilities in the United States. As described in Market Factors and Competition in Items 1. and 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations, our net income for the year ended December 31, 2022 included $1.1 billion of losses resulting from changes in the fair values of our derivatives, of which substantially all of such losses were related to commodity derivative instruments indexed to international LNG prices, mainly our IPM agreement in force.
Management’s Discussion and Analysis of Financial Condition and Results of Operations, our net income for the years ended December 31, 2024 and 2023 included $388 million and $2.1 billion of gains, respectively, resulting from changes in the fair values of our derivatives, substantially all of which were related to commodity derivative instruments indexed to international LNG prices, mainly our IPM agreement.
As of December 31, 2023 and 2022, we had collateral posted with counterparties by us of zero and $35 million, respectively, which are included in margin deposits in our Consolidated Balance Sheets. Restrictions in agreements governing our subsidiaries’ indebtedness may prevent our subsidiaries from engaging in certain beneficial transactions, which could materially and adversely affect us.
As of December 31, 2024 and 2023, we had collateral posted with counterparties by us of $13 million and zero, respectively, which are included in other current assets, net in our Consolidated Balance Sheets. 14 Table of Contents Restrictions in agreements governing us and our subsidiaries’ indebtedness may prevent us and our subsidiaries from engaging in certain beneficial transactions, which could materially and adversely affect us.
Further, the IRA includes a charge on methane emissions above certain emissions thresholds employing empirical emissions data that will apply to our facilities beginning in calendar year 2024. In January 2024, the EPA issued a proposed rule to impose and collect the methane emissions charge authorized under the IRA.
Further, the IRA includes a charge on methane emissions above certain emissions thresholds employing empirical emissions data that applied to our facilities beginning in calendar year 2024. On November 12, 2024, the EPA finalized a rule to impose and collect methane emissions charges authorized under the IRA.
A cyber attack involving our business or operational control systems or related infrastructure, or that of third party pipelines with which we do business, could negatively impact our operations, result in data security breaches, impede the processing of transactions, or delay financial or compliance reporting.
A cyber attack involving our business or operational control systems or related infrastructure, or that of third parties pipelines with whom we do business, or an attack on our critical suppliers, could negatively impact our business or operations, result in data security breaches, impede the processing of transactions, delay financial or compliance reporting and potentially harm our reputation.
Cheniere owns 48.6% of our outstanding common units, but it is contractually prohibited from voting our units that it holds in favor of the removal of our general partner. 23 Table of Contents Additionally, our partnership agreement restricts unitholders’ voting rights by providing that any units held by a person that owns 20% or more of any class of units then outstanding, other than our general partner and its affiliates, their transferees and persons who acquired such units with the prior approval of the board of directors of our general partner, cannot vote on any matter.
Additionally, our partnership agreement restricts unitholders’ voting rights by providing that any units held by a person that owns 20% or more of any class of units then outstanding, other than our general partner and its affiliates, their transferees and persons who acquired such units with the prior approval of the board of directors of our general partner, cannot vote on any matter.
As described in Market Factors and Competition , we have contracted through our SPAs and IPM agreement approximately 85% of the total anticipated production from the Liquefaction Project with approximately 14 years of weighted average remaining life as of December 31, 2023, excluding volumes that are contractually subject to additional liquefaction capacity beyond what is currently in construction or operation.
Business and Properties, we have contracted through our SPAs and the IPM agreement currently in effect approximately 80% of the total anticipated production from the Liquefaction Project with approximately 13 years of weighted average remaining life as of December 31, 2024, excluding volumes that are contractually 17 Table of Contents subject to additional liquefaction capacity beyond what is currently in construction or operation.
As of December 31, 2023, we had, on a consolidated basis, $575 million of cash and cash equivalents, $56 million of restricted cash and cash equivalents, a total of $1.7 billion of available commitments under our credit facilities and $16.0 billion of total debt outstanding (before unamortized discount and debt issuance costs).
As of December 31, 2024, we had, on a consolidated basis, $270 million of cash and cash equivalents, $109 million of restricted cash and cash equivalents, a total of $1.8 billion of available commitments under our credit facilities and $15.2 billion of total debt outstanding (before unamortized discount and debt issuance costs).
Owners and operators of lean remix gas-fired turbines and diffusion flame gas-fired turbines at major sources of HAP that were installed after January 14, 2003 were required to comply with NESHAP Subpart YYYY by March 9, 2022 and demonstrate initial compliance with those requirements by September 5, 2022.
Owners and operators of lean remix gas-fired turbines and diffusion flame gas-fired turbines at major sources of HAP that were installed after January 14, 2003 were required to comply with NESHAP Subpart YYYY beginning in 2022.
A cyber attack involving our business, operational control systems or related infrastructure, or that of third party pipelines which supply the Liquefaction Project, could negatively impact our operations, result in data security breaches, impede the processing of transactions or delay financial or compliance reporting.
A cyber attack involving our business, operational control systems or related infrastructure, or that of third parties with whom we do business, including pipelines which supply our Liquefaction Project, or an attack on our critical suppliers, could negatively impact our business or operations, result in data security breaches, impede the processing of transactions, delay financial or compliance reporting and potentially harm our reputation.
The agreements governing our subsidiaries’ indebtedness restrict payments that our subsidiaries can make to us in certain events. For example, SPL is restricted from making distributions under agreements governing its indebtedness generally unless, among other requirements, appropriate reserves have been established for debt service using cash or letters of credit and a debt service coverage ratio of 1.25:1.00 is satisfied.
For example, SPL is restricted from making distributions under agreements governing its indebtedness generally unless, among other requirements, appropriate reserves have been established for debt service using cash or letters of credit and a historical and projected debt service coverage ratio of 1.25:1.00 is satisfied.
Risks Relating to Our Relationship with Our General Partner We are entirely dependent on our general partner, Cheniere, including employees of Cheniere and its subsidiaries, for key personnel, and the unavailability of skilled workers or Cheniere’s failure to attract and retain qualified personnel could adversely affect us.
Risks Relating to Our Relationship with Our General Partner We are entirely dependent on Cheniere, who owns our general partner, for key personnel, and the unavailability of skilled workers or Cheniere’s failure to attract and retain qualified personnel could adversely affect us. In addition, changes in our general partner’s executive officers could affect our business results.
While we believe we can continue to mitigate any significant adverse impact to our employees and operations at our critical facilities related to the virus in its current form, the outbreak of a more potent variant or another infectious disease in the future at one or more of our facilities could adversely affect our operations. 18 Table of Contents Risks Relating to Regulations Failure to obtain and maintain approvals and permits from governmental and regulatory agencies with respect to the design, construction and operation of our facilities, the development and operation of our pipeline and the export of LNG could impede operations and construction and could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.
While the COVID-19 pandemic, including subsequent variants, had no adverse impact on our on-going operations, the risk of future variants and other infectious diseases is unknown and the outbreak of a more potent variant or another infectious disease in the future at one or more of our facilities could adversely affect our operations or business. 18 Table of Contents Risks Relating to Regulations Failure to obtain and maintain approvals and permits from governmental and regulatory agencies with respect to the design, construction and operation of our facilities, the development and operation of our pipeline and the export of LNG could impede operations and construction and could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.
The executive officers of our general partner are officers and employees of Cheniere and its affiliates. We do not maintain key person life insurance policies on any personnel, and our general partner does not have any employment contracts or other agreements with key personnel binding them to provide services for any particular term.
We do not maintain key person life insurance policies on any personnel, and our general partner does not have any employment contracts or other agreements with key personnel binding them to provide services for any particular term. The loss of the services of any of these individuals could have a material adverse effect on our business.
Cheniere competes with other liquefaction projects in the United States and globally, other energy companies and other employers to attract and retain qualified personnel with the technical skills and experience required to construct and operate our facilities and pipelines and to provide our customers with the highest quality service.
We depend on Cheniere’s hiring and retaining personnel to provide sufficient support for the aforementioned services. Cheniere competes with other liquefaction projects in the United States and globally, other energy companies and other employers to attract and retain qualified personnel with the technical skills and experience required to support us and to provide our customers with the highest quality service.
These conflicts include, among others, the following situations: • neither our partnership agreement nor any other agreement requires Cheniere to pursue a business strategy that favors us.
In resolving these conflicts, our general partner may favor its own interests and the interests of its affiliates over the interests of us and our unitholders. These conflicts include, among others, the following situations: • neither our partnership agreement nor any other agreement requires Cheniere to pursue a business strategy that favors us.
Under the SPAs with our customers, we are required to make available to them a specified amount of LNG at specified times. The supply of natural gas to our Liquefaction Project to meet our LNG production requirements timely and at sufficient quantities is critical to our operations and the fulfillment of our customer contracts.
The supply of natural gas to our Liquefaction Project to meet our LNG production requirements timely and at sufficient quantities is critical to our operations and the fulfillment of our customer contracts.
These impacts could materially and adversely affect our business, contracts, financial condition, operating results, cash flow and liquidity. The pipeline and LNG industries are increasingly dependent on business and operational control technologies to conduct daily operations. We rely on control systems, technologies and networks to run our business and to control and manage our pipeline, liquefaction and shipping operations.
The pipeline and LNG industries are increasingly dependent on business and operational control technologies to conduct daily operations. We rely on control systems, technologies and networks to run our business and to control and manage our pipeline and liquefaction operations.
Our unitholders will likely be subject to state and local taxes and return filing requirements as a result of an investment in our common units.
Non-U.S. unitholders should consult their tax advisors regarding the impact of these rules on an investment in our common units. Our unitholders will likely be subject to state and local taxes and return filing requirements as a result of an investment in our common units.
Risks Relating to an Investment in Us and Our Common Units Our partnership agreement limits our general partner’s fiduciary duties to our unitholders and restricts the remedies available to our unitholders for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty.
In the event Cheniere favors its interests over our interests, we may have less available cash to make distributions on our units than we otherwise would have if Cheniere had favored our interests. 22 Table of Contents Risks Relating to an Investment in Us and Our Common Units Our partnership agreement limits our general partner’s fiduciary duties to our unitholders and restricts the remedies available to our unitholders for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty.
Therefore, conflicts of interest may arise between Cheniere and its affiliates, including our general partner, on the one hand, and us and our unitholders, on the other hand. In resolving these conflicts, our general partner may favor its own interests and the interests of its affiliates over the interests of us and our unitholders.
Some of our general partner’s directors are also directors of Cheniere, and certain of our general partner’s officers are officers of Cheniere. Therefore, conflicts of interest may arise between Cheniere and its affiliates, including our general partner, on the one hand, and us and our unitholders, on the other hand.
The loss of the services of any of these individuals could have a material adverse effect on our business. In addition, our future success will depend in part on our general partner’s ability to engage, and Cheniere’s ability to attract and retain, additional qualified personnel.
In addition, our future success will depend in part on our general partner’s ability to engage, and Cheniere’s ability to attract and retain, additional qualified personnel.
We intend to treat all of our distributions as being in excess of our cumulative net income for such purposes and subject to the additional 10% withholding tax.
We intend to treat all of our distributions as being in excess of our cumulative net income for such purposes and subject to the additional 10% withholding tax. For transfers of, or distributions on, interests in a publicly traded partnership, if effected through a broker, the obligation to withhold is imposed on the transferor’s broker.
Under the EPAct, the FERC has civil penalty authority under the NGA and the NGPA to impose penalties for current violations of up to $1.5 million per day for each violation.
Under the EPAct, the FERC has civil penalty authority under the NGA and the NGPA to impose penalties for current violations of up to $1.5 million per day for each violation. Although the FERC has not imposed fines or penalties on us to date, we are exposed to substantial penalties and fines if we fail to comply with such regulations.
In May 2023, certain of our subsidiaries entered the pre-filing review process with the FERC under the NEPA for the SPL Expansion Project. To date, the DOE has also issued orders under Section 4 of the NGA authorizing SPL to export domestically produced LNG.
In February 2024, certain of our subsidiaries submitted an application to the FERC under the NGA for authorization to site, construct and operate the SPL Expansion Project. To date, the DOE has also issued orders under Section 4 of the NGA authorizing SPL to export domestically produced LNG.
Our facilities at the Sabine Pass LNG Terminal are critical infrastructure and continued to operate during the COVID-19 pandemic through our implementation of workplace controls and pandemic risk reduction measures. While the COVID-19 pandemic, including subsequent variants, had no adverse impact on our on-going operations, the risk of future variants and other infectious diseases is unknown.
Outbreaks of infectious diseases, such as COVID-19, at our facilities could adversely affect our operations or business. Our facilities at the Sabine Pass LNG Terminal are critical infrastructure and continued to operate during the COVID-19 pandemic through our implementation of workplace controls and pandemic risk reduction measures.
As a result, our business, contracts, financial condition, operating results, cash flow, liquidity and prospects could be materially and adversely affected.
As a result, our business, contracts, financial condition, operating results, cash flow, liquidity and prospects could be materially and adversely affected. We and our subsidiaries may be restricted under the terms of our and their indebtedness from making distributions under certain circumstances, which could materially and adversely affect our liquidity.
Our future results and liquidity are substantially dependent upon performance by our customers to make payments under long-term contracts. As of December 31, 2023, we had SPAs with initial terms of 10 or more years with a total of 11 different third party customers.
Our future results and liquidity are substantially dependent upon performance by our customers to make payments under long-term contracts.
Any increase in our operating costs could materially and adversely affect our business, contracts, financial condition, operating results, cash flow, liquidity and prospects. 21 Table of Contents Our general partner and its affiliates have conflicts of interest and limited fiduciary duties, which may permit them to favor their own interests to the detriment of us and our unitholders.
Our general partner and its affiliates have conflicts of interest and limited fiduciary duties, which may permit them to favor their own interests to the detriment of us and our unitholders. Cheniere owns and controls our general partner, which has sole responsibility for conducting our business and managing our operations.
We also compete with any other project Cheniere is developing, including its liquefaction project at Corpus Christi, Texas, for the time and expertise of Cheniere’s personnel. Further, we and Cheniere face competition for these highly skilled employees in the immediate vicinity of the Sabine Pass LNG Terminal and more generally from the Gulf Coast hydrocarbon processing and construction industries.
We also compete with any other project Cheniere is operating or developing, including, as further described in Market Factors and Competition in Items 1. and 2. Business Properties, the operation and construction of its liquefaction projects near Corpus Christi, Texas, for the time and expertise of Cheniere’s personnel.
Although the FERC has not imposed fines or penalties on us to date, we are exposed to substantial penalties and fines if we fail to comply with such regulations. 19 Table of Contents Existing and future safety, environmental and similar laws and governmental regulations could result in increased compliance costs or additional operating costs or construction costs and restrictions.
Existing and future safety, environmental and similar laws and governmental regulations could result in increased compliance costs or additional operating costs or construction costs and restrictions.
In those circumstances where additional contracts with Cheniere and its affiliates may be necessary or desirable, additional conflicts of interest may be involved. 22 Table of Contents In the event Cheniere favors its interests over our interests, we may have less available cash to make distributions on our units than we otherwise would have if Cheniere had favored our interests.
In those circumstances where additional contracts with Cheniere and its affiliates may be necessary or desirable, additional conflicts of interest may be involved.
We have contracted with subsidiaries of Cheniere to provide the personnel necessary for the operation, maintenance and management of the Sabine Pass LNG Terminal, the Creole Trail Pipeline and construction and operation of the Liquefaction Project. We depend on Cheniere’s subsidiaries hiring and retaining personnel sufficient to provide support for the Sabine Pass LNG Terminal.
As of December 31, 2024, Cheniere had 1,714 full-time employees, including 501 employees who directly supported our operations. We have contracted with subsidiaries of Cheniere to provide the personnel necessary for the construction, operation, maintenance and management of the Liquefaction Project and the Creole Trail Pipeline, and administrative services.
Our efforts to manage commodity and financial risks through derivative instruments, including our IPM agreements, could adversely affect our earnings reported under GAAP and our liquidity. We use derivative instruments to manage commodity, currency and financial market risks.
Any inability to pay distributions by us or our subsidiaries as a result of the foregoing restrictions could have a material adverse effect on our liquidity. Our use of derivative instruments, including our IPM agreements, to manage risks could adversely affect our earnings reported under GAAP and our liquidity. We use derivative instruments to manage our commodity-related price risk.
Removed
Our subsidiaries may be restricted under the terms of their indebtedness from making distributions to us under certain circumstances, which may limit our ability to pay or increase distributions to our unitholders and could materially and adversely affect the market price of our common units.
Added
As of December 31, 2024, we had SPAs with a total of 11 different third party customers. 13 Table of Contents While substantially all of our long-term third party customer arrangements are executed with a creditworthy parent company or secured by a parent company guarantee or other form of collateral, we are nonetheless exposed to credit risk in the event of a customer default that requires us to seek recourse.
Removed
Our subsidiaries’ inability to pay distributions to us as a result of the foregoing restrictions in the agreements governing their indebtedness may inhibit our ability to pay or increase distributions to our unitholders, which could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.
Added
The agreements governing our and our subsidiaries’ indebtedness contain customary terms and events of default and certain covenants that, among other things, may limit our and our subsidiaries’ ability to make certain investments or pay distributions.
Removed
These impacts could materially and adversely affect our business, contracts, financial condition, operating results, cash flow and liquidity. Outbreaks of infectious diseases, such as COVID-19, at our facilities could adversely affect our operations.
Added
We may not be able to purchase or receive physical delivery of sufficient natural gas to satisfy our delivery obligations under the SPAs, which could have a material adverse effect on us. Under the SPAs with our customers, we are required to make available to them a specified amount of LNG at specified times.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeGovernance We rely on Cheniere’s cybersecurity leadership team, which consists of its Director and Chief Information Security Officer ( “CISO” ), Vice President and Chief Information Officer and Senior Vice President of Shared Services.
Biggest changeGovernance We rely on Cheniere’s cybersecurity leadership team, which consists of its Director and Chief Information Security Officer, Vice President and Chief Information Officer and Senior Vice President of Shared Services. These individuals collectively provide the strategic oversight of our cybersecurity governance, cyber risk management and security operations and are responsible for maintaining our technology defense posture and program.
Cheniere also seeks to negotiate contractual requirements which compel our service providers to notify us of information security incidents occurring on their systems which may affect Cheniere’s systems or data, including personal information. During the year ended December 31, 2023, cybersecurity incidents and threats did not materially affect our business, results of operations or financial condition.
Cheniere also seeks to negotiate contractual requirements which compel our service providers to notify us of information security incidents occurring on their systems which may affect Cheniere’s systems or data, including personal information. During the year ended December 31, 2024, cybersecurity incidents and threats did not materially affect our business, results of operations or financial condition.
ITEM 1C. CYBERSECURITY Cyberattacks represent a potentially significant risk to the Partnership and its industry. We have implemented policies and procedures that are intended to manage and reduce this risk, including those managed by affiliates of Cheniere through our service agreements with them, as further discussed in Note 14—Related Party Transactions of our Notes to Consolidated Financial Statements.
ITEM 1C. CYBERSECURITY Cyberattacks represent a potentially significant risk to the Partnership and our industry. We have implemented policies and procedures that are intended to manage and reduce this risk, including those managed by affiliates of Cheniere through our service agreements with them, as further discussed in Note 13—Related Party Transactions of our Notes to Consolidated Financial Statements.
We seek to contractually require third party service providers with access to our information technology systems, sensitive business data or personal information to maintain reasonable security controls and restrict their ability to use Cheniere’s data, including personal information, for purposes other than to provide services to us, except as required by applicable law.
Cheniere seeks to contractually require third party service providers with access to our information technology systems, sensitive business data or personal information to maintain reasonable security controls and restrict their ability to use Cheniere’s data, including personal information, for purposes other than to provide services to us, except as required by applicable law.
These engagements are also designed to exercise, assess the maturity of, and enhance our Cyber Incident Response Plan. To support these efforts, we have contracted with third parties to perform facility and system penetration tests, compromise assessments of information technology systems, and security maturity assessments of our corporate and operational networks.
These engagements are also designed to exercise, assess the maturity of and enhance our Cyber Incident Response Plan. To support these efforts, Cheniere has contracted with third parties to perform facility and system penetration tests, compromise assessments of information technology systems and security maturity assessments of our corporate and operational networks.
For additional information about cybersecurity risks, see the risk A cyber attack involving our business, operational control systems or related infrastructure, or that of third party pipelines which supply the Liquefaction Project, could negatively impact our operations, result in data security breaches, impede the processing of transactions or delay financial or compliance reporting under Risks Relating to Our Operations and Industry in Item 1A.Risk Factors.
For additional information about cybersecurity risks, see the risk A cyber attack involving our business, operational control systems or related infrastructure, or that of third parties with whom we do business, including pipelines which supply our Liquefaction Project, or an attack on our critical suppliers, could negatively impact our business or operations, result in data security breaches, impede the processing of transactions, delay financial or compliance reporting and potentially harm our reputation under Risks Relating to Our Operations and Industry in Item 1A.Risk Factors.
He maintains a Certified Information Security Manager certification from ISACA, secret clearance from the Department of Homeland Security and has played an active role in the development of various cybersecurity standards including the CSF. Risks that could affect us are an integral part of the board of directors of our general partner and Audit Committee deliberations throughout the year.
They have decades of experience managing strategic technology operations, including the identification of cybersecurity risk and the defense of information technology assets from global threats. Risks that could affect us are an integral part of the board of directors of our general partner and Audit Committee deliberations throughout the year.
Removed
These individuals collectively provide the strategic oversight of our cybersecurity governance, cyber risk management and security operations and are responsible for maintaining our technology defense posture and program. They have decades of experience managing strategic technology operations, including the identification of cybersecurity risk and the defense of information technology assets from global threats.
Added
As part of their governance and risk management responsibilities, these individuals oversee the efforts to prevent, detect, mitigate and remediate cybersecurity risks and incidents, including the systems deployed in our technology infrastructure to monitor for threats, perform security control testing and assessments, and incorporate threat intelligence into our day-to-day cybersecurity operations and strategic initiatives.
Removed
Cheniere’s CISO’s experience includes assessing risks, implementing governance programs, and responding to threats in oil and gas, electric and natural gas utilities and nuclear power generation companies.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeOur subsidiaries continue to work with the LDEQ to resolve the matters identified in the 2023 Compliance Order, including the petition pending with the EPA. As of December 2023, our subsidiaries have filed test results with the LDEQ indicating that all 44 turbines meet the relevant compliance standard.
Biggest changeOur subsidiaries continue to work with the LDEQ to resolve the matters identified in the 2023 Compliance Order, including the petition pending with the EPA. As of December 2024, our subsidiaries have filed test results with the LDEQ indicating that for the 2024 testing period all 44 turbines meet the relevant compliance standard.
ITEM 3. LEGAL PROCEEDINGS We may in the future be involved as a party to various legal proceedings, which are incidental to the ordinary course of business. We regularly analyze current information and, as necessary, provide accruals for probable liabilities on the eventual disposition of these matters.
ITEM 3. LEGAL PROCEEDINGS We are, and may in the future be, involved as a party to various legal proceedings, which are incidental to the ordinary course of business. We regularly analyze current information and, as necessary, provide accruals for probable liabilities on the eventual disposition of these matters.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Removed
Item 5. Market for Registrant's Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities , of this annual report on Form 10-K. Upon our liquidation, our partners, including our general partner, will be entitled to receive liquidating distributions according to their respective capital account balances.
Added
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED UNITHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common units trade on the New York Stock Exchange under the symbol “CQP”, and previously traded on the NYSE American or its predecessors under the symbol “CQP” from our initial public offering on March 21, 2007 through February 3, 2024.
Removed
Procedures for Review, Approval and Ratification of Transactions with Related Persons Under the audit committee charter, the audit committee of our general partner is required to review and approve all transactions or series of related financial transactions, arrangements or relationships between the partnership and any related-party, if the amount involved exceeds $120,000 and such transactions have not been reviewed by the conflicts committee of our general partner.
Added
As of February 14, 2025, we had 484.0 million common units outstanding held by 10 record owners. Because our units are held by brokers and other institutions on behalf of our unitholders, we are unable to estimate the total number of actual unitholders represented by these record owners.
Removed
The following related-party transactions are in addition to those related-party transactions described in Note 14—Related Party Transactions of our Notes to Consolidated Financial Statements which is herein incorporated by reference. Except as described below, such related-party transactions were approved by the members of the board of directors of our general partner, which includes each member of the audit committee.
Added
We consider cash distributions to unitholders on a quarterly basis, although there is no assurance as to the future cash distributions since they are dependent upon future earnings, cash flows, capital requirements, financial condition and other factors.
Removed
In determining whether to approve or ratify a related party transaction, the audit committee of our general partner will apply the following standards and such other standards it deems appropriate: • whether the related party transaction is on terms no less favorable than the terms generally available to an unaffiliated third party under the same or similar circumstances; • whether the transaction is material to the Partnership or the related party; and • the extent of the related person’s interest in the transaction.
Added
Cash Distribution Policy Our cash distribution policy is consistent with the terms of our partnership agreement, which requires that, within 45 days after the end of each quarter, we distribute all of our available cash which, as defined in our partnership agreement, is generally our cash on hand at the end of a quarter less the amount of any reserves established by our general partner.
Removed
In addition, pursuant to our Code of Business Conduct and Ethics approved by the board of directors of our general partner, the directors, officers and employees of our general partner are expected to bring to the attention of the Compliance 93 Table of Contents Officer any conflict or potential conflict of interest.
Added
General Partner Units and Incentive Distribution Rights (“IDRs”) IDRs represent the right to receive an increasing percentage of quarterly distributions of available cash from operating surplus in excess of the initial quarterly distribution. Our general partner currently holds the IDRs but may transfer these rights separately from its general partner interest.
Removed
If a conflict or potential conflict of interest arises between us and a director, officer or any of our affiliates, the resolution of any such conflict or potential conflict should be addressed by the board in accordance with the provisions of our limited partnership agreement.
Added
Assuming we do not issue any additional classes of units that are paid distributions and our general partner maintains its 2% interest, if we have made distributions to our unitholders from operating surplus in an amount equal to the initial quarterly distribution for any quarter, assuming no arrearages, then we will distribute any additional available cash from operating surplus for that quarter among the unitholders and our general partner as follows: Total Quarterly Distribution Target Amount Marginal Percentage Interest Distributions Common and Subordinated Unitholders General Partner Initial quarterly distribution $0.425 98% 2% First Target Distribution Above $0.425 up to $0.489 98% 2% Second Target Distribution Above $0.489 up to $0.531 85% 15% Third Target Distribution Above $0.531 up to $0.638 75% 25% Thereafter Above $0.638 50% 50%
Removed
Independent Directors Because we are a limited partnership, the NYSE American does not require our general partner’s board of directors to be composed of a majority of directors who meet the criteria for independence required by NYSE American. The board of our general partner has determined that Messrs.
Removed
Ball, McCain, Pagano and Richard are independent directors in accordance with the following NYSE American independence standards.
Removed
A director would not be independent if any of the following relationships exists: • a director who is, or during the past three years was, employed by the partnership, general partner or by any parent or subsidiary of the partnership or general partner, other than prior employment as an interim executive officer (provided the interim employment did not last longer than one year); • a director who accepts, or has an immediate family member who accepts, any compensation from the partnership, general partner or any parent or subsidiary of the partnership or general partner in excess of $120,000 during any twelve consecutive-month period within the three years preceding the determination of independence, other than compensation for board or committee services, or compensation paid to an immediate family member who is a non-executive employee of the partnership, general partner or any parent or subsidiary of the partnership or general partner, among other exceptions; • a director who is an immediate family member of an individual who is, or at any time during the past three years was, employed by the partnership, general partner or any parent or subsidiary of the partnership or general partner as an executive officer; • a director who is, or has an immediate family member who is, a partner in, or a controlling shareholder or an executive officer of, any organization to which the partnership, general partner or any parent or subsidiary of the partnership or general partner made, or from which the partnership, general partner or any parent or subsidiary of the partnership or general partner received, payments (other than those arising solely from investments in our common units or payments under non-discretionary charitable contribution matching programs) that exceed 5% of the organization’s consolidated gross revenues for that year, or $200,000, whichever is more, in any of the most recent three fiscal years; • a director who is, or has an immediate family member who is, employed as an executive officer of another entity where at any time during the most recent three fiscal years any of the executive officers of the partnership, general partner or any parent or subsidiary of the partnership or general partner serves on the compensation committee of such other entity; or • a director who is, or has an immediate family member who is, a current partner of the outside auditor of the partnership, general partner or parent or subsidiary of the partnership or general partner, or was a partner or employee of the outside auditor of the partnership, general partner or any parent or subsidiary of the partnership or general partner who worked on our audit at any time during any of the past three years.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

74 edited+21 added−55 removed27 unchanged
Biggest changeConsequently, we believe we are well positioned to help meet the increased demand of our international LNG customers to overcome their supply shortages. 33 Table of Content Results of Operations Year Ended December 31, (in millions, except per unit data) 2023 2022 Variance Revenues LNG revenues $ 6,991 $ 11,507 $ (4,516) LNG revenues—affiliate 2,475 4,568 (2,093) Regasification revenues 135 1,068 (933) Other revenues 63 63 — Total revenues 9,664 17,206 (7,542) Operating costs and expenses Cost of sales (excluding items shown separately below) 2,721 11,887 (9,166) Cost of sales—affiliate 22 213 (191) Operating and maintenance expense 879 757 122 Operating and maintenance expense—affiliate 166 166 — Operating and maintenance expense—related party 62 72 (10) General and administrative expense 10 5 5 General and administrative expense—affiliate 89 92 (3) Depreciation and amortization expense 672 634 38 Other 6 — 6 Other—affiliate 1 — 1 Total operating costs and expenses 4,628 13,826 (9,198) Income from operations 5,036 3,380 1,656 Other income (expense) Interest expense, net of capitalized interest (823) (870) 47 Loss on modification or extinguishment of debt (6) (33) 27 Interest and dividend income 46 21 25 Other income, net 1 — 1 Total other expense (782) (882) 100 Net income $ 4,254 $ 2,498 $ 1,756 Basic and diluted net income per common unit $ 6.95 $ 3.27 $ 3.68 Volumes loaded and recognized from the Liquefaction Project Year Ended December 31, 2023 2022 Variance LNG volumes loaded and recognized as revenues (in TBtu) 1,536 1,520 16 34 Table of Content Net income The increase of $1.8 billion in net income between the years ended December 31, 2023 and 2022 was primarily attributable to the favorable variance of $3.2 billion from changes in fair value and settlements of derivatives.
Biggest changeThis, along with the expiry of the gas transit agreement between Russia and Ukraine on December 31, 2024, is likely to increase the call on LNG imports in the coming months in order to replenish European gas storage facilities to 90% capacity by November 1, as required by the EU each year. 32 Table of Contents Results of Operations Year Ended December 31, (in millions, except per unit data) 2024 2023 Variance Revenues LNG revenues $ 6,550 $ 6,991 $ (441) LNG revenues—affiliate 1,954 2,475 (521) Regasification revenues 135 135 — Other revenues 65 63 2 Total revenues 8,704 9,664 (960) Operating costs and expenses Cost of sales (excluding items shown separately below) 3,570 2,721 849 Cost of sales—affiliate 4 22 (18) Operating and maintenance expense 824 879 (55) Operating and maintenance expense—affiliate 172 166 6 Operating and maintenance expense—related party 58 62 (4) General and administrative expense 10 10 — General and administrative expense—affiliate 90 89 1 Depreciation and amortization expense 680 672 8 Other operating costs and expenses 14 6 8 Other operating costs and expenses—affiliate 2 1 1 Total operating costs and expenses 5,424 4,628 796 Income from operations 3,280 5,036 (1,756) Other income (expense) Interest expense, net of capitalized interest (800) (823) 23 Loss on modification or extinguishment of debt (3) (6) 3 Interest and dividend income 33 46 (13) Other income, net — 1 (1) Total other expense (770) (782) 12 Net income $ 2,510 $ 4,254 $ (1,744) Basic and diluted net income per common unit $ 4.25 $ 6.95 $ (2.70) Volumes loaded and recognized from the Liquefaction Project Year Ended December 31, 2024 2023 Variance Volumes loaded and recognized as revenues (in TBtu) 1,567 1,536 31 Net income Net income declined by $1.7 billion during the year ended December 31, 2024 as compared to the same period of 2023 and was primarily attributable to $1.7 billion of decreases in gains from changes in fair value of derivatives.
We may recognize changes in fair value through earnings that could be significant to our results of operations if and when such uncertainties are resolved. Additionally, the valuation of certain physical liquefaction supply derivatives requires significant judgment in estimating underlying forward commodity curves due to periods of unobservability or limited liquidity.
We may recognize changes in fair value through earnings that could be significant to our results of operations if and when such uncertainties are resolved. Additionally, the valuation of certain liquefaction supply derivatives requires significant judgment in estimating underlying forward commodity curves due to periods of unobservability or limited liquidity.
Under the SPAs, the customers purchase LNG on an FOB basis (delivered to the customer at the Sabine Pass LNG Terminal) generally for a price consisting of a fixed fee per MMBtu of LNG (a portion of which is subject to annual adjustment for inflation) plus a variable fee per MMBtu of LNG generally equal to 115% of Henry Hub.
Under our SPAs, customers purchase LNG on an FOB basis (delivered to the customer at the Sabine Pass LNG Terminal) generally for a price consisting of a fixed fee per MMBtu of LNG (a portion of which is subject to annual adjustment for inflation) plus a variable fee per MMBtu of LNG generally equal to 115% of Henry Hub.
Valuation of our physical liquefaction supply derivative contracts is often developed through the use of internal models which includes significant unobservable inputs representing Level 3 fair value measurements as further described in Note 3—Summary of Significant Accounting Policies of our Notes to Consolidated Financial Statements.
Valuation of our liquefaction supply derivative contracts is often developed through the use of internal models which includes significant unobservable inputs representing Level 3 fair value measurements as further described in Note 3—Summary of Significant Accounting Policies of our Notes to Consolidated Financial Statements.
Fair Value of Level 3 Physical Liquefaction Supply Derivatives All of our derivative instruments are recorded at fair value, as described in Note 3—Summary of Significant Accounting Policies of our Notes to Consolidated Financial Statements.
Fair Value of Level 3 Liquefaction Supply Derivatives All of our derivative instruments are recorded at fair value, as described in Note 3—Summary of Significant Accounting Policies of our Notes to Consolidated Financial Statements.
Capital Expenditures Although we do not currently have any material capital expenditures under executed contracts, we expect to incur ongoing capital expenditures to maintain our facilities and other assets, as well as to optimize our existing assets and purchase new assets that are intended to grow our productive capacity. See Financially Disciplined Growth section for further discussion.
Capital Expenditures Although we do not currently have any material capital expenditures under executed contracts, we expect to incur ongoing capital expenditures to maintain our facilities and other assets, as well as to optimize our existing assets and purchase new assets that are intended to grow our productive capacity. See Disciplined Accretive Growth section for further discussion.
Discussion of 2021 items and variance drivers between the year ended December 31, 2022 as compared to December 31, 2021 are not included herein and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our annual report on Form 10-K for the fiscal year ended December 31, 2022 .
Discussion of items for the year ended December 31, 2022 and variance drivers between the year ended December 31, 2023 as compared to December 31, 2022 are not included herein and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our annual report on Form 10-K for the fiscal year ended December 31, 2023 .
These distributions consist of a base amount of $0.775 per unit and a variable amount of $0.260 per unit. Summary of Critical Accounting Estimates The preparation of our Consolidated Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the accompanying notes.
These distributions consist of a base amount of $0.775 per unit and a variable amount of $0.045 per unit. Summary of Critical Accounting Estimates The preparation of our Consolidated Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the accompanying notes.
Quantitative and Qualitative Disclosures About Market Risk for further analysis of the sensitivity of the fair value of our derivatives to hypothetical changes in underlying prices. Recent Accounting Standards For a summary of recently issued accounting standards, see Note 3—Summary of Significant Accounting Policies of our Notes to Consolidated Financial Statements.
See Item 7A. Quantitative and Qualitative Disclosures About Market Risk for further analysis of the sensitivity of the fair value of our derivatives to hypothetical changes in underlying prices. Recent Accounting Standards For a summary of recently issued accounting standards, see Note 3—Summary of Significant Accounting Policies of our Notes to Consolidated Financial Statements.
For commodity derivative instruments related to our IPM agreements, the underlying LNG sales being economically hedged are accounted for under the accrual method of accounting, whereby revenues expected to be derived from the future LNG sales are recognized only upon delivery or realization of the underlying transaction.
For commodity derivative instruments, including those related to our IPM agreements, the underlying LNG sales being economically hedged are accounted for under the accrual method of accounting, whereby revenues expected to be derived from the future LNG sales are recognized only upon delivery or realization of the underlying transaction.
We own the natural gas liquefaction and export facility at Sabine Pass, Louisiana. For further discussion of our business, see Items 1. and 2. Business and Properties . Our long-term customer arrangements form the foundation of our business and provide us with significant, stable, long-term cash flows.
We own the natural gas liquefaction and export facility at Sabine Pass, Louisiana. For further discussion of our business, see Items 1. and 2. Business and Properties . Our long-term counterparty arrangements form the foundation of our business and provide us with significant, stable, long-term cash flows.
Certain restrictions under debt instruments executed by SPL limit its ability to distribute cash, including the following: • SPL is required to deposit all cash received into restricted cash and cash equivalents accounts under certain of their debt agreements.
Certain restrictions or requirements under debt instruments executed by SPL limit its ability to distribute cash, including the following: • SPL is required to deposit all cash received into restricted cash and cash equivalents accounts under certain of their debt agreements.
Such valuations are more susceptible to variability particularly when markets are volatile. Provided below are the changes in fair value from valuation of instruments valued through the use of internal models which incorporate significant unobservable inputs for the years ended December 31, 2023 and 2022 (in millions), which entirely consisted of physical liquefaction supply derivatives.
Such valuations are more susceptible to variability particularly when markets are volatile. Provided below are the changes in fair value from valuation of instruments valued through the use of internal models which incorporate significant unobservable inputs for the years ended December 31, 2024 and 2023 (in millions), which entirely consisted of liquefaction supply derivatives.
There is a possibility that the entire guarantee may be set aside, in which case the entire liability may be extinguished. 37 Table of Content The following tables include summarized financial information of CQP (the “Parent Issuer” ), and the CQP Guarantors (together with the Parent Issuer, the “Obligor Group” ) on a combined basis.
There is a possibility that the entire guarantee may be set aside, in which case the entire liability may be extinguished. The following tables include summarized financial information of CQP (the “Parent Issuer” ), and the CQP Guarantors (together with the Parent Issuer, the “Obligor Group” ) on a combined basis.
See Note 11 —Debt of our Notes to Consolidated Financial Statements for additional information on our credit facilities and other debt instruments. Our liquidity position subsequent to December 31, 2023 will be driven by future sources of liquidity and future cash requirements as further discussed under the caption Future Sources and Uses of Liquidity .
See Note 10—Debt of our Notes to Consolidated Financial Statements for additional information on our credit facilities and other debt instruments. Our liquidity position subsequent to December 31, 2024 will be driven by future sources of liquidity and future cash requirements, as further discussed under the caption Future Sources and Uses of Liquidity .
As of December 31, 2023, we and SPL were in compliance with all covenants related to their respective debt agreements. Further discussion of our debt obligations, including the restrictions imposed by these arrangements, can be found in Note 11—Debt of our Notes to Consolidated Financial Statements.
As of December 31, 2024, we and SPL were in compliance with all covenants related to their respective debt agreements. Further discussion of our debt obligations, including the restrictions imposed by these arrangements, can be found in Note 10—Debt of our Notes to Consolidated Financial Statements.
The sources of liquidity at SPL primarily fund the cash 36 Table of Content requirements of SPL, and any remaining liquidity not subject to restriction, as supplemented by liquidity provided by SPLNG, is available to enable CQP to meet its cash requirements.
The sources of liquidity at SPL primarily fund the cash requirements of SPL, and any remaining liquidity not subject to restriction, as supplemented by liquidity provided by SPLNG, is available to enable CQP to meet its cash requirements.
The CQP Guarantors’ guarantees are full and unconditional, subject to certain release provisions including (1) the sale, disposition or transfer (by merger, consolidation or otherwise) of the capital stock or all or substantially all of the assets of the CQP Guarantors, (2) upon the liquidation or dissolution of a Guarantor, (3) following the release of a Guarantor from another guarantee that resulted in the creation of its guarantee of the CQP Senior Notes and (4) upon the legal defeasance or satisfaction and discharge of obligations under the indenture governing the CQP Senior Notes.
The CQP Guarantors’ guarantees of such Guaranteed Obligations are full and unconditional, subject to certain release provisions including, as applicable, (1) the sale, disposition or transfer (by merger, consolidation or otherwise) of the capital stock or all or substantially all of the assets of a Guarantor, (2) the liquidation or dissolution of a Guarantor, (3) following the release of a Guarantor from another guarantee that resulted in the creation of its guarantee of the Guaranteed Obligation and (4) the legal defeasance or satisfaction and discharge of obligations under the indenture governing the CQP Senior Notes.
Additionally, we expect to meet our long term cash requirements by using operating cash flows and other future potential sources of liquidity, which may include debt offerings by us or our subsidiaries and equity offerings by us. The table below provides a summary of our available liquidity (in millions). Future material sources of liquidity are discussed below.
Additionally, we expect to meet our long term cash requirements by using operating cash flows and other future potential sources of liquidity, which may include debt offerings by us or our subsidiaries and equity offerings by us. 34 Table of Contents The table below provides a summary of our available liquidity (in millions).
To ensure that we are able to transport natural gas feedstock to the Sabine Pass LNG Terminal, we have entered into firm pipeline transportation and other agreements to secure firm pipeline transportation capacity from third party interstate and intrastate pipeline companies.
To ensure that we are able to transport natural gas feedstock to the Sabine Pass LNG Terminal, we have transportation precedent and other agreements to secure firm pipeline transportation capacity from CTPL and third party interstate and intrastate pipeline companies.
Year Ended December 31, 2023 2022 Favorable (unfavorable) changes in fair value relating to instruments still held at the end of the period $ 1,318 $ (1,032) The changes in fair value on instruments held at the end of both years are primarily attributed to a significant variance in the estimated and observable forward international LNG commodity prices on our IPM agreement during the years ended December 31, 2023 and 2022.
Year Ended December 31, 2024 2023 Favorable changes in fair value relating to instruments still held at the end of the period $ 184 $ 1,318 The changes in fair value on instruments held at the end of both years are primarily attributed to a significant variance in the estimated and observable forward international LNG commodity prices on our IPM agreement in effect during the years ended December 31, 2024 and 2023.
Debt and interest payments do not contemplate repurchases, repayments and retirements that we may make prior to contractual maturity. Debt As of December 31, 2023, our debt complex was comprised of senior notes with an aggregate outstanding principal balance of $16.0 billion and credit facilities with no outstanding loan balances.
Debt and interest payments do not contemplate repurchases, repayments and retirements that we may make prior to contractual maturity. Debt As of December 31, 2024, our debt complex was comprised of senior notes with an aggregate outstanding principal balance of $15.2 billion and credit facilities with no outstanding loan balances.
Interest As of December 31, 2023, our senior notes had a weighted average contractual interest rate of 4.83%. Borrowings under our credit facilities are indexed to SOFR. Undrawn commitments under our credit facilities are subject to commitment fees ranging from 0.075% to 0.300%, subject to change based on the applicable entity’s credit rating.
Interest As of December 31, 2024, our senior notes had a weighted average contractual interest rate of 4.79%. Borrowings under our credit facilities are indexed to SOFR. Undrawn commitments under our credit facilities are subject to commitment fees ranging from 0.075% to 0.30%, subject to change based on the applicable entity’s credit rating.
In the event of a default in payment of the principal or interest by us, whether at maturity of the CQP Senior Notes or by declaration of acceleration, call for redemption or otherwise, legal proceedings may be instituted against the CQP Guarantors to enforce the guarantee.
In the event of a default in payment of the principal or interest by us, whether at maturity of the respective debt obligation or by declaration of acceleration, call for redemption or otherwise, legal proceedings may be instituted against the CQP Guarantors to enforce the guarantee.
Through our SPAs and IPM agreement, we have contracted approximately 85% of the total anticipated production from the Liquefaction Project with approximately 14 years of weighted average remaining life as of December 31, 2023, excluding volumes that are contractually subject to additional liquefaction capacity beyond what is currently in construction or operation.
Through our SPAs and the IPM agreement currently in effect, with approximately 13 years of weighted average remaining life as of December 31, 2024, we have contracted approximately 80% of the total anticipated production from the Liquefaction Project, excluding volumes that are contractually subject to additional liquefaction capacity beyond what is currently in construction or operation.
Financially Disciplined Growth Our significant land position at the Sabine Pass LNG Terminal provides potential development and investment opportunities for further liquefaction capacity expansion at strategically advantaged locations with proximity to pipeline infrastructure and resources.
Disciplined Accretive Growth Our significant land position at the Sabine Pass LNG Terminal provides potential development and investment opportunities for further liquefaction capacity expansion at a strategically advantaged location with proximity to pipeline infrastructure and resources.
Because our general partner has no employees, it relies on subsidiaries of Cheniere to provide the personnel necessary to allow it to meet its management obligations to us, SPLNG, SPL and CTPL. As of December 31, 2023, Cheniere and its subsidiaries had 1,605 full-time employees, including 501 employees who directly supported the Sabine Pass LNG Terminal operations.
Because our general partner has no employees, it relies on subsidiaries of Cheniere to provide the personnel necessary to allow it to meet its management obligations to us and our subsidiaries. As of December 31, 2024, Cheniere and its subsidiaries had 1,714 full-time employees, including 501 employees who directly supported the Sabine Pass LNG Terminal operations.
The following table summarizes our estimate of material cash requirements for financing under executed contracts as of December 31, 2023 (in billions): Estimated Payments Due Under Executed Contracts by Period (1) 2024 2025 - 2028 Thereafter Total Debt $ 0.3 $ 6.7 $ 9.0 $ 16.0 Interest payments 0.9 2.2 1.2 4.3 Total $ 1.2 $ 8.9 $ 10.2 $ 20.3 (1) Debt and interest payments are based on the total debt balance, scheduled contractual maturities and fixed or estimated forward interest rates in effect at December 31, 2023.
The following table summarizes our estimate of material cash requirements for financing under executed contracts as of December 31, 2024 (in billions): Estimated Payments Due Under Executed Contracts by Period (1) 2025 2026 - 2029 Thereafter Total Debt $ 0.4 $ 6.2 $ 8.6 $ 15.2 Interest payments 0.7 2.2 1.1 4.0 Total $ 1.1 $ 8.4 $ 9.7 $ 19.2 (1) Debt and interest payments are based on the total debt balance, scheduled contractual maturities and fixed or estimated forward interest rates in effect at December 31, 2024.
Issued letters of credit under our credit facilities are subject to letter of credit fees ranging from 1.00% to 2.00%, subject to change based on the applicable entity’s credit rating. We had $280 million aggregate amount of issued letters of credit under our credit facilities as of December 31, 2023.
Issued letters of credit under our credit facilities are subject to letter of credit fees ranging from 1.0% to 2.0%, subject to change based on the applicable entity’s credit rating. We had $224 million aggregate amount of issued letters of credit under our credit facilities as of December 31, 2024.
The following table summarizes our estimate of material cash requirements for operations related to our core operations under executed contracts as of December 31, 2023 (in billions): Estimated Payments Due Under Executed Contracts by Period (1) 2024 2025 - 2028 Thereafter Total Purchase obligations (2): Natural gas supply agreements (3) $ 3.5 $ 10.0 $ 5.2 $ 18.7 Natural gas transportation and storage service agreements (4) 0.3 0.9 2.3 3.5 Other purchase obligations (5) 0.2 0.9 1.1 2.2 Leases (6) — 0.1 0.1 0.2 Total $ 4.0 $ 11.9 $ 8.7 $ 24.6 (1) Agreements in force as of December 31, 2023 that have terms dependent on project milestone dates are based on the estimated dates as of December 31, 2023.
The following table summarizes our estimate of material cash requirements for operations related to our core operations under executed contracts as of December 31, 2024 (in billions): Estimated Payments Due Under Executed Contracts by Period (1) 2025 2026 - 2029 Thereafter Total Purchase obligations (2): Natural gas supply agreements excluding our IPM agreement (3) (4) $ 4.2 $ 8.5 $ 1.5 $ 14.2 Natural gas transportation and storage service agreements (5) 0.3 0.9 1.9 3.1 Other purchase obligations (6) 0.1 0.4 1.0 1.5 Leases (7) — 0.1 0.1 0.2 Total $ 4.6 $ 9.9 $ 4.5 $ 19.0 (1) Agreements in force as of December 31, 2024 that have terms dependent on project milestone dates are based on the estimated dates as of December 31, 2024.
Available Commitments under Credit Facilities As of December 31, 2023, we had $1.7 billion in available commitments under our credit facilities, as detailed earlier in the table summarizing our available liquidity, subject to compliance with the applicable covenants, to potentially meet liquidity needs. Our credit facilities mature in 2028.
Additional Future Sources of Liquidity Available Commitments under Credit Facilities As of December 31, 2024, we had $1.8 billion in available commitments under our credit facilities, as detailed earlier in the table summarizing our available liquidity, subject to compliance with the applicable covenants, to potentially meet liquidity needs. Our credit facilities mature in 2028.
The estimated fair value of level 3 derivatives recognized in our Consolidated Balance Sheets as of December 31, 2023 and 2022 amounted to a liability of $1.7 billion and $3.7 billion, respectively, consisting entirely of physical liquefaction supply derivatives.
The estimated fair value of level 3 derivatives recognized in our Consolidated Balance Sheets as of December 31, 2024 and 2023 amounted to a liability of $1.3 billion and $1.7 billion, respectively.
Business and Properties, will provide a foundation for additional growth in our portfolio of customer contracts in the future.
Business and Properties, will provide a foundation for additional growth in our business in the future.
December 31, 2023 Cash and cash equivalents $ 575 Restricted cash and cash equivalents designated for the Liquefaction Project 56 Available commitments under our credit facilities (1): SPL Revolving Credit Facility 720 CQP Revolving Credit Facility 1,000 Total available commitments under our credit facilities 1,720 Total available liquidity $ 2,351 (1) Available commitments represent total commitments less loans outstanding and letters of credit issued under each of our credit facilities as of December 31, 2023.
December 31, 2024 Cash and cash equivalents $ 270 Restricted cash and cash equivalents designated for the Liquefaction Project 109 Available commitments under our credit facilities (1): SPL Revolving Credit Facility 776 CQP Revolving Credit Facility 1,000 Total available commitments under our credit facilities 1,776 Total available liquidity $ 2,155 (1) Available commitments represent total commitments less loans outstanding and letters of credit issued under each of our credit facilities as of December 31, 2024.
For example, as described in Note 8—Derivative 35 Table of Content Instruments of our Notes to Consolidated Financial Statements, the fair value of our Liquefaction Supply Derivatives incorporates market participant-based assumptions pertaining to certain contractual uncertainties, including those related to the availability of market information for delivery points, which may require future development of infrastructure, as well as the timing of both satisfaction of contractual events or states of affairs and delivery commencement.
For example, as described in Note 7—Derivative Instruments of our Notes to Consolidated Financial Statements, the fair value of the Liquefaction Supply Derivatives incorporates, as applicable, market participant-based assumptions pertaining to certain contractual uncertainties, including those related to the availability of market information for delivery points, which may require future development of infrastructure, as well as the timing of satisfaction of certain events or development of infrastructure to support natural gas gathering and transport.
As further described in the LNG Revenues section above, the pricing structure of our SPA arrangements with our customers often incorporates a variable fee per MMBtu of LNG generally equal to 115% of Henry Hub, which is paid upon delivery, thus limiting our net exposure to future increases in natural gas prices.
As further described in the Future Sources of Liquidity under Executed Contracts section, the pricing structure of our SPAs often incorporates a variable fee per MMBtu of LNG generally equal to 115% of Henry Hub, which is paid upon delivery, thus limiting our net exposure to future increases in natural gas prices.
Capital Allocation Plan In September 2022, the board of directors of Cheniere approved a revised long-term capital allocation plan, which may involve the repayment, redemption or repurchase, on the open market or otherwise, of debt, including senior notes of CQP and SPL. 43 Table of Content Sources and Uses of Cash The following table summarizes the sources and uses of our cash, cash equivalents and restricted cash and cash equivalents (in millions).
Capital Allocation Plan In June 2024, the board of directors of Cheniere approved an updated comprehensive long-term capital allocation plan, which may involve the repayment, redemption or repurchase, on the open market or otherwise, of debt, including senior notes of CQP and SPL. 40 Table of Contents Sources and Uses of Cash The following table summarizes the sources and uses of our cash, cash equivalents and restricted cash and cash equivalents (in millions).
On January 26, 2024, with respect to the fourth quarter of 2023, we declared a cash distribution of $1.035 per common unit to unitholders of record as of February 7, 2024 and the related general partner distribution that was paid on February 14, 2024.
On January 29, 2025, with respect to the fourth quarter of 2024, we declared a cash distribution of $0.820 per common unit to unitholders of record as of February 10, 2025, and the related general partner distribution, that was paid on February 14, 2025.
On January 26, 2024, with respect to the fourth quarter of 2023, we declared a cash distribution of $1.035 per common unit to unitholders of record as of February 7, 2024 and the related general partner distribution that was paid on February 14, 2024.
On January 29, 2025, with respect to the fourth quarter of 2024, we declared a cash distribution of $0.820 per common unit to unitholders of record as of February 10, 2025, and the related general partner distribution, that was paid on February 14, 2025.
Additional Future Cash Requirements for Operations and Capital Expenditures Operational Services We rely on our general partner to manage all aspects of the development, construction, operation and maintenance of the Sabine Pass LNG Terminal and to conduct our business.
Leases Our obligations under our lease arrangements primarily consist of leases for the use of tug vessels and land sites. Additional Future Cash Requirements for Operations and Capital Expenditures Operational Services We rely on our general partner to manage all aspects of the development, construction, operation and maintenance of the Sabine Pass LNG Terminal and to conduct our business.
All distributions paid to date have been made from accumulated operating surplus. 44 Table of Content The following provides a summary of distributions paid by us during the years ended December 31, 2023 and 2022: Total Distribution (in millions) Date Paid Period Covered by Distribution Distribution Per Common Unit Common Units General Partner Units Incentive Distribution Rights November 14, 2023 July 1 - September 30, 2023 $ 1.030 $ 499 $ 14 $ 201 August 14, 2023 April 1 - June 30, 2023 1.030 499 14 201 May 15, 2023 January 1 - March 31, 2023 1.030 499 14 201 February 14, 2023 October 1 - December 31, 2022 1.070 518 15 220 November 14, 2022 July 1 - September 30, 2022 $ 1.070 $ 518 $ 15 $ 220 August 12, 2022 April 1 - June 30, 2022 1.060 513 15 215 May 13, 2022 January 1 - March 31, 2022 1.050 508 15 210 February 14, 2022 October 1 - December 31, 2021 0.700 339 8 47 In addition, Tug Services distributed $13 million and $12 million during the years ended December 31, 2023 and 2022, respectively, to Cheniere Terminals in accordance with their terminal marine service agreement, which is recognized as part of the distributions to the holder of our general partner interest.
The following provides a summary of distributions paid by us during the years ended December 31, 2024 and 2023: Total Distribution (in millions) Date Paid Period Covered by Distribution Distribution Per Common Unit Common Units General Partner Units Incentive Distribution Rights November 14, 2024 July 1 - September 30, 2024 $ 0.810 $ 392 $ 10 $ 99 August 14, 2024 April 1 - June 30, 2024 0.810 392 10 99 May 15, 2024 January 1 - March 31, 2024 0.810 392 10 99 February 14, 2024 October 1 - December 31, 2023 1.035 501 14 204 November 14, 2023 July 1 - September 30, 2023 $ 1.030 $ 499 $ 14 $ 201 August 14, 2023 April 1 - June 30, 2023 1.030 499 14 201 May 15, 2023 January 1 - March 31, 2023 1.030 499 14 201 February 14, 2023 October 1 - December 31, 2022 1.070 518 15 220 In addition, Tug Services distributed $13 million during both the years ended December 31, 2024 and 2023, respectively, to Cheniere Terminals in accordance with their terminal marine service agreement, which is recognized as part of the distributions to the holder of our general partner interest.
The ultimate fair value of our derivative instruments is uncertain, and we believe that it is reasonably possible that a material change in the estimated fair value could occur in the near future, particularly as it relates to commodity prices given the level of volatility in the current year. See Item 7A.
The ultimate fair value of our derivative instruments is uncertain, and we believe that it is reasonably possible that a material change in the estimated fair value could occur in the near future, particularly as it relates to commodity prices impacting the valuation of our liquefaction supply derivatives, given the level of volatility to which such prices are subjected.
As of December 31, 2023, we have secured approximately 77% of the natural gas supply required to support the total forecasted production capacity of the Liquefaction Project during 2024. Natural gas supply secured decreases as a percentage of forecasted production capacity beyond 2024.
As of December 31, 2024, we have secured approximately 73% of the natural gas supply required to support the total forecasted production capacity of the Liquefaction Project during 2025, excluding the 3% of which has been secured under our IPM agreement in effect. Natural gas supply secured decreases as a percentage of forecasted production capacity beyond 2025.
Certain customers may elect to cancel or suspend deliveries of LNG cargoes, with advance notice as governed by each respective SPA, in which case the customers would still be required to pay the fixed fee with respect to the contracted volumes that are not delivered as a result of such cancellation or suspension.
Certain customers may elect to cancel or suspend deliveries of LNG cargoes, with advance notice as governed by each respective SPA, in which case the customers would still be required to pay the fixed fee with respect to the contracted volumes that are not delivered as a result of such cancellation or suspension. 37 Table of Contents The table above excludes an SPA with Cheniere Marketing under which we sell LNG produced from natural gas procured under our IPM agreement in effect at pricing linked to global gas market prices.
Estimates are not guarantees of future performance and actual results may differ materially as a result of a variety of factors described in this annual report on Form 10-K. Future Sources of Liquidity under Executed SPAs As described in Items 1. and 2.
Estimates are not guarantees of future performance and actual results may differ materially as a result of a variety of factors described in this annual report on Form 10-K. Future Sources of Liquidity under Executed Contracts We are contractually entitled to significant future consideration contracted under our long-term SPAs that has not yet been recognized as revenue.
Significant factors affecting our results of operations Below are significant factors that affect our results of operations. Gains and losses on derivative instruments Derivative instruments are utilized to manage our exposure to commodity-related marketing and price risks and are reported at fair value on our Consolidated Financial Statements.
Significant factor affecting our results of operations Below is a significant factor that affects our results of operations. Gains and losses on derivative instruments Derivative instruments, which we use to manage certain risks, are reported at fair value in our Consolidated Financial Statements.
The decrease was partially offset by lower cash outflows for natural gas feedstock, mostly due to lower U.S. natural gas prices. Investing Cash Flows Cash outflows for property, plant and equipment during the year ended December 31, 2023 were primarily related to optimization and other site improvement projects.
Investing Cash Flows Cash outflows for property, plant and equipment during the years ended December 31, 2024 and 2023 were primarily related to optimization and other site improvement projects.
Under our IPM agreement, we pay for natural gas feedstock based on global gas market prices less fixed liquefaction fees and certain costs incurred by us.
The IPM agreement in effect, under which we pay for natural gas feedstock based on global gas prices less liquefaction fees and certain costs incurred by us, generates a take-or-pay style fixed liquefaction fee when viewed in conjunction with the associated SPA.
We derive our volatility assumptions based on observed historical settled global LNG market pricing or accepted proxies for global LNG market pricing as well as settled domestic natural gas pricing. Such volatility assumptions also contemplate, as of the balance sheet date, observable forward curve data of such indices, as well as evolving available industry data and independent studies.
We derive our volatility assumptions based on observed historical settled global LNG market pricing or accepted proxies for global LNG market pricing as well as settled domestic natural gas pricing.
Our current estimate of volatility does not exclude the impact of otherwise rare events unless we believe market participants would exclude such events on account of their assertion that those events were specific to our company and deemed within our control. 45 Table of Content Our fair value estimates incorporate market participant-based assumptions pertaining to applicable contractual uncertainties, including those related to the availability of market information for delivery points, as well as the timing of both satisfaction of contractual events or states of affairs and delivery commencement.
Our fair value estimates incorporate market participant-based assumptions pertaining to applicable contractual uncertainties, including those related to the availability of market information for delivery points, as well as the timing of both satisfaction of contractual events or states of affairs and delivery commencement.
Liquidity and Capital Resources The following information describes our ability to generate and obtain adequate amounts of cash to meet our requirements in the short term and the long term.
We may recognize changes in fair value through earnings that could significantly impact our results of operations if and when such uncertainties are resolved. Liquidity and Capital Resources The following information describes our ability to generate and obtain adequate amounts of cash to meet our requirements in the short term and the long term.
(3) LNG revenues (variable fees, including affiliate) reflect the assumption that customers elect to take delivery of all cargoes made available under the contract. LNG revenues (variable fees, including affiliate) are based on estimated forward prices and basis spreads as of December 31, 2023.
(3) LNG revenues (variable fees) reflect the assumption of delivery of all contractual volumes, irrespective of any contractual right of non-delivery. LNG revenues (variable fees) are based on estimated forward prices and basis spreads as of December 31, 2024.
Supplemental Guarantor Information The 2033 CQP Senior Notes are jointly and severally guaranteed by each of our current and future subsidiaries who guarantee the CQP Revolving Credit Facility and the $1.5 billion of 4.500% Senior Notes due 2029, $1.5 billion of 4.000% Senior Notes due 2031 and $1.2 billion of 3.25% Senior Notes due 2032 (together with the 2033 CQP Senior Notes, the “CQP Senior Notes” ) are jointly and severally guaranteed by each of our subsidiaries other than SPL and, subject to certain conditions governing its guarantee, Sabine Pass LP (each a “Guarantor” and collectively, the “CQP Guarantors” ).
Supplemental Guarantor Information Certain debt obligations of CQP (the “Guaranteed Obligations” ), consisting of the $1.5 billion of 4.500% Senior Notes due 2029, $1.5 billion of 4.000% Senior Notes due 2031, $1.2 billion of 3.25% Senior Notes due 2032, $1.4 billion of 5.950% Senior Notes due 2033 and the 2034 CQP Senior Notes (collectively, the “CQP Senior Notes” ) are jointly and severally guaranteed by certain subsidiaries of CQP (each a “Guarantor” and collectively, the “CQP Guarantors” ), as prescribed within the respective debt agreements governing such Guaranteed Obligation.
The timing of revenue recognition under GAAP may not align with cash receipts, although we do not consider the timing difference to be material.
The timing of revenue recognition under GAAP may not align with cash receipts, although we do not consider the timing difference to be significant to our future liquidity. In addition, a significant portion of this future consideration is subject to variability as discussed more specifically below.
The development of this sites or other projects, including infrastructure projects in support of natural gas supply and LNG demand, will require, among other things, acceptable commercial and financing arrangements before we make a positive FID. 40 Table of Content Future Cash Requirements for Operations and Capital Expenditures under Executed Contracts We are committed to make future cash payments for operations and capital expenditures pursuant to certain of our contracts.
In October 2024, the authorization from the DOE to export LNG to FTA countries was received. The development of this site or other projects, including infrastructure projects in support of natural gas supply and LNG demand, will require, among other things, acceptable commercial and financing arrangements before we make a positive FID.
We expect that the SPL Expansion Project and any further expansion at the Sabine Pass LNG Terminal would increase cash requirements to support expanded operations, although expansion may be designed to leverage shared infrastructure to reduce the incremental costs of any potential expansion. 42 Table of Content Future Cash Requirements for Financing under Executed Contracts We are committed to make future cash payments for financing pursuant to certain of our contracts.
Disciplined Accretive Growth The FID of any expansion projects will result in additional cash requirements to fund the construction and operations of such projects in excess of our current contractual obligations under executed contracts discussed above, although expansion may be designed to leverage shared infrastructure to reduce the incremental costs of any potential expansion. 39 Table of Contents Future Cash Requirements for Financing under Executed Contracts We are committed to make future cash payments for financing pursuant to certain of our contracts.
The variable fees under our SPAs were generally sized with the intention to cover the costs of gas purchases, transportation and liquefaction fuel consumed to produce the LNG to be sold under each such SPA. In aggregate, the annual fixed fee portion to be paid by the third party SPA customers is approximately $3.4 billion.
The variable fees under our SPAs were generally sized with the intention to cover the supply and transportation of natural gas and the liquefaction fuel consumed to produce the LNG to be sold under each such SPA, thus limiting our exposure to future U.S. natural gas price increases.
Operational • As of February 16, 2024, approximately 2,410 cumulative LNG cargoes totaling approximately 165 million tonnes of LNG have been produced, loaded and exported from the Liquefaction Project.
In October 2024, the authorization from the DOE to export LNG to FTA countries was received for the SPL Expansion Project. 31 Table of Contents Operational • As of February 14, 2025, approximately 2,840 cumulative LNG cargoes totaling over 195 million tonnes of LNG have been produced, loaded and exported from the Liquefaction Project.
Cash Distributions to Unitholders Our partnership agreement requires that, within 45 days after the end of each quarter, we distribute all of our available cash (as defined in our partnership agreement). Our available cash is our cash on hand at the end of a quarter less the amount of any reserves established by our general partner.
Our available cash is our cash on hand at the end of a quarter less the amount of any reserves established by our general partner. All distributions paid to date have been made from accumulated operating surplus.
Year Ended December 31, 2023 2022 Net cash provided by operating activities $ 3,109 $ 4,149 Net cash used in investing activities (227) (451) Net cash used in financing activities (3,247) (3,676) Net increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents $ (365) $ 22 Operating Cash Flows The $1.0 billion decrease between the periods was primarily related to lower cash receipts from the sale of LNG cargoes from lower pricing per MMBtu, as a result of decreased Henry Hub pricing, and regasification fees.
Year Ended December 31, 2024 2023 Net cash provided by operating activities $ 2,968 $ 3,109 Net cash used in investing activities (162) (227) Net cash used in financing activities (3,058) (3,247) Net increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents $ (252) $ (365) Operating Cash Flows The $143 million decrease between the periods was primarily related to cash flows attributed to working capital, mainly due to differences in timing of payments to suppliers and cash collections from the sale of LNG cargoes.
Summarized Balance Sheets (in millions) December 31, 2023 2022 ASSETS Current assets Cash and cash equivalents $ 575 $ 904 Accounts receivable from Non-Guarantors 55 55 Other current assets 39 40 Current assets—affiliate 86 171 Current assets with Non-Guarantors 1 — Total current assets 756 1,170 Property, plant and equipment, net of accumulated depreciation 2,915 2,946 Other non-current assets, net 110 109 Total assets $ 3,781 $ 4,225 LIABILITIES Current liabilities Due to affiliates $ 121 $ 193 Deferred revenue from Non-Guarantors 3 24 Other current liabilities 177 95 Other current liabilities from Non-Guarantors — 2 Total current liabilities 301 314 Long-term debt, net of premium, discount and debt issuance costs 5,542 4,159 Finance lease liabilities 14 18 Other non-current liabilities 67 78 Non-current liabilities—affiliate 18 18 Total liabilities $ 5,942 $ 4,587 Summarized Statement of Income (in millions) Year Ended December 31, 2023 Revenues $ 199 Revenues from Non-Guarantors 549 Total revenues 748 Operating costs and expenses 247 Operating costs and expenses—affiliate 188 Operating costs and expenses—Non-Guarantors 12 Total operating costs and expenses 447 Income from operations 301 Net income 105 38 Table of Content Future Sources and Uses of Liquidity The following discussion of our future sources and uses of liquidity includes estimates that reflect management’s assumptions and currently known market conditions and other factors as of December 31, 2023.
Summarized Balance Sheets (in millions) December 31, 2024 2023 ASSETS Current assets Current assets, net $ 312 $ 614 Current assets—affiliate 103 86 Current assets with Non-Guarantors 53 56 Total current assets 468 756 Non-current assets, net 3,034 3,025 Total assets $ 3,502 $ 3,781 LIABILITIES Current liabilities Current liabilities $ 148 $ 155 Current liabilities—affiliate 57 46 Current liabilities due to Non-Guarantors 120 100 Total current liabilities 325 301 Long-term debt, net of premium, discount and debt issuance costs 6,731 5,542 Other non-current liabilities 141 81 Non-current liabilities—affiliate 18 18 Total liabilities $ 7,215 $ 5,942 36 Table of Contents Summarized Statement of Operations (in millions) Year Ended December 31, 2024 Revenues $ 200 Revenues from Non-Guarantors 552 Total revenues 752 Operating costs and expenses 263 Operating costs and expenses—affiliate 210 Total operating costs and expenses 473 Income from operations 279 Net income (30) Future Sources and Uses of Liquidity The following discussion of our future sources and uses of liquidity includes estimates that reflect management’s assumptions and currently known market conditions and other factors as of December 31, 2024.
The rights of holders of the CQP Senior Notes against the CQP Guarantors may be limited under the U.S. Bankruptcy Code or state fraudulent transfer or conveyance law.
The Guaranteed 35 Table of Contents Obligations also include events of default that are customary for the respective debt instrument, which are subject to customary grace periods and materiality standards. The rights of holders of the Guaranteed Obligations against the CQP Guarantors may be limited under the U.S. Bankruptcy Code or state fraudulent transfer or conveyance law.
The following table summarizes our estimate of future material sources of liquidity to be received from executed SPAs as of December 31, 2023 (in billions): Estimated Revenues Under Executed SPAs by Period (1) (2) 2024 2025 - 2028 Thereafter Total LNG revenues (fixed fees) $ 3.9 $ 14.1 $ 31.0 $ 49.0 LNG revenues (variable fees) (3) 5.1 24.4 60.1 89.6 Total $ 9.0 $ 38.5 $ 91.1 $ 138.6 (1) Agreements in force as of December 31, 2023 that have terms dependent on project milestone dates are based on the estimated dates as of December 31, 2023.
The following table summarizes our estimate of revenues to be received from executed long-term SPAs as of December 31, 2024 (in billions): Estimated Revenues Under Executed SPAs by Period (1) (2) 2025 2026 - 2029 Thereafter Total LNG revenues (fixed fees) $ 3.8 $ 13.8 $ 27.5 $ 45.1 LNG revenues (variable fees) (3) 6.0 22.1 49.0 77.1 Total $ 9.8 $ 35.9 $ 76.5 $ 122.2 (1) LNG revenues exclude revenues from contracts with original expected durations of one year or less.
Payments during renewal options that are exercisable at our sole discretion are included only to the extent that the option is believed to be reasonably certain to be exercised. Natural Gas Supply, Transportation and Storage Service Agreements We have secured natural gas feedstock for the Liquefaction Project through long-term natural gas supply agreements, including an IPM agreement.
(7) Leases include payments under operating leases and finance leases. Payments during future renewal option periods that are exercisable at our sole discretion are included only to the extent that the option is believed to be reasonably certain to be exercised.
Financing Cash Flows The following table summarizes our financing activities (in millions): Year Ended December 31, 2023 2022 Proceeds from issuances of debt $ 1,397 $ 559 Redemptions and repayments of debt (1,700) (1,560) Distributions (2,907) (2,635) Other (37) (40) Net cash used in financing activities $ (3,247) $ (3,676) Debt Activity During the year ended December 31, 2023, we issued an aggregate principal amount of $1.4 billion of 2033 CQP Senior Notes, the proceeds of which were used, together with cash on hand, to redeem $1.4 billion of the 2024 SPL Senior Notes.
Financing Cash Flows The following table summarizes our financing activities (in millions): Year Ended December 31, 2024 2023 Proceeds from issuances of debt $ 1,228 $ 1,397 Redemptions, repayments and repurchases of debt (2,030) (1,700) Distributions (2,235) (2,907) Other (21) (37) Net cash used in financing activities $ (3,058) $ (3,247) Debt Activity The following table shows our debt activity (in millions): Year Ended December 31, 2024 2023 Proceeds from issuances of debt CQP: 5.750% Senior Notes due 2034 $ 1,198 $ — 5.950% Senior Notes due 2033 — 1,397 SPL: SPL Revolving Credit Facility 30 — Total proceeds from issuances of debt $ 1,228 $ 1,397 Redemptions, repayments and repurchases of debt SPL: 5.750% Senior Secured Notes due 2024 $ (300) $ (1,700) 5.625% Senior Secured Notes due 2025 (1,700) — SPL Revolving Credit Facility (30) — Total redemptions, repayments and repurchases of debt $ (2,030) $ (1,700) 41 Table of Contents Cash Distributions to Unitholders Our partnership agreement requires that, within 45 days after the end of each quarter, we distribute all of our available cash (as defined in our partnership agreement).
Through our SPAs and IPM agreement, we have contracted approximately 85% of the total anticipated production from the Liquefaction Project, with approximately 14 years of weighted average remaining life as of December 31, 2023, excluding volumes that are contractually subject to additional liquefaction capacity beyond what is currently in construction or operation.
Under our long-term SPAs, we have contracted approximately 80% of the total anticipated production though the mid-2030s from our liquefaction capacity that is currently in construction or operation.
Includes $0.8 billion under natural gas supply agreements with unsatisfied contractual conditions. (4) Includes $0.2 billion of purchase obligations to related parties under the natural gas transportation and storage service agreements. (5) Includes $1.2 billion of purchase obligations to affiliates under services agreements and payments under SPL’s partial TUA assignment agreement with TotalEnergies Gas & Power North America, Inc.
(4) Pricing of natural gas supply agreements is based on estimated forward prices and basis spreads as of December 31, 2024. 38 Table of Contents (5) Natural gas transportation and storage services agreements include $0.2 billion in obligations to related parties. (6) Other purchase obligations include $1.2 billion of purchase obligations to affiliates under service agreements.
(2) LNG revenues (including $1.4 billion and $7.6 billion of fixed fees and variable fees, respectively, from affiliates) exclude revenues from contracts with original expected durations of one year or less.
(2) LNG revenues (including $0.7 billion and $1.4 billion of fixed fees and variable fees, respectively, from affiliates) exclude the SPA with Cheniere Marketing associated with our IPM agreement in effect, for which pricing is linked to international natural gas prices.
The following is an additional discussion of the significant drivers of the variance in net income by line item: Revenues The $7.5 billion decrease in revenues between the years ended December 31, 2023 and 2022 was primarily attributable to: • $6.7 billion decrease in revenues due to lower pricing per MMBtu, from decreased Henry Hub pricing; and • $933 million decrease in regasification revenues due to the accelerated recognition of revenues associated with the termination of one of our TUA agreements in December 2022.
The remaining $189 million of decreases in gains from changes in fair value of derivatives during the comparable years was primarily due to an unfavorable shift in long-term U.S. natural gas basis spreads. 33 Table of Contents The following is an additional discussion of the significant drivers of the variance in net income by line item: Revenues The $960 million decrease in revenues during the year ended December 31, 2024 as compared to the same period of 2023 was primarily attributable to a $1.1 billion decrease from lower pricing per MMBtu as a result of declining Henry Hub pricing, partially offset by a $188 million increase from higher production volume largely due to reduced maintenance activities compared to the same period of 2023 and cooler weather.
These distributions consist of a base amount of $0.775 per unit and a variable amount of $0.260 per unit.
These distributions consist of a base amount of $0.775 per unit and a variable amount of $0.045 per unit. • In May 2024, we issued $1.2 billion aggregate principal amount of 5.750% Senior Notes due 2034 (the “2034 CQP Senior Notes” ).
See Note 14—Related Party Transactions of our Notes to Consolidated Financial Statements for a discussion of the services agreements pursuant to which general and administrative services are provided to us, SPLNG, SPL and CTPL.
Refer to Note 13—Related Party Transactions of our Notes to Consolidated Financial Statements for further discussion of this agreement.
Operating costs and expenses The $9.2 billion decrease in operating costs and expenses between the years ended December 31, 2023 and 2022 was primarily attributable to: • $6.1 billion decrease in cost of sales excluding the effect of derivative changes described below, primarily as a result of $6.0 billion decrease in cost of natural gas feedstock largely due to lower U.S. natural gas prices; and • $3.2 billion favorable variance from changes in fair value and settlements of derivatives included in cost of sales, from a loss of $1.2 billion in the year ended December 31, 2022 to a gain of $2.1 billion in the year ended December 31, 2023, primarily due to decreased international gas prices resulting in non-cash favorable changes in fair value of our commodity derivatives indexed to such prices, specifically associated with the Tourmaline IPM Agreement as discussed above under Net income.
Operating costs and expenses The increase in operating costs and expenses of $796 million during the year ended December 31, 2024 as compared to the same period of 2023 was primarily attributable to $1.7 billion of decreases in gains from changes in fair value of derivatives included in cost of sales, as discussed above under Net income .
We include contracts with unsatisfied contractual conditions if the conditions are currently expected to be met. (3) Pricing of natural gas supply agreements is based on estimated forward prices and basis spreads as of December 31, 2023. Pricing of our IPM agreements is based on global gas market prices less fixed liquefaction fees and certain costs incurred by us.
We include contracts with unsatisfied contractual conditions if the conditions are currently expected to be met. (3) Natural gas supply agreements exclude the IPM agreement, which, as described in Future Sources of Liquidity under Executed Contracts , is structured to generate a fixed margin when viewed in conjunction with the associated SPA with Cheniere Marketing .
The Henry Hub benchmark also 32 Table of Content witnessed a similar year-over-year drop albeit from a much lower base. The Henry Hub average settlement price in 2023 was $2.74, down approximately 59% from $6.64/MMBtu in 2022 during the height of the energy crisis in Europe.
Similarly, the average settlement price for the Japan Korea Marker ( “JKM” ) was $11.83/MMBtu in 2024, 26.6% lower than the 2023 average of $16.13/MMBtu. The Henry Hub benchmark also dropped from an average settlement price of $2.74/MMBtu in 2023 to $2.27/MMBtu in 2024, down 17.1% year-over-year.
Removed
Overview of Significant Events Our significant events since January 1, 2023 and through the filing date of this Form 10-K include the following: Strategic • In November 2023, Cheniere announced that SPL Stage V entered into an IPM agreement with ARC Resources U.S.
Added
Overview of Significant Events Our significant events since January 1, 2024 and through the filing date of this Form 10-K include the following: Strategic • In February 2024, certain of our subsidiaries submitted an application to the FERC under the NGA for authorization to site, construct and operate the SPL Expansion Project, as well as an application to the DOE requesting authorization to export LNG to FTA countries and non-FTA countries, both of which applications exclude debottlenecking.
Removed
Corp., a subsidiary of ARC Resources Ltd., to purchase 140,000 MMBtu per day of natural gas at a price based on the Dutch Title Transfer Facility ( “TTF” ) less a fixed regasification fee, fixed LNG shipping costs and a fixed liquefaction fee, for a term of approximately 15 years commencing with commercial operations of the first train of the SPL Expansion Project.
Added
Financial • We declared aggregate distributions of $3.465 per common unit for the year ended December 31, 2024.
Removed
This agreement is subject to Cheniere making a positive FID on the first train of the SPL Expansion Project or us unilaterally waiving that requirement. 31 Table of Content • In May 2023, certain of our subsidiaries entered the pre-filing review process with the FERC under the NEPA for the SPL Expansion Project, and in April 2023, one of our subsidiaries executed a contract with Bechtel Energy Inc. to provide the front end engineering and design work on the project. • On January 2, 2023, Corey Grindal, formerly Executive Vice President, Worldwide Trading, was promoted to Executive Vice President and Chief Operating Officer of Cheniere Partners GP.
Added
In June 2024, the net proceeds, together with cash on hand, were used to redeem $1.2 billion of the outstanding aggregate principal amount of SPL’s 5.625% Senior Secured Notes due 2025 (the “2025 SPL Senior Notes” ). • Excluding amounts refinanced, SPL redeemed $800 million of outstanding aggregate principal amount of its senior secured notes during the year ended December 31, 2024. • In May 2024, in connection with the 2034 CQP Senior Notes issuance, Moody’s Ratings ( “Moody ’ s” ) upgraded our issuer credit rating to Baa2 from Ba1 and revised our outlook to stable from positive.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeIn order to test the sensitivity of the fair value of the Liquefaction Supply Derivatives to changes in underlying commodity prices, management modeled a 10% change in the commodity price for natural gas for each delivery location as follows (in millions): December 31, 2023 December 31, 2022 Fair Value Change in Fair Value Fair Value Change in Fair Value Liquefaction Supply Derivatives $ (1,657) $ 362 $ (3,741) $ 565 See Note 8 —Derivative Instruments of our Notes to Consolidated Financial Statements for additional details about our derivative instruments. 46 Table of Contents
Biggest changeIn order to test the sensitivity of the fair value of the Liquefaction Supply Derivatives to changes in underlying commodity prices, management modeled a 10% change in the commodity price for natural gas for each delivery location as follows (in millions): December 31, 2024 December 31, 2023 Fair Value Change in Fair Value Fair Value Change in Fair Value Liquefaction Supply Derivatives $ (1,281) $ 342 $ (1,657) $ 362 43 Table of Contents See Note 7—Derivative Instruments of our Notes to Consolidated Financial Statements for additional details about our derivative instruments. 44 Table of Contents
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Marketing and Trading Commodity Price Risk SPL has commodity derivatives consisting of natural gas supply contracts for the operation of the Liquefaction Project (the “Liquefaction Supply Derivatives” ).
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Marketing and Trading Commodity Price Risk We have commodity derivatives consisting of natural gas supply contracts for the operation of the Liquefaction Project, as well as the associated economic hedges (collectively, the “Liquefaction Supply Derivatives” ).

Other CQP 10-K year-over-year comparisons