UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

��☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2020~~2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-33366

Cheniere Energy Partners, L.P.

(Exact name of registrant as specified in its charter)


Delaware			20-5913059
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

700 Milam Street, Suite 1900

Houston, Texas 77002

(Address of principal executive offices) (Zip Code)

(713) 375-5000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Units Representing Limited Partner Interests	CQP	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October~~July 30, ~~2020,~~2021, the registrant had ~~484,019,623~~484,024,123 common units outstanding.

CHENIERE ENERGY PARTNERS, L.P.

TABLE OF CONTENTS




























	Definitions	1
Part I. Financial Information
Item 1.	Consolidated Financial Statements	3
	Consolidated ~~Balance Sheets~~Statements of Income	3
	Consolidated ~~Statements of Operations~~Balance Sheets	4
	Consolidated Statements of Partners’ Equity	5
	Consolidated Statements of Cash Flows	76
	Notes to Consolidated Financial Statements	7
	Note 1—Nature of Operations and Basis of Presentation	7
	Note 2—Unitholders’ Equity	7
	Note 3—Restricted Cash	8
	Note 4—Accounts and Other Receivables, Ne t of Current Expected Credit Losses	8
	Note 5—Inventory	8
	Note 6—Property, Plant and Equipment, Ne t of Accumulated Depreciation	8
	Note 7—Derivative Instruments	9
	Note 8—Other Non-Current Assets, Net	12
	Note 9—Accrued Liabilities	12
	Note 10—Debt	13
	Note 11—Revenues from Contracts with Customers	15
	Note 12—Related Party Transactions	18
	Note 13—Net Income per Common Unit	22
	Note 14—Customer Concentration	24
	Note 15—Supplemental Cash Flow Information	24

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2425

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3938

Item 4.	Controls and Procedures	4039

Part II. Other Information
Item 1.	Legal Proceedings	4140

Item 1A.	Risk Factors	4140

Item 5.	Other Information	40

Item 6.	Exhibits	41

	Signatures	42

DEFINITIONS

As used in this quarterly report, the terms listed below have the following meanings:

Common Industry and Other Terms


Bcf						billion cubic feet
Bcf/d						billion cubic feet per day
Bcf/yr						billion cubic feet per year
Bcfe						billion cubic feet equivalent
DOE						U.S. Department of Energy
EPC						engineering, procurement and construction
FERC						Federal Energy Regulatory Commission
FTA countries						countries with which the United States has a free trade agreement providing for national treatment for trade in natural gas
GAAP						generally accepted accounting principles in the United States
Henry Hub						the final settlement price (in USD per MMBtu) for the New York Mercantile Exchange’s Henry Hub natural gas futures contract for the month in which a relevant cargo’s delivery window is scheduled to begin
LIBOR						London Interbank Offered Rate
LNG						liquefied natural gas, a product of natural gas that, through a refrigeration process, has been cooled to a liquid state, which occupies a volume that is approximately 1/600th of its gaseous state
MMBtu						million British thermal ~~units, an~~units; one British thermal unit measures the amount of energy ~~unit~~required to raise the temperature of one pound of water by one degree Fahrenheit
mtpa						million tonnes per annum
non-FTA countries						countries with which the United States does not have a free trade agreement providing for national treatment for trade in natural gas and with which trade is permitted
SEC						U.S. Securities and Exchange Commission
SPA						LNG sale and purchase agreement
TBtu						trillion British thermal ~~units, an~~units; one British thermal unit measures the amount of energy ~~unit~~required to raise the temperature of one pound of water by one degree Fahrenheit
Train						an industrial facility comprised of a series of refrigerant compressor loops used to cool natural gas into LNG
TUA						terminal use agreement

Abbreviated Legal Entity Structure

The following diagram depicts our abbreviated legal entity structure as of ~~September~~June 30, ~~2020,~~2021, including our ownership of certain subsidiaries, and the references to these entities used in this quarterly report:

Unless the context requires otherwise, references to “Cheniere Partners,” “the Partnership,” “we,” “us” and “our” refer to Cheniere Energy Partners, L.P. and its consolidated subsidiaries, including SPLNG, SPL and CTPL.

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED ~~BALANCE SHEETS~~STATEMENTS OF INCOME

(in millions, except per unit data)

(unaudited)

September 30, December 31,
2020 2019
ASSETS (unaudited)
Current assets
Cash and cash equivalents $ 1,254 $ 1,781
Restricted cash 157 181
Accounts and other receivables, net 204 297
Accounts receivable—affiliate 82 105
Advances to affiliate 120 158
Inventory 113 116
Derivative assets 14 17
Other current assets 117 51
Other current assets—affiliate 0 1
Total current assets 2,061 2,707
Property, plant and equipment, net 16,666 16,368
Operating lease assets, net 100 94
Debt issuance costs, net 18 15
Non-current derivative assets 30 32
Other non-current assets, net 155 168
Total assets $ 19,030 $ 19,384
LIABILITIES AND PARTNERS’ EQUITY
Current liabilities
Accounts payable $ 17 $ 40
Accrued liabilities 564 709
Accrued liabilities—related party 2 0
Due to affiliates 42 46
Deferred revenue 179 155
Deferred revenue—affiliate 0 1
Current operating lease liabilities 7 6
Derivative liabilities 31 9
Total current liabilities 842 966
Long-term debt, net 17,573 17,579
Non-current operating lease liabilities 92 87
Non-current derivative liabilities 25 16
Other non-current liabilities 2 1
Other non-current liabilities—affiliate 18 20
Partners’ equity
Common unitholders’ interest (484.0 million and 348.6 million units issued and outstanding at September 30, 2020 and December 31, 2019, respectively) 627 1,792
Subordinated unitholders’ interest (0 and 135.4 million units issued and outstanding at September 30, 2020 and December 31, 2019, respectively) 0 (996)
General partner’s interest (2% interest with 9.9 million units issued and outstanding at September 30, 2020 and December 31, 2019) (149) (81)
Total partners’ equity 478 715
Total liabilities and partners’ equity $ 19,030 $ 19,384


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenues
LNG revenues	$	1,597	$	1,332	$	3,266	$	2,781
LNG revenues—affiliate	211		61		425		249

Regasification revenues	67		68		134		135

Other revenues	14		9		27		23

Total revenues	1,889		1,470		3,852		3,188

Operating costs and expenses
Cost of sales (excluding items shown separately below)	888		398		1,836		1,097
Cost of sales—affiliate	12		5		54		5
Cost of sales—related party	1		0		1		0
Operating and maintenance expense	168		165		317		317
Operating and maintenance expense—affiliate	35		48		69		81
Operating and maintenance expense—related party	12		0		22		0
Development expense	1		0		1		0

General and administrative expense	3		8		5		10
General and administrative expense—affiliate	21		24		42		49
Depreciation and amortization expense	138		138		277		276
Impairment expense and loss on disposal of assets	6		0		6		5

Total operating costs and expenses	1,285		786		2,630		1,840

Income from operations	604		684		1,222		1,348

Other income (expense)
Interest expense, net of capitalized interest	(209)		(236)		(426)		(470)
Loss on modification or extinguishment of debt	0		(42)		(54)		(43)

Other income, net	0		0		0		6

Total other expense	(209)		(278)		(480)		(507)

Net income	$	395	$	406	$	742	$	841

Basic and diluted net income per common unit	$	0.73	$	0.78	$	1.38	$	1.62


Weighted average number of common units outstanding used for basic and diluted net income per common unit calculation	484.0		348.6		484.0		348.6

The accompanying notes are an integral part of these consolidated financial statements.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED ~~STATEMENTS OF OPERATIONS~~BALANCE SHEETS

(in millions, except ~~per~~ unit data)

~~(unaudited)~~

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Revenues
LNG revenues $ 807 $ 1,140 $ 3,588 $ 3,678
LNG revenues—affiliate 103 257 352 1,017
Regasification revenues 67 66 202 199
Other revenues 5 13 28 36
Total revenues 982 1,476 4,170 4,930
Operating costs and expenses
Cost of sales (excluding items shown separately below) 454 742 1,551 2,501
Cost of sales—affiliate 33 6 38 6
Operating and maintenance expense 146 172 463 472
Operating and maintenance expense—affiliate 34 34 115 100
General and administrative expense 2 3 12 9
General and administrative expense—affiliate 24 34 73 82
Depreciation and amortization expense 137 138 413 390
Impairment expense and loss on disposal of assets 0 1 5 6
Total operating costs and expenses 830 1,130 2,670 3,566
Income from operations 152 346 1,500 1,364
Other income (expense)
Interest expense, net of capitalized interest (221) (231) (691) (648)
Loss on modification or extinguishment of debt 0 (13) (43) (13)
Other income, net 2 8 8 24
Total other expense (219) (236) (726) (637)
Net income (loss) $ (67) $ 110 $ 774 $ 727
Basic and diluted net income (loss) per common unit $ (0.08) $ 0.19 $ 1.55 $ 1.38
Weighted average number of common units outstanding used for basic and diluted net income (loss) per common unit calculation 414.8 348.6 370.9 348.6



	June 30,		December 31,
	2021		2020
ASSETS	(unaudited)
Current assets
Cash and cash equivalents	$	1,239	$	1,210
Restricted cash	65		97
Accounts and other receivables, net of current expected credit losses	285		318
Accounts receivable—affiliate	65		184
Advances to affiliate	154		144
Inventory	116		107
Current derivative assets	23		14
Other current assets	97		61
Other current assets—affiliate	1		0
Total current assets	2,045		2,135


Property, plant and equipment, net of accumulated depreciation	16,789		16,723
Operating lease assets, net of accumulated amortization	95		99
Debt issuance costs, net of accumulated amortization	14		17
Derivative assets	21		11
Other non-current assets, net	159		160

Total assets	$	19,123	$	19,145

LIABILITIES AND PARTNERS’ EQUITY
Current liabilities
Accounts payable	$	16	$	12
Accrued liabilities	649		658
Accrued liabilities—related party	4		4
Current debt, net of discount and debt issuance costs	654		0
Due to affiliates	38		53
Deferred revenue	105		137
Deferred revenue—affiliate	11		1
Current operating lease liabilities	8		7
Current derivative liabilities	21		11

Total current liabilities	1,506		883

Long-term debt, net of premium, discount and debt issuance costs	16,935		17,580

Operating lease liabilities	87		90
Derivative liabilities	8		35
Other non-current liabilities	0		1
Other non-current liabilities—affiliate	16		17



Partners’ equity
Common unitholders’ interest (484.0 million units issued and outstanding at both June 30, 2021 and December 31, 2020)	805		714

General partner’s interest (2% interest with 9.9 million units issued and outstanding at June 30, 2021 and December 31, 2020)	(234)		(175)
Total partners’ equity	571		539
Total liabilities and partners’ equity	$	19,123	$	19,145

The accompanying notes are an integral part of these consolidated financial statements.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY

(in millions)

(unaudited)

Three and Nine Months Ended September 30, 2020
Common Unitholders’ Interest Subordinated Unitholder’s Interest General Partner’s Interest Total Partners’ Equity
Units Amount Units Amount Units Amount
Balance at December 31, 2019 348.6 $ 1,792 135.4 $ (996) 9.9 $ (81) $ 715
Net income — 307 — 119 — 9 435
Distributions
Common units, $0.63/unit — (220) — — — — (220)
Subordinated units, $0.63/unit — — — (85) — — (85)
General partner units — — — — — (25) (25)
Balance at March 31, 2020 348.6 1,879 135.4 (962) 9.9 (97) 820
Net income — 287 — 111 — 8 406
Distributions
Common units, $0.64/unit — (223) — — — — (223)
Subordinated units, $0.64/unit — — — (86) — — (86)
General partner units — — — — — (29) (29)
Balance at June 30, 2020 348.6 1,943 135.4 (937) 9.9 (118) 888
Net income — (65) — (1) — (1) (67)
Conversion of subordinated units into common units 135.4 (1,026) (135.4) 1,026 0 0 0
Distributions
Common units, $0.645/unit — (225) — — — — (225)
Subordinated units, $0.645/unit — — — (88) — — (88)
General partner units — — — — — (30) (30)
Balance at September 30, 2020 484.0 $ 627 0 $ 0 9.9 $ (149) $ 478


Three and Six Months Ended June 30, 2021
	Common Unitholders’ Interest			Subordinated Unitholder’s Interest		General Partner’s Interest			Total Partners’ Equity
	Units	Amount			Units	Amount		Units			Amount













Balance at December 31, 2020	484.0	$	714		0	$	0	9.9	$	(175)		$	539
Net income	—	340			—	0		—	7			347
Distributions
Common units, $0.655/unit	—	(316)			—	—		—	—			(316)

General partner units	—	—			—	—		—	(35)			(35)
Balance at March 31, 2021	484.0	738			0	0		9.9	(203)			535






Net income	—	387			—	0		—	8			395

Distributions
Common units, $0.660/unit	—	(320)			—	—		—	—			(320)

General partner units	—	—			—	—		—	(39)			(39)

Balance at June 30, 2021	484.0	$	805		0	$	0	9.9	$	(234)		$	571


Three and Six Months Ended June 30, 2020
	Common Unitholders’ Interest			Subordinated Unitholder’s Interest		General Partner’s Interest			Total Partners’ Equity
	Units	Amount			Units	Amount		Units			Amount
















Balance at December 31, 2019	348.6	$	1,792		135.4	$	(996)	9.9	$	(81)		$	715
Net income	—	307			—	119		—	9			435
Distributions
Common units, $0.630/unit	—	(220)			—	—		—	—			(220)
Subordinated units, $0.630/unit	—	—			—	(85)		—	—			(85)
General partner units	—	—			—	—		—	(25)			(25)
Balance at March 31, 2020	348.6	1,879			135.4	(962)		9.9	(97)			820
Net income	—	287			—	111		—	8			406
Distributions
Common units, $0.640/unit	—	(223)			—	—		—	—			(223)
Subordinated units, $0.640/unit	—	—			—	(86)		—	—			(86)
General partner units	—	—			—	—		—	(29)			(29)
Balance at June 30, 2020	348.6	$	1,943		135.4	$	(937)	9.9	$	(118)		$	888

The accompanying notes are an integral part of these consolidated financial statements.

~~CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY—CONTINUED~~

~~(in millions)~~

~~(unaudited)~~

Three and Nine Months Ended September 30, 2019
Common Unitholders’ Interest Subordinated Unitholder’s Interest General Partner’s Interest Total Partners’ Equity
Units Amount Units Amount Units Amount
Balance at December 31, 2018 348.6 $ 1,806 135.4 $ (990) 9.9 $ (16) $ 800
Net income — 272 — 105 — 8 385
Distributions
Common units, $0.59/unit — (206) — — — — (206)
Subordinated units, $0.59/unit — — — (80) — — (80)
General partner units — — — — — (18) (18)
Balance at March 31, 2019 348.6 1,872 135.4 (965) 9.9 (26) 881
Net income — 164 — 64 — 4 232
Distributions
Common units, $0.60/unit — (209) — — — — (209)
Subordinated units, $0.60/unit — — — (81) — — (81)
General partner units — — — — — (22) (22)
Balance at June 30, 2019 348.6 1,827 135.4 (982) 9.9 (44) 801
Net income — 77 — 30 — 3 110
Distributions
Common units, $0.61/unit — (212) — — — — (212)
Subordinated units, $0.61/unit — — — (83) — — (83)
General partner units — — — — — (24) (24)
Balance at September 30, 2019 348.6 $ 1,692 135.4 $ (1,035) 9.9 $ (65) $ 592

~~The accompanying notes are an integral part of these consolidated financial statements.~~

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)


		Nine Months Ended September 30,				Six Months Ended June 30,
		2020		2019				2021		2020
Cash flows from operating activities	Cash flows from operating activities						Cash flows from operating activities
Net income	Net income	$	774	$	727		Net income	$	742	$	841
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:						Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	Depreciation and amortization expense	413		390			Depreciation and amortization expense	277		276
Amortization of debt issuance costs, premium and discount	Amortization of debt issuance costs, premium and discount	24		23			Amortization of debt issuance costs, premium and discount	15		17
Loss on modification or extinguishment of debt	Loss on modification or extinguishment of debt	43		13			Loss on modification or extinguishment of debt	54		43
Total losses (gains) on derivatives, net		38		(30)
Net cash provided by (used for) settlement of derivative instruments		(2)		11
Total gains on derivatives, net							Total gains on derivatives, net	(54)		(29)
Net cash provided by settlement of derivative instruments							Net cash provided by settlement of derivative instruments	18		3
Impairment expense and loss on disposal of assets	Impairment expense and loss on disposal of assets	5		6			Impairment expense and loss on disposal of assets	6		5
Other	Other	10		8			Other	7		7

Changes in operating assets and liabilities:	Changes in operating assets and liabilities:						Changes in operating assets and liabilities:
Accounts and other receivables, net		93		36
Accounts and other receivables, net of current expected credit losses							Accounts and other receivables, net of current expected credit losses	32		6
Accounts receivable—affiliate	Accounts receivable—affiliate	23		47			Accounts receivable—affiliate	119		103
Advances to affiliate	Advances to affiliate	31		(47)			Advances to affiliate	3		14
Inventory	Inventory	2		(3)			Inventory	(9)		14
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	(96)		(209)			Accounts payable and accrued liabilities	(48)		(242)
Accrued liabilities—related party		2		0

Due to affiliates	Due to affiliates	(3)		(3)			Due to affiliates	(13)		(8)
Deferred revenue	Deferred revenue	24		54			Deferred revenue	(32)		(133)
Other, net	Other, net	(45)		(42)			Other, net	(49)		(40)
Other, net—affiliate	Other, net—affiliate	(3)		(4)			Other, net—affiliate	7		(3)
Net cash provided by operating activities	Net cash provided by operating activities	1,333		977			Net cash provided by operating activities	1,075		874

Cash flows from investing activities	Cash flows from investing activities						Cash flows from investing activities
Property, plant and equipment, net		(795)		(1,156)
Other		0		(1)
Property, plant and equipment							Property, plant and equipment	(316)		(581)

Net cash used in investing activities	Net cash used in investing activities	(795)		(1,157)			Net cash used in investing activities	(316)		(581)

Cash flows from financing activities	Cash flows from financing activities						Cash flows from financing activities
Proceeds from issuances of debt	Proceeds from issuances of debt	1,995		2,230			Proceeds from issuances of debt	1,500		1,995
Repayments of debt	Repayments of debt	(2,000)		(730)			Repayments of debt	(1,500)		(2,000)
Debt issuance and other financing costs	Debt issuance and other financing costs	(34)		(33)			Debt issuance and other financing costs	(20)		(34)
Debt extinguishment costs	Debt extinguishment costs	(39)		(4)			Debt extinguishment costs	(40)		(39)

Distributions to owners	Distributions to owners	(1,011)		(935)			Distributions to owners	(710)		(668)
Other	Other	0		3			Other	8		(1)
Net cash provided by (used in) financing activities		(1,089)		531
Net cash used in financing activities							Net cash used in financing activities	(762)		(747)

Net increase (decrease) in cash, cash equivalents and restricted cash		(551)		351
Net decrease in cash, cash equivalents and restricted cash							Net decrease in cash, cash equivalents and restricted cash	(3)		(454)
Cash, cash equivalents and restricted cash—beginning of period	Cash, cash equivalents and restricted cash—beginning of period	1,962		1,541			Cash, cash equivalents and restricted cash—beginning of period	1,307		1,962
Cash, cash equivalents and restricted cash—end of period	Cash, cash equivalents and restricted cash—end of period	$	1,411	$	1,892		Cash, cash equivalents and restricted cash—end of period	$	1,304	$	1,508

Balances per Consolidated Balance ~~Sheet:~~Sheets:


	~~September~~June 30,
	~~2020~~2021
Cash and cash equivalents	$	~~1,254~~1,239
Restricted cash	~~157~~65

Total cash, cash equivalents and restricted cash	$	~~1,411~~1,304

The accompanying notes are an integral part of these consolidated financial statements.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1—NATURE OF OPERATIONS AND BASIS OF PRESENTATION

The Sabine Pass LNG terminal is located in Cameron Parish, Louisiana, ~~on the Sabine-Neches Waterway less than four miles from the Gulf Coast. Through our subsidiary, SPL, we are currently operating~~and has natural gas liquefaction facilities consisting of 5 operational natural gas liquefaction Trains and ~~are constructing~~ 1 additional Train under construction that is expected to be substantially completed in the first half of 2022, for a total production capacity of approximately 30 mtpa of LNG (the “Liquefaction Project”) ~~at the Sabine Pass LNG terminal. Through our subsidiary, SPLNG, we own and operate regasification facilities at~~ ~~the~~. The Sabine Pass LNG terminal ~~which includes pre-existing infr~~also has operational regasification facilities~~astructure of~~ that include 5 LNG storage tanks, vaporizers and 2 marine berths, ~~and vaporizers and~~with an additional marine berth that is under construction. We also own a 94-mile pipeline through our subsidiary, CTPL, that interconnects the Sabine Pass LNG terminal with a number of large interstate pipelines (the “Creole Trail Pipeline”).

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements of Cheniere Partners have been prepared in accordance with GAAP for interim financial information and with Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Consolidated Financial Statements and accompanying notes included in our annual report on Form 10-K for the fiscal year ended December 31, ~~2019~~2020.

Results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 are not necessarily indicative of the results of operations that will be realized for the year ending December 31, ~~2020.~~2021.

We are not subject to either federal or state income tax, as our partners are taxed individually on their allocable share of our taxable income. Accordingly, 0 provision or liability for federal or state income taxes is included in the accompanying Consolidated Financial Statements.

Recent Accounting Standards

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This guidance primarily provides temporary optional expedients which simplify the accounting for contract modifications to existing debt agreements expected to arise from the market transition from LIBOR to alternative reference rates. The optional expedients were available to be used upon issuance of this guidance but we have not yet applied the guidance because we have not yet modified any of our existing contracts for reference rate reform. Once we apply an optional expedient to a modified contract and adopt this standard, the guidance will be applied to all subsequent applicable contract modifications until December 31, 2022, at which time the optional expedients are no longer available.

NOTE 2—UNITHOLDERS’ EQUITY

The common units represent limited partner interests in us. The holders of the units are entitled to participate in partnership distributions and exercise the rights and privileges available to limited partners under our partnership agreement. 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). Generally, 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 as defined in the partnership agreement.

In July 2020, the board of directors of our general partner confirmed and approved that, following the distribution with respect to the three months ended June 30, 2020, the financial tests required for conversion of our subordinated units had been met under the terms of the partnership agreement. Accordingly, effective August 17, 2020, the first business day following the payment of the distribution, all of our subordinated units were automatically converted into common units on a one-for-one basis and the subordination period was terminated.

Although common unitholders are not obligated to fund losses of the Partnership, its capital account, which would be considered in allocating the net assets of the Partnership were it to be liquidated, continues to share in losses.

~~CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED~~

~~(unaudited)~~

The general partner interest is entitled to at least 2% of all distributions made by us. In addition, the general partner holds incentive distribution rights (“IDRs”), which allow the general partner to receive a higher percentage of quarterly distributions of available cash from operating surplus ~~after the initial quarterly distributions have been achieved and~~ as additional target levels are met, but may transfer these rights separately from its general partner interest. The higher percentages range from 15% to 50%, inclusive of the general partner interest.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

As of ~~September~~June 30, ~~2020, Cheniere~~2021, our total securities beneficially owned in the form of common units were held 48.6% ~~limited partner and 2% general partner interest in us, BX~~by Cheniere, 41.4% by CQP Target Holdco L.L.C. (“BX CQP Target Holdco”) and other affiliates of The Blackstone Group Inc. (“Blackstone”) and Brookfield Asset Management Inc. (“Brookfield”) and 8.0% by the public. All of our 2% general partner interest was held ~~41.9% interest in us and the public held 7.5% interest in us. BX~~by Cheniere. CQP Target Holdco’s equity interests are ~~50.01%~~50.00% owned by BIP Chinook Holdco L.L.C., an affiliate of Blackstone and ~~49.99%~~50.00% owned by BIF IV Cypress Aggregator (Delaware) LLC, an affiliate of Brookfield. The ownership of BX CQP Target Holdco, Blackstone and Brookfield are based on their most recent filings with the SEC.

NOTE 3—RESTRICTED CASH

Restricted cash consists of funds that are contractually or legally restricted as to usage or withdrawal and have been presented separately from cash and cash equivalents on our Consolidated Balance Sheets. As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, we had ~~$157~~$65 million and ~~$181~~$97 million of ~~current~~ restricted cash, respectively.

Pursuant to the accounts agreement entered into with the collateral trustee for the benefit of SPL’s debt holders, SPL is required to deposit all cash received into reserve accounts controlled by the collateral trustee. The usage or withdrawal of such cash is restricted to the payment of liabilities related to the Liquefaction Project and other restricted payments.

NOTE 4—ACCOUNTS AND OTHER RECEIVABLES, NET OF CURRENT EXPECTED CREDIT LOSSES

As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, accounts and other receivables, net of current expected credit losses consisted of the following (in millions):


		September 30,		December 31,			June 30,		December 31,
		2020		2019			2021		2020
SPL trade receivable	SPL trade receivable	$	175	$	283	SPL trade receivable	$	264	$	300
Other accounts receivable	Other accounts receivable	29		14		Other accounts receivable	21		18

Total accounts and other receivables, net		$	204	$	297
Total accounts and other receivables, net of current expected credit losses						Total accounts and other receivables, net of current expected credit losses	$	285	$	318

NOTE 5—INVENTORY

As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, inventory consisted of the following (in millions):


		September 30,		December 31,			June 30,		December 31,
		2020		2019			2021		2020
Materials						Materials	$	81	$	81
LNG						LNG	9		8
Natural gas	Natural gas	$	13	$	9	Natural gas	25		17
LNG		18		27
Materials and other		82		80
Other						Other	1		1
Total inventory	Total inventory	$	113	$	116	Total inventory	$	116	$	107

NOTE 6—PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION

As of June 30, 2021 and December 31, 2020, property, plant and equipment, net of accumulated depreciation consisted of the following (in millions):



	June 30,		December 31,
	2021		2020
LNG terminal
LNG terminal and interconnecting pipeline facilities	$	16,941	$	16,908

LNG terminal construction-in-process	2,463		2,154
Accumulated depreciation	(2,620)		(2,344)
Total LNG terminal, net of accumulated depreciation	16,784		16,718
Fixed assets
Fixed assets	30		29
Accumulated depreciation	(25)		(24)
Total fixed assets, net of accumulated depreciation	5		5
Property, plant and equipment, net of accumulated depreciation	$	16,789	$	16,723

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

~~NOTE 6—PROPERTY, PLANT AND EQUIPMENT~~

~~As of September 30, 2020 and December 31, 2019, property, plant and equipment, net consisted of the following (in millions):~~

September 30, December 31,
2020 2019
LNG terminal costs
LNG terminal and interconnecting pipeline facilities $ 16,873 $ 16,894
LNG terminal construction-in-process 2,001 1,275
Accumulated depreciation (2,213) (1,807)
Total LNG terminal costs, net 16,661 16,362
Fixed assets
Fixed assets 28 27
Accumulated depreciation (23) (21)
Total fixed assets, net 5 6
Property, plant and equipment, net $ 16,666 $ 16,368

The following table shows depreciation expense ~~and offsets to LNG terminal costs~~ during the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 (in millions):

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Depreciation expense $ 135 $ 136 $ 409 $ 386
Offsets to LNG terminal costs (1) 0 0 0 48

(1) We realize offsets to LNG terminal costs related to the sale of commissioning cargoes because these amounts were earned or loaded prior to the start of commercial operations of the respective Trains of the Liquefaction Project during the testing phase for its construction.


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Depreciation expense	$	137	$	137	$	275	$	274

NOTE 7—DERIVATIVE INSTRUMENTS

We have entered into commodity derivatives consisting of natural gas supply contracts for the commissioning and operation of the Liquefaction Project (“Physical Liquefaction Supply Derivatives”) and associated economic hedges ~~(collectively,~~(“Financial Liquefaction Supply Derivatives,” and collectively with the Physical Liquefaction Supply Derivatives, the “Liquefaction Supply Derivatives”).

We recognize our derivative instruments as either assets or liabilities and measure those instruments at fair value. None of our derivative instruments are designated as cash flow or fair value hedging instruments, and changes in fair value are recorded within our Consolidated Statements of ~~Operations~~Income to the extent not utilized for the commissioning ~~process.~~process, in which case it is capitalized.

The following table shows the fair value of our derivative instruments that are required to be measured at fair value on a recurring basis as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019, which are classified as derivative assets, non-current derivative assets, derivative liabilities or non-current derivative liabilities in our Consolidated Balance Sheets~~2020 (in millions).:

Fair Value Measurements as of
September 30, 2020 December 31, 2019
Quoted Prices in Active Markets
(Level 1) Significant Other Observable Inputs
(Level 2) Significant Unobservable Inputs
(Level 3) Total Quoted Prices in Active Markets
(Level 1) Significant Other Observable Inputs
(Level 2) Significant Unobservable Inputs
(Level 3) Total
Liquefaction Supply Derivatives asset (liability) $ (7) $ (5) $ 0 $ (12) $ 3 $ (3) $ 24 $ 24


	Fair Value Measurements as of
	June 30, 2021								December 31, 2020
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total

Liquefaction Supply Derivatives asset (liability)	$	(11)	$	(7)	$	33	$	15	$	1	$	(1)	$	(21)	$	(21)

We value our Liquefaction Supply Derivatives using a market-based approach incorporating present value techniques, as needed, using observable commodity price curves, when available, and other relevant data.

~~CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED~~

~~(unaudited)~~

The fair value of our Physical Liquefaction Supply Derivatives is predominantly driven by observable and unobservable market commodity prices and, as applicable to our natural gas supply contracts, our assessment of the associated events deriving fair value, including evaluating whether the respective market is available as pipeline infrastructure is developed. The fair value of our Physical Liquefaction Supply Derivatives incorporates risk premiums related to the satisfaction of conditions precedent, such as completion and placement into service of relevant pipeline infrastructure to accommodate marketable physical gas flow. As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, some of our Physical Liquefaction Supply Derivatives existed within markets for which the pipeline infrastructure was under development to accommodate marketable physical gas flow.

We include a portion of our Physical Liquefaction Supply Derivatives as Level 3 within the valuation hierarchy as the fair value is developed through the use of internal models which incorporate significant unobservable inputs. In instances where observable data is unavailable, consideration is given to the assumptions that market participants would use in valuing the asset or liability. This includes assumptions about market risks, such as future prices of energy units for unobservable periods, liquidity, volatility and contract duration.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

The Level 3 fair value measurements of natural gas positions within our Physical Liquefaction Supply Derivatives could be materially impacted by a significant change in certain natural gas prices. The following table includes quantitative information for the unobservable inputs for our Level 3 Physical Liquefaction Supply Derivatives as of ~~September~~June 30, ~~2020:~~2021:

Net Fair Value Asset
(in millions)

Valuation Approach

Significant Unobservable Input

Range of Significant Unobservable Inputs / Weighted Average (1)

Physical Liquefaction Supply Derivatives

$033

Market approach incorporating present value techniques

Henry Hub basis spread

$~~(0.527)~~(0.350) - ~~$0.055~~$0.190 / ~~$0.001~~$0.007

(1) Unobservable inputs were weighted by the relative fair value of the instruments.

Increases or decreases in basis, in isolation, would decrease or increase, respectively, the fair value of our Physical Liquefaction Supply Derivatives.

The following table shows the changes in the fair value of our Level 3 Physical Liquefaction Supply Derivatives during the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 (in millions):


		Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019				2021		2020		2021		2020
Balance, beginning of period	Balance, beginning of period	$	51	$	34	$	24	$	(25)		Balance, beginning of period	$	(36)	$	49	$	(21)	$	24
Realized and mark-to-market gains (losses):
Realized and mark-to-market gains:											Realized and mark-to-market gains:
Included in cost of sales	Included in cost of sales	(47)		(42)		(22)		(22)			Included in cost of sales	67		4		58		32
Purchases and settlements:	Purchases and settlements:										Purchases and settlements:
Purchases	Purchases	5		(1)		4		(4)			Purchases	1		(1)		0		0
Settlements	Settlements	(8)		1		(6)		43			Settlements	1		(1)		(4)		(6)
Transfers into Level 3, net (1)	Transfers into Level 3, net (1)	(1)		0		0		0			Transfers into Level 3, net (1)	0		0		0		1
Balance, end of period	Balance, end of period	$	0	$	(8)	$	0	$	(8)		Balance, end of period	$	33	$	51	$	33	$	51
Change in unrealized losses relating to instruments still held at end of period		$	(47)	$	(42)	$	(22)	$	(22)
Change in unrealized gains relating to instruments still held at end of period											Change in unrealized gains relating to instruments still held at end of period	$	67	$	4	$	58	$	32

(1) Transferred into Level 3 as a result of unobservable market, or out of Level 3 as a result of observable market for the underlying natural gas purchase agreements.

~~Derivative assets and liabilities arising from our derivative contracts with the same counterparty are reported on a net basis, as all~~All counterparty derivative contracts provide for the unconditional right of set-off in the event of default. We have elected to report derivative assets and liabilities arising from our derivative contracts with the same counterparty on a net basis. The use of derivative instruments exposes us to counterparty credit risk, or the risk that a counterparty will be unable to meet its commitments in instances when our derivative instruments are in an asset position. Additionally, counterparties are at risk that we will be unable to meet our commitments in instances where our derivative instruments are in a liability position. We incorporate both our own nonperformance risk and the respective counterparty’s nonperformance risk in fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of any applicable credit enhancements, such as collateral postings, set-off rights and guarantees.

~~CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED~~

~~(unaudited)~~

Liquefaction Supply Derivatives

SPL has entered into primarily index-based physical natural gas supply contracts and associated economic hedges to purchase natural gas for the commissioning and operation of the Liquefaction Project. The remaining terms of the physical natural gas supply contracts range up to 10 years, some of which commence upon the satisfaction of certain events or states of affairs. The terms of the Financial Liquefaction Supply Derivatives range up to approximately three years.

The notional natural gas position of our Liquefaction Supply Derivatives was approximately ~~3,207~~5,078 TBtu and ~~3,663~~4,970 TBtu as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, of which 91 TBtu ~~and 0 TBtu, respectively,~~for each of the periods were for a natural gas supply contract that SPL has with a related party.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Fair Value and Location of Derivative Assets and Liabilities on the Consolidated Balance Sheets

The following table shows the fair value and location of our Liquefaction Supply Derivatives on our Consolidated Balance Sheets (in millions):


		Fair Value Measurements as of (1)				Fair Value Measurements as of (1)
Consolidated Balance Sheets Location	Consolidated Balance Sheets Location	September 30, 2020		December 31, 2019			Consolidated Balance Sheets Location	June 30, 2021		December 31, 2020
Current derivative assets							Current derivative assets	$	23	$	14
Derivative assets	Derivative assets	$	14	$	17		Derivative assets	21		11
Non-current derivative assets		30		32
Total derivative assets	Total derivative assets	44		49			Total derivative assets	44		25

Current derivative liabilities							Current derivative liabilities	(21)		(11)
Derivative liabilities	Derivative liabilities	(31)		(9)			Derivative liabilities	(8)		(35)
Non-current derivative liabilities		(25)		(16)
Total derivative liabilities	Total derivative liabilities	(56)		(25)			Total derivative liabilities	(29)		(46)

Derivative asset (liability), net	Derivative asset (liability), net	$	(12)	$	24		Derivative asset (liability), net	$	15	$	(21)

(1) Does not include collateral posted with counterparties by us of ~~$12~~$16 million and $2$4 million, ~~for such contracts,~~ which are included in other current assets in our Consolidated Balance Sheets as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. Includes a natural gas supply contract that SPL has with a related party, which had a fair value of 0 as of ~~September~~both June 30, 2021 and December 31, 2020.

The following table shows the gain (loss) from changes in the fair value, settlements and location of our Liquefaction Supply Derivatives recorded on our Consolidated Statements of ~~Operations~~Income during the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 (in millions):

Consolidated Statements of Operations Location (1) Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Liquefaction Supply Derivatives gain LNG revenues $ 7 $ 1 $ 3 $ 2
Liquefaction Supply Derivatives gain (loss) Cost of sales (74) (55) (41) 28


Consolidated Statements of Income Location (1)	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
LNG revenues	$	0	$	(4)	$	0	$	(4)
Cost of sales	56		12		54		33

(1) Does not include the realized value associated with derivative instruments that settle through physical delivery. Fair value fluctuations associated with commodity derivative activities are classified and presented consistently with the item economically hedged and the nature and intent of the derivative instrument.

1211

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Consolidated Balance Sheets Presentation

Our derivative instruments are presented on a net basis on our Consolidated Balance Sheets as described above. The following table shows the fair value of our derivatives outstanding on a gross and net basis (in millions):

Gross Amounts Recognized Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts Presented in the Consolidated Balance Sheets
Offsetting Derivative Assets (Liabilities)
As of September 30, 2020
Liquefaction Supply Derivatives $ 47 $ (3) $ 44
Liquefaction Supply Derivatives (59) 3 (56)
As of December 31, 2019
Liquefaction Supply Derivatives $ 51 $ (2) $ 49
Liquefaction Supply Derivatives (27) 2 (25)


	Liquefaction Supply Derivatives
As of June 30, 2021
Gross assets	$	46
Offsetting amounts	(2)
Net assets	$	44

Gross liabilities	$	(33)
Offsetting amounts	4
Net liabilities	$	(29)

As of December 31, 2020
Gross assets	$	69
Offsetting amounts	(44)
Net assets	$	25

Gross liabilities	$	(48)
Offsetting amounts	2
Net liabilities	$	(46)

NOTE 8—OTHER NON-CURRENT ASSETS, NET

As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, other non-current assets, net consisted of the following (in millions):


		September 30,		December 31,			June 30,		December 31,
		2020		2019			2021		2020
Advances made to municipalities for water system enhancements	Advances made to municipalities for water system enhancements	$	85	$	87	Advances made to municipalities for water system enhancements	$	82	$	84
Advances and other asset conveyances to third parties to support LNG terminal	Advances and other asset conveyances to third parties to support LNG terminal	34		35		Advances and other asset conveyances to third parties to support LNG terminal	33		33
Advances made under EPC and non-EPC contracts						Advances made under EPC and non-EPC contracts	2		9
Tax-related prepayments and receivables	Tax-related prepayments and receivables	17		17		Tax-related prepayments and receivables	16		17
Information technology service prepayments	Information technology service prepayments	6		6		Information technology service prepayments	5		6
Advances made under EPC and non-EPC contracts		4		15
Other	Other	9		8		Other	21		11
Total other non-current assets, net	Total other non-current assets, net	$	155	$	168	Total other non-current assets, net	$	159	$	160

NOTE 9—ACCRUED LIABILITIES

As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, accrued liabilities consisted of the following (in millions):


		September 30,		December 31,			June 30,		December 31,
		2020		2019			2021		2020
Interest costs and related debt fees	Interest costs and related debt fees	$	264	$	241	Interest costs and related debt fees	$	201	$	203
Accrued natural gas purchases	Accrued natural gas purchases	212		325		Accrued natural gas purchases	310		374
LNG terminal and related pipeline costs	LNG terminal and related pipeline costs	62		135		LNG terminal and related pipeline costs	116		71
Other accrued liabilities	Other accrued liabilities	26		8		Other accrued liabilities	22		10
Total accrued liabilities	Total accrued liabilities	$	564	$	709	Total accrued liabilities	$	649	$	658

1312

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

NOTE 10—DEBT

As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, our debt consisted of the following (in millions):

September 30, December 31,
2020 2019
Long-term debt:
SPL — 4.200% to 6.25% senior secured notes due through 2037 and working capital facility (“2020 SPL Working Capital Facility”)
$ 13,650 $ 13,650
Cheniere Partners — 4.500% to 5.625% senior notes due through 2029 and credit facilities (“2019 CQP Credit Facilities”)
4,100 4,100
Unamortized premium, discount and debt issuance costs, net (177) (171)
Total long-term debt, net 17,573 17,579
Current debt:
$1.2 billion Amended and Restated SPL Working Capital Facility executed in 2015 (“2015 SPL Working Capital Facility”) 0 0
Total debt, net $ 17,573 $ 17,579



	June 30,		December 31,
	2021		2020
Long-term debt:











SPL — 4.200% to 6.25% senior secured notes due between March 2022 and September 2037 and working capital facility (“2020 SPL Working Capital Facility”)	$	12,994	$	13,650







Cheniere Partners — 4.000% to 5.625% senior notes due between October 2025 and March 2031 and credit facilities (“2019 CQP Credit Facilities”)	4,100		4,100
Unamortized premium, discount and debt issuance costs, net of accumulated amortization	(159)		(170)
Total long-term debt, net of premium, discount and debt issuance costs	16,935		17,580

Current debt:
SPL — current portion of 6.25% senior secured notes due March 2022 (“2022 SPL Senior Notes”) (1)	656		0


Unamortized discount and debt issuance costs, net of accumulated amortization	(2)		0
Total current debt, net of discount and debt issuance costs	654		0

Total debt, net of premium, discount and debt issuance costs	$	17,589	$	17,580

(1)A portion of the 2022 SPL Senior Notes is categorized as long-term debt because the proceeds from the expected series of sales of approximately $347 million aggregate principal amount of senior secured notes due 2037, expected to be issued in the second half of 2021, subject to customary closing conditions, will be used to strategically refinance a portion of 2022 SPL Senior Notes and pay related fees, costs and expenses.

Issuances and Redemptions

The following table shows the issuances and redemptions of long-term debt during the ~~nine~~six months ended ~~September~~June 30, ~~2020:~~2021 (in millions):

Maturity Date Interest Rate Principal Amount Issued (in millions)
Three Months Ended June 30, 2020
SPL — 4.500% Senior Secured Notes due 2030 (the “2030 SPL Senior Notes”) (1)
May 15, 2030 4.500% $ 2,000
Nine Months Ended September 30, 2020 total $ 2,000


Issuances			Principal Amount Issued

Cheniere Partners — 4.000% Senior Notes due 2031 (the “2031 CQP Senior Notes”) (1)			$	1,500



Redemptions			Principal Amount Redeemed
Cheniere Partners — 5.250% Senior Notes due 2025 (the “2025 CQP Senior Notes”) (1)	$	1,500

(1)Proceeds of the ~~2030 SPL~~2031 CQP Senior Notes, ~~along~~together with ~~available~~ cash on hand, were used to redeem all of ~~SPL’s~~our outstanding ~~5.625%~~2025 CQP Senior ~~Secured~~ Notes, ~~due 2021 (the “2021 SPL Senior Notes”),~~ resulting in the recognition of debt extinguishment costs of ~~$43~~$54 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 relating to the payment of early redemption fees and write off of unamortized debt premium and issuance costs.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Credit Facilities

Below is a summary of our credit facilities outstanding as of ~~September~~June 30, ~~2020~~2021 (in millions):

2020 SPL Working Capital Facility (1)

2019 CQP Credit Facilities

2020 SPL Working Capital Facility (1)

2019 CQP Credit Facilities

Original facility size

1,200

1,500

Original facility size

1,200

1,500

Less:

Outstanding balance

Commitments prepaid or terminated

750

Commitments prepaid or terminated

750

Letters of credit issued

413

Letters of credit issued

396

Available commitment

787

750

Available commitment

804

750

Priority ranking

Senior secured

Interest rate on available balance

LIBOR plus 1.125% - 1.750% or base rate plus 0.125% - 0.750%

LIBOR plus 1.25% - 2.125% or base rate plus 0.25% - 1.125%

Interest rate on available balance

LIBOR plus 1.125% - 1.750% or base rate plus 0.125% - 0.750%

LIBOR plus 1.25% - 2.125% or base rate plus 0.25% - 1.125%

Weighted average interest rate of outstanding balance

n/a

Weighted average interest rate of outstanding balance

n/a

Maturity date

March 19, 2025

May 29, 2024

Maturity date

March 19, 2025

May 29, 2024

(1)The 2020 SPL Working Capital Facility contains customary conditions precedent for extensions of credit, as well as customary affirmative and negative covenants. SPL pays a commitment fee equal to an annual rate of 0.1% to 0.3% (depending on the then-current rating of SPL), which accrues on the daily amount of the total commitment less the

~~CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED~~

~~(unaudited)~~

sum of (1) the outstanding principal amount of loans, (2) letters of credit issued and (3) the outstanding principal amount of swing line loans.

Restrictive Debt Covenants

The indentures governing our senior notes and other agreements underlying our debt contain customary terms and events of default and certain covenants that, among other things, may limit us and our restricted subsidiaries’ ability to make certain investments or pay dividends or distributions.

As of ~~September~~June 30, ~~2020,~~2021, we and SPL were in compliance with all covenants related to our respective debt agreements.

Interest Expense

Total interest expense, net of capitalized interest consisted of the following (in millions):


		Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019				2021		2020		2021		2020
Total interest cost	Total interest cost	$	246	$	246	$	759	$	718		Total interest cost	$	241	$	259	$	488	$	513
Capitalized interest	Capitalized interest	(25)		(15)		(68)		(70)			Capitalized interest	(32)		(23)		(62)		(43)
Total interest expense, net of capitalized interest	Total interest expense, net of capitalized interest	$	221	$	231	$	691	$	648		Total interest expense, net of capitalized interest	$	209	$	236	$	426	$	470

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Fair Value Disclosures

The following table shows the carrying amount and estimated fair value of our debt (in millions):


		September 30, 2020				December 31, 2019					June 30, 2021				December 31, 2020
		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value			Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Senior notes — Level 2 (1)	Senior notes — Level 2 (1)	$	16,950	$	18,666	$	16,950	$	18,320	Senior notes — Level 2 (1)	$	16,950	$	18,849	$	16,950	$	19,113
Senior notes — Level 3 (2)	Senior notes — Level 3 (2)	800		946		800		934		Senior notes — Level 3 (2)	800		1,008		800		1,036
Credit facilities (3)		0		0		0		0
Credit facilities — Level 3 (3)										Credit facilities — Level 3 (3)	0		0		0		0

(1)The Level 2 estimated fair value was based on quotes obtained from broker-dealers or market makers of these senior notes and other similar instruments.

(2)The Level 3 estimated fair value was calculated based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including interest rates based on debt issued by parties with comparable credit ratings to us and inputs that are not observable in the market.

(3)The Level 3 estimated fair value approximates the principal amount because the interest rates are variable and reflective of market rates and the debt may be repaid, in full or in part, at any time without penalty.

NOTE 11—REVENUES FROM CONTRACTS WITH CUSTOMERS

The following table represents a disaggregation of revenue earned from contracts with customers during the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 (in millions):


		Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019				2021		2020		2021		2020
LNG revenues (1)	LNG revenues (1)	$	800	$	1,139	$	3,585	$	3,676		LNG revenues (1)	$	1,597	$	1,336	$	3,266	$	2,785
LNG revenues—affiliate	LNG revenues—affiliate	103		257		352		1,017			LNG revenues—affiliate	211		61		425		249
Regasification revenues	Regasification revenues	67		66		202		199			Regasification revenues	67		68		134		135
Other revenues	Other revenues	5		13		28		36			Other revenues	14		9		27		23

Total revenues from customers	Total revenues from customers	975		1,475		4,167		4,928			Total revenues from customers	1,889		1,474		3,852		3,192
Net derivative gains (2)		7		1		3		2
Net derivative loss (2)											Net derivative loss (2)	0		(4)		0		(4)
Total revenues	Total revenues	$	982	$	1,476	$	4,170	$	4,930		Total revenues	$	1,889	$	1,470	$	3,852	$	3,188

(1)LNG revenues include revenues for LNG cargoes in which our customers exercised their contractual right to not take delivery but remained obligated to pay fixed fees irrespective of such election. ~~LNG revenues during~~During the three and ~~nine~~six months ended ~~September~~June 30, 2020, ~~included $109~~we recognized $388 million and ~~$513~~$404 million, respectively, in LNG revenues associated with LNG cargoes for which customers ~~have~~ notified us that they ~~will~~would not take delivery, of which ~~$21~~$244 million would have ~~otherwise~~ been recognized subsequent to ~~September~~June 30, 2020 ifhad the cargoes ~~were~~been lifted pursuant to the delivery

~~CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED~~

~~(unaudited)~~

schedules with the customers. LNG revenues during the three months ended ~~September~~June 30, 2020 excluded ~~$244~~$16 million ~~in prior period cancellations~~ that would have otherwise been recognized during the quarter if the cargoes were lifted pursuant to the delivery schedules with the customers. We did 0t have revenues associated with LNG cargoes for which customers notified us that they would not take delivery during the three and six months ended June 30, 2021. Revenue is generally recognized upon receipt of irrevocable notice that a customer will not take delivery because our customers have no contractual right to take delivery of such LNG cargo in future periods and our performance obligations with respect to such LNG cargo have been satisfied.

(2)See Note 7—7 —Derivative Instruments for additional information about our derivatives.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Contract Assets

The following table shows our contract assets, net of current expected credit losses, which are classified as other current assets and other non-current assets, net on our Consolidated Balance Sheets (in millions):



	June 30,		December 31,
	2021		2020
Contract assets, net of current expected credit losses	$	1	$	0

Contract assets represent our right to consideration for transferring goods or services to the customer under the terms of a sales contract when the associated consideration is not yet due. Changes in contract assets during the six months ended June 30, 2021 were primarily attributable to revenue recognized due to the delivery of LNG under certain SPAs for which the associated consideration was not yet due.

Deferred Revenue Reconciliation

The following table reflects the changes in our contract liabilities, which we classify as deferred revenue on our Consolidated Balance Sheets (in millions):

Six Months Ended June 30, 2021

~~Nine Months Ended September 30, 2020~~

Deferred ~~revenues,~~revenue, beginning of period

~~155~~137

Cash received but not yet recognized in revenue

~~179~~105

Revenue recognized from prior period deferral

~~(155)~~(137)

Deferred ~~revenues,~~revenue, end of period

~~179~~105

The following table reflects the changes in our contract liabilities to affiliate, which we classify as deferred revenue—affiliate on our Consolidated Balance Sheets (in millions):


	Six Months Ended June 30, 2021

Deferred revenue—affiliate, beginning of period	$	1
Cash received but not yet recognized in revenue	11
Revenue recognized from prior period deferral	(1)
Deferred revenue—affiliate, end of period	$	11

Transaction Price Allocated to Future Performance Obligations

Because many of our sales contracts have long-term durations, we are contractually entitled to significant future consideration which we have not yet recognized as revenue. The following table discloses the aggregate amount of the transaction price that is allocated to performance obligations that have not yet been satisfied as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019:~~2020:


		September 30, 2020			December 31, 2019				June 30, 2021			December 31, 2020
		Unsatisfied Transaction Price (in billions)		Weighted Average Recognition Timing (years) (1)	Unsatisfied Transaction Price (in billions)		Weighted Average Recognition Timing (years) (1)		Unsatisfied Transaction Price (in billions)		Weighted Average Recognition Timing (years) (1)	Unsatisfied Transaction Price (in billions)		Weighted Average Recognition Timing (years) (1)
LNG revenues	LNG revenues	$	52.9	9	$	55.0	10	LNG revenues	$	50.7	9	$	52.1	9
LNG revenues—affiliate								LNG revenues—affiliate	0.2		3	0.1		1
Regasification revenues	Regasification revenues	2.2		5	2.4		5	Regasification revenues	2.0		4	2.1		5
Total revenues	Total revenues	$	55.1		$	57.4		Total revenues	$	52.9		$	54.3

(1) The weighted average recognition timing represents an estimate of the number of years during which we shall have recognized half of the unsatisfied transaction price.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

We have elected the following exemptions which omit certain potential future sources of revenue from the table above:

(1)We omit from the table above all performance obligations that are part of a contract that has an original expected ~~delivery~~ duration of one year or less.

(2)The table above excludes substantially all variable consideration under our SPAs and TUAs. We omit from the table above all variable consideration that is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation when that performance obligation qualifies as a series. The amount of revenue from variable fees that is not included in the transaction price will vary based on the future prices of Henry Hub throughout the contract terms, to the extent customers elect to take delivery of their LNG, and adjustments to the consumer price index. Certain of our contracts contain additional variable consideration based on the outcome of contingent events and the movement of various indexes. We have not included such variable consideration in the transaction price to the extent the consideration is considered constrained due to the uncertainty of ultimate pricing and receipt. Approximately ~~39%~~55% and ~~49%~~29% of our LNG revenues from contracts included in the table above during the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and approximately ~~37%~~53% and ~~53%~~37% of our LNG revenues from contracts included in the table above during the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, respectively, were related to variable consideration received from customers. Approximately 91% and ~~2019,~~100% of our LNG revenues—affiliate from contracts included in the table above during both the three and six months ended June 30, 2021 and 2020, respectively, were related to variable consideration received from customers. During each of the three and ~~nine~~six months ended ~~September~~June 30, 2021, approximately 5% of our regasification revenues were related to variable consideration received from customers and during each of the three and six months ended June 30, 2020, ~~and 2019,~~ approximately 3%6% of our regasification revenues were related to variable consideration received from customers.

~~CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED~~

~~(unaudited)~~

We may enter into contracts to sell LNG that are conditioned upon one or both of the parties achieving certain milestones such as reaching a final investment decision on a certain liquefaction Train, obtaining financing or achieving substantial completion of a Train and any related facilities. These contracts are considered completed contracts for revenue recognition purposes and are included in the transaction price above when the conditions are considered probable of being met.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

NOTE 12—RELATED PARTY TRANSACTIONS

Below is a summary of our related party transactions as reported on our Consolidated Statements of ~~Operations~~Income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 (in millions):


		Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019				2021		2020		2021		2020
LNG revenues—affiliate	LNG revenues—affiliate										LNG revenues—affiliate
Cheniere Marketing Agreements	Cheniere Marketing Agreements	$	87	$	255	$	328	$	1,015		Cheniere Marketing Agreements	$	209	$	59	$	419	$	241
Contracts for Sale and Purchase of Natural Gas and LNG	Contracts for Sale and Purchase of Natural Gas and LNG	16		2		24		2			Contracts for Sale and Purchase of Natural Gas and LNG	2		2		6		8
Total LNG revenues—affiliate	Total LNG revenues—affiliate	103		257		352		1,017			Total LNG revenues—affiliate	211		61		425		249

Cost of sales—affiliate	Cost of sales—affiliate										Cost of sales—affiliate
Cheniere Marketing Agreements	Cheniere Marketing Agreements	32		0		32		0			Cheniere Marketing Agreements	0		0		34		0
Contracts for Sale and Purchase of Natural Gas and LNG	Contracts for Sale and Purchase of Natural Gas and LNG	1		6		6		6			Contracts for Sale and Purchase of Natural Gas and LNG	12		5		20		5
Total cost of sales—affiliate											Total cost of sales—affiliate	12		5		54		5
		33		6		38		6
Cost of sales—related party											Cost of sales—related party
Natural Gas Transportation and Storage Agreements											Natural Gas Transportation and Storage Agreements	1		0		1		0

Operating and maintenance expense—affiliate	Operating and maintenance expense—affiliate										Operating and maintenance expense—affiliate

Services Agreements	Services Agreements	34		34		115		100			Services Agreements	35		48		69		81

Operating and maintenance expense—related party											Operating and maintenance expense—related party
Natural Gas Transportation and Storage Agreements											Natural Gas Transportation and Storage Agreements	12		0		22		0

General and administrative expense—affiliate	General and administrative expense—affiliate										General and administrative expense—affiliate
Services Agreements	Services Agreements	24		34		73		82			Services Agreements	21		24		42		49

As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, we had ~~$82~~$65 million and ~~$105~~$184 million, respectively, of accounts receivable—affiliate under the agreements described below.

Cheniere Marketing Agreements

Cheniere Marketing SPA

Cheniere Marketing has an SPA (“Base SPA”) with SPL to purchase, at Cheniere Marketing’s option, any LNG produced by SPL in excess of that required for other customers at a price of 115% of Henry Hub plus $3.00 per MMBtu of LNG.

In May 2019, SPL and Cheniere Marketing entered into an amendment to the Base SPA to remove certain conditions related to the sale of LNG from Trains 5 and 6 of the Liquefaction Project and provide that cargoes rejected by Cheniere Marketing under the Base SPA can be sold by SPL to Cheniere Marketing at a contract price equal to a portion of the estimated net profits from the sale of such cargo.

Cheniere Marketing Master SPA

SPL has an agreement with Cheniere Marketing that allows the parties to sell and purchase LNG with each other by executing and delivering confirmations under this agreement. SPL executed a confirmation with Cheniere Marketing that obligated Cheniere Marketing in certain circumstances to buy LNG cargoes produced during the period while Bechtel Oil, Gas and Chemicals, Inc. (“Bechtel”) had control of, and was commissioning, Train 5 of the Liquefaction Project.

Cheniere Marketing Letter Agreements

In February 2021, SPL and Cheniere Marketing entered into a letter agreement for the sale of up to 31 cargoes to be delivered between 2021 and 2026 at a price of 115% of Henry Hub plus $1.72 per MMBtu.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

In December 2020, SPL and Cheniere Marketing ~~Letter Agreements~~entered into a letter agreement for the sale of up to 30 cargoes scheduled for delivery in 2021 at a price of 115% of Henry Hub plus $0.728 per MMBtu.

In December 2019, SPL and Cheniere Marketing entered into a letter agreement for the sale of up to 43 cargoes ~~scheduled for delivery~~that were delivered in 2020 at a price of 115% of Henry Hub plus $1.67 per MMBtu.

Facility Swap Agreement

In August 2020, SPL entered into an arrangement with subsidiaries of Cheniere to provide the ability, in limited circumstances, to potentially fulfill commitments to LNG buyers in the event operational conditions impact operations at either the Sabine Pass or Corpus Christi liquefaction facilities. The purchase price for such cargoes would be (i) 115% of the applicable natural gas feedstock purchase price or (ii) a free-on-board U.S. Gulf Coast LNG market price, whichever is greater.

Natural Gas Transportation and Storage Agreements

SPL is party to various natural gas transportation and storage agreements and CTPL is party to an operational balancing agreement with a related party in the ordinary course of business for the operation of the Liquefaction Project, with initial primary terms of up to 10 years with extension rights. This related party is partially owned by Brookfield, who indirectly acquired a portion of our limited partner interests in September 2020 through its purchase of a portion of CQP Target Holdco’s equity interests. We recorded operating and maintenance expense—related party of $12 million and $22 million and cost of sales—related party of $1 million and $1 million during the three and six months ended June 30, 2021, respectively, and accrued liabilities—related party of $2$4 million as of ~~September~~both June 30, 2021 and December 31, 2020 with this related ~~to these agreements.~~party.

Services Agreements

As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, we had ~~$120~~$154 million and ~~$158~~$144 million of advances to affiliates, respectively, under the services agreements described below. The non-reimbursement amounts incurred under these agreements are recorded in general and administrative expense—affiliate.

Cheniere Partners Services Agreement

We have a services agreement with Cheniere Terminals, a subsidiary of Cheniere, pursuant to which Cheniere Terminals is entitled to a quarterly non-accountable overhead reimbursement charge of $3 million (adjusted for inflation) for the provision of various general and administrative services for our benefit. In addition, Cheniere Terminals is entitled to reimbursement for all audit, tax, legal and finance fees incurred by Cheniere Terminals that are necessary to perform the services under the agreement.

Cheniere Investments Information Technology Services Agreement

Cheniere Investments has an information technology services agreement with Cheniere, pursuant to which Cheniere Investments’ subsidiaries receive certain information technology services. On a quarterly basis, the various entities receiving the benefit are invoiced by Cheniere Investments according to the cost allocation percentages set forth in the agreement. In addition, Cheniere is entitled to reimbursement for all costs incurred by Cheniere that are necessary to perform the services under the agreement.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

SPLNG O&M Agreement

SPLNG has a long-term operation and maintenance agreement (the “SPLNG O&M Agreement”) with Cheniere Investments pursuant to which SPLNG receives all necessary services required to operate and maintain the Sabine Pass LNG receiving terminal. SPLNG pays a fixed monthly fee of $130,000 (indexed for inflation) under the SPLNG O&M Agreement and the cost of a bonus equal to 50% of the salary component of labor costs in certain circumstances to be agreed upon between SPLNG and Cheniere Investments at the beginning of each operating year. In addition, SPLNG is required to reimburse Cheniere Investments for its operating expenses, which consist primarily of labor expenses. Cheniere Investments provides the services required under the SPLNG O&M Agreement pursuant to a secondment agreement with a wholly owned subsidiary of Cheniere. All payments received by Cheniere Investments under the SPLNG O&M Agreement are required to be remitted to such subsidiary.

~~CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED~~

~~(unaudited)~~

SPLNG MSA

SPLNG has a long-term management services agreement (the “SPLNG MSA”) with Cheniere Terminals, pursuant to which Cheniere Terminals manages the operation of the Sabine Pass LNG receiving terminal, excluding those matters provided for under the SPLNG O&M Agreement. SPLNG pays a monthly fixed fee of $520,000 (indexed for inflation) under the SPLNG MSA.

SPL O&M Agreement

SPL has an operation and maintenance agreement (the “SPL O&M Agreement”) with Cheniere Investments pursuant to which SPL receives all of the necessary services required to construct, operate and maintain the Liquefaction Project. Before each Train of the Liquefaction Project is operational, the services to be provided include, among other services, obtaining governmental approvals on behalf of SPL, preparing an operating plan for certain periods, obtaining insurance, preparing staffing plans and preparing status reports. After each Train is operational, the services include all necessary services required to operate and maintain the Train. Prior to the substantial completion of each Train of the Liquefaction Project, in addition to reimbursement of operating expenses, SPL is required to pay a monthly fee equal to 0.6% of the capital expenditures incurred in the previous month. After substantial completion of each Train, for services performed while the Train is operational, SPL will pay, in addition to the reimbursement of operating expenses, a fixed monthly fee of $83,333 (indexed for inflation) for services with respect to the Train. Cheniere Investments provides the services required under the SPL O&M Agreement pursuant to a secondment agreement with a wholly owned subsidiary of Cheniere. All payments received by Cheniere Investments under the SPL O&M Agreement are required to be remitted to such subsidiary.

SPL MSA

SPL has a management services agreement (the “SPL MSA”) with Cheniere Terminals pursuant to which Cheniere Terminals manages the construction and operation of the Liquefaction Project, excluding those matters provided for under the SPL O&M Agreement. The services include, among other services, exercising the day-to-day management of SPL’s affairs and business, managing SPL’s regulatory matters, managing bank and brokerage accounts and financial books and records of SPL’s business and operations, entering into financial derivatives on SPL’s behalf and providing contract administration services for all contracts associated with the Liquefaction Project. Prior to the substantial completion of each Train of the Liquefaction Project, SPL pays a monthly fee equal to 2.4% of the capital expenditures incurred in the previous month. After substantial completion of each Train, SPL will pay a fixed monthly fee of $541,667 (indexed for inflation) for services with respect to such Train.

CTPL O&M Agreement

CTPL has an amended long-term operation and maintenance agreement (the “CTPL O&M Agreement”) with Cheniere Investments pursuant to which CTPL receives all necessary services required to operate and maintain the Creole Trail Pipeline. CTPL is required to reimburse Cheniere Investments for its operating expenses, which consist primarily of labor expenses. Cheniere Investments provides the services required under the CTPL O&M Agreement pursuant to a secondment agreement with a wholly owned subsidiary of Cheniere. All payments received by Cheniere Investments under the CTPL O&M Agreement are required to be remitted to such subsidiary.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

CTPL MSA

CTPL has a management services agreement (the “CTPL MSA”) with Cheniere Terminals pursuant to which Cheniere Terminals manages the operations and business of the Creole Trail Pipeline, excluding those matters provided for under the CTPL O&M Agreement. The services include, among other services, exercising the day-to-day management of CTPL’s affairs and business, managing CTPL’s regulatory matters, managing bank and brokerage accounts and financial books and records of CTPL’s business and operations, providing contract administration services for all contracts associated with the Creole Trail Pipeline and obtaining insurance. CTPL is required to reimburse Cheniere Terminals for the aggregate of all costs and expenses incurred in the course of performing the services under the CTPL MSA.

Natural Gas Supply Agreement

SPL is party to a natural gas supply agreement with a related party in the ordinary course of business, to obtain a fixed minimum daily volume of feed gas for the operation of the Liquefaction Project. This related party is partially owned by Blackstone, who also partially owns our limited partner interests. The term of the agreement is for five years, which can commence no earlier than November 1, 2021 and no later than November 1, 2022, following the achievement of contractually-defined conditions precedent.

Agreement to Fund SPLNG’s Cooperative Endeavor Agreements

SPLNG has executed Cooperative Endeavor Agreements (“CEAs”) with various Cameron Parish, Louisiana taxing authorities that allowed them to collect certain advanced payments of annual ~~property tax payments~~ad valorem taxes from SPLNG from 2007 through 2016. This initiative represented an aggregate commitment of $25 million over 10 years in order to aid in their reconstruction efforts

~~CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED~~

~~(unaudited)~~

following Hurricane Rita. In exchange for SPLNG’s advance payments of annual ad valorem taxes, Cameron Parish ~~may~~shall grant SPLNG a dollar-for-dollar credit against future ad valorem taxes to be levied against the Sabine Pass LNG terminal as early as 2019. Beginning in September 2007, SPLNG entered into various agreements with Cheniere Marketing, pursuant to which Cheniere Marketing would pay SPLNG additional TUA revenues equal to any and all amounts payable by SPLNG to the Cameron Parish taxing authorities under the CEAs. In exchange for such amounts received as TUA revenues from Cheniere Marketing, SPLNG will make payments to Cheniere Marketing equal to the dollar-for-dollar credit applied to the ad valorem tax levied ~~on our~~against the Sabine Pass LNG terminal in the ~~year the Cameron Parish dollar-for-dollar credit is applied.~~given year.

On a consolidated basis, these advance tax payments were recorded to other non-current assets, and payments from Cheniere Marketing that SPLNG utilized to make the ad valorem tax payments were recorded as obligations. We had ~~$4 million and~~ $2 million in due to affiliates as of both June 30, 2021 and ~~$18~~December 31, 2020 and $16 million and ~~$20~~$17 million of other non-current liabilities—affiliate ~~resulting~~as of June 30, 2021 and December 31, 2020, respectively, from these payments received from Cheniere ~~Marketing as of September 30, 2020 and December 31, 2019, respectively.~~Marketing.

Contracts for Sale and Purchase of Natural Gas and LNG

SPLNG is able to sell and purchase natural gas and LNG under agreements with Cheniere Marketing. Under these agreements, SPLNG purchases natural gas or LNG from Cheniere Marketing at a sales price equal to the actual purchase price paid by Cheniere Marketing to suppliers of the natural gas or LNG, plus any third-party costs incurred by Cheniere Marketing with respect to the receipt, purchase and delivery of natural gas or LNG to the Sabine Pass LNG terminal.

SPL has an agreement with CCL that allows them to sell and purchase natural gas from each other. Natural gas purchased under this agreement is initially recorded as inventory and then to cost of sales—affiliate upon its sale, except for purchases related to commissioning activities which are capitalized as LNG terminal construction-in-process. Natural gas sold under this agreement is recorded as LNG revenues—affiliate.

Terminal Marine Services Agreement

In connection with its tug boat lease, Tug Services entered into an agreement with Cheniere Terminals to provide its LNG cargo vessels with tug boat and marine services at the Sabine Pass LNG terminal. The agreement also provides that Tug Services shall contingently pay Cheniere Terminals a portion of its future revenues. Accordingly, Tug Services distributed $1$3 million and $2 million during the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and $4 million and $5$3 million

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, to Cheniere Terminals, which is recognized as part of the distributions to our general partner interest holders on our Consolidated Statements of Partners’ Equity.

LNG Terminal Export Agreement

SPLNG and Cheniere Marketing have an LNG terminal export agreement that provides Cheniere Marketing the ability to export LNG from the Sabine Pass LNG terminal. SPLNG did 0t record any revenues associated with this agreement during the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020.

State Tax Sharing Agreements

SPLNG has a state tax sharing agreement with Cheniere. Under this agreement, Cheniere has agreed to prepare and file all state and local tax returns which SPLNG and Cheniere are required to file on a combined basis and to timely pay the combined state and local tax liability. If Cheniere, in its sole discretion, demands payment, SPLNG will pay to Cheniere an amount equal to the state and local tax that SPLNG would be required to pay if its state and local tax liability were calculated on a separate company basis. There have been 0 state and local taxes paid by Cheniere for which Cheniere could have demanded payment from SPLNG under this agreement; therefore, Cheniere has not demanded any such payments from SPLNG. The agreement is effective for tax returns due on or after January 1, 2008.

SPL has a state tax sharing agreement with Cheniere. Under this agreement, Cheniere has agreed to prepare and file all state and local tax returns which SPL and Cheniere are required to file on a combined basis and to timely pay the combined state and local tax liability. If Cheniere, in its sole discretion, demands payment, SPL will pay to Cheniere an amount equal to the state and local tax that SPL would be required to pay if SPL’s state and local tax liability were calculated on a separate

~~CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED~~

~~(unaudited)~~

company basis. There have been 0 state and local taxes paid by Cheniere for which Cheniere could have demanded payment from SPL under this agreement; therefore, Cheniere has not demanded any such payments from SPL. The agreement is effective for tax returns due on or after August 2012.

CTPL has a state tax sharing agreement with Cheniere. Under this agreement, Cheniere has agreed to prepare and file all state and local tax returns which CTPL and Cheniere are required to file on a combined basis and to timely pay the combined state and local tax liability. If Cheniere, in its sole discretion, demands payment, CTPL will pay to Cheniere an amount equal to the state and local tax that CTPL would be required to pay if CTPL’s state and local tax liability were calculated on a separate company basis. There have been 0 state and local taxes paid by Cheniere for which Cheniere could have demanded payment from CTPL under this agreement; therefore, Cheniere has not demanded any such payments from CTPL. The agreement is effective for tax returns due on or after May 2013.

NOTE 13—NET INCOME ~~(LOSS)~~ PER COMMON UNIT

Net income ~~(loss)~~ per common unit for a given period is based on the distributions that will be made to the unitholders with respect to the period plus an allocation of undistributed net income ~~(loss)~~ based on provisions of the partnership agreement, divided by the weighted average number of common units outstanding. Distributions paid by us are presented on the Consolidated Statements of Partners’ Equity. On ~~October~~July 27, ~~2020,~~2021, we declared a ~~$0.650~~$0.665 distribution per common unit and the related distribution to our general partner and IDR holders tothat will be paid on ~~November~~August 13, ~~2020~~2021 to unitholders of record as of ~~November~~August 6, ~~2020~~2021 for the period from ~~July~~April 1, ~~2020~~2021 to ~~September~~June 30, ~~2020.~~2021.

The two-class method dictates that net income ~~(loss)~~ for a period be reduced by the amount of available cash that will be distributed with respect to that period and that any residual amount representing undistributed net income to be allocated to common unitholders and other participating unitholders to the extent that each unit may share in net income as if all of the net income for the period had been distributed in accordance with the partnership agreement. Undistributed income is allocated to participating securities based on the distribution waterfall for available cash specified in the partnership agreement. Undistributed losses (including those resulting from distributions in excess of net income) are allocated to common units and other participating securities on a pro rata basis based on provisions of the partnership agreement. Distributions are treated as distributed earnings in the computation of earnings per common unit even though cash distributions are not necessarily derived from current or prior period earnings.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

The following table provides a reconciliation of net income ~~(loss)~~ and the allocation of net income ~~(loss)~~ to the common units, the subordinated units, the general partner units and IDRs for purposes of computing basic and diluted net income ~~(loss)~~ per unit (in millions, except per unit data).

~~CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED~~

~~(unaudited)~~


				Limited Partner Units									Limited Partner Units
		Total		Common Units		Subordinated Units		General Partner Units		IDR			Total		Common Units		Subordinated Units		General Partner Units		IDR
Three Months Ended September 30, 2020
Net loss		$	(67)
Declared distributions		346		315		0		6		25
Assumed allocation of undistributed net loss (1)		$	(413)	(347)		(58)		(8)		0
Assumed allocation of net loss				$	(32)	$	(58)	$	(2)	$	25

Weighted average units outstanding				414.8		69.2
Basic and diluted net loss per unit				$	(0.08)	$	(0.84)

Three Months Ended September 30, 2019
Three Months Ended June 30, 2021												Three Months Ended June 30, 2021
Net income	Net income	$	110									Net income	$	395
Declared distributions	Declared distributions	323		217		84		6		16		Declared distributions	361		322		0		7		32
Assumed allocation of undistributed net loss (1)		$	(213)	(151)		(58)		(4)		0
Assumed allocation of undistributed net income (1)												Assumed allocation of undistributed net income (1)	$	34	33		0		1		0
Assumed allocation of net income	Assumed allocation of net income			$	66	$	26	$	2	$	16	Assumed allocation of net income			$	355	$	0	$	8	$	32

Weighted average units outstanding	Weighted average units outstanding			348.6		135.4						Weighted average units outstanding			484.0		0
Basic and diluted net income per unit	Basic and diluted net income per unit			$	0.19	$	0.19					Basic and diluted net income per unit			$	0.73	$	0

Nine Months Ended September 30, 2020
Three Months Ended June 30, 2020												Three Months Ended June 30, 2020
Net income	Net income	$	774									Net income	$	406
Declared distributions	Declared distributions	1,024		763		174		20		67		Declared distributions	341		225		87		7		22
Assumed allocation of undistributed net loss (1)		$	(250)	(188)		(57)		(5)		0
Assumed allocation of undistributed net income (1)												Assumed allocation of undistributed net income (1)	$	65	46		18		1		0
Assumed allocation of net income												Assumed allocation of net income			$	271	$	105	$	8	$	22

Weighted average units outstanding												Weighted average units outstanding			348.6		135.4
Basic and diluted net income per unit												Basic and diluted net income per unit			$	0.78	$	0.78

Six Months Ended June 30, 2021												Six Months Ended June 30, 2021
Net income												Net income	$	742
Declared distributions												Declared distributions	716		641		0		14		61
Assumed allocation of undistributed net income (1)												Assumed allocation of undistributed net income (1)	$	26	25		0		1		0
Assumed allocation of net income	Assumed allocation of net income			$	575	$	117	$	15	$	67	Assumed allocation of net income			$	666	$	0	$	15	$	61

Weighted average units outstanding	Weighted average units outstanding			370.9		113.1						Weighted average units outstanding			484.0		0
Basic and diluted net income per unit	Basic and diluted net income per unit			$	1.55	$	1.03					Basic and diluted net income per unit			$	1.38	$	0

Nine Months Ended September 30, 2019
Six Months Ended June 30, 2020												Six Months Ended June 30, 2020
Net income	Net income	$	727									Net income	$	841
Declared distributions	Declared distributions	949		638		248		19		44		Declared distributions	678		448		174		14		42

Assumed allocation of undistributed net loss (1)		$	(222)	(157)		(61)		(4)		0
Assumed allocation of undistributed net income (1)												Assumed allocation of undistributed net income (1)	$	163	115		45		3		0
Assumed allocation of net income	Assumed allocation of net income			$	481	$	187	$	15	$	44	Assumed allocation of net income			$	563	$	219	$	17	$	42

Weighted average units outstanding	Weighted average units outstanding			348.6		135.4						Weighted average units outstanding			348.6		135.4
Basic and diluted net income per unit	Basic and diluted net income per unit			$	1.38	$	1.38					Basic and diluted net income per unit			$	1.62	$	1.62

(1)Under our partnership agreement, the IDRs participate in net income only to the extent of the amount of cash distributions actually declared, thereby excluding the IDRs from participating in undistributed net income.

2223

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

NOTE 14—CUSTOMER CONCENTRATION

The following table shows external customers with revenues of 10% or greater of total revenues from external customers and external customers with accounts receivable, net of current expected credit losses and contract assets, net of current expected credit losses balances of 10% or greater of total accounts receivable, net of current expected credit losses and contract assets, net of current expected credit losses from external customers:


		Percentage of Total Revenues from External Customers				Percentage of Accounts Receivable, Net from External Customers			Percentage of Total Revenues from External Customers					Percentage of Accounts Receivable, Net and Contract Assets, Net from External Customers

		Three Months Ended September 30,		Nine Months Ended September 30,		September 30,	December 31,		Three Months Ended June 30,			Six Months Ended June 30,		June 30,	December 31,
		2020	2019	2020	2019		2020	2019			2021	2020	2021	2020		2021	2020
Customer A	Customer A	*	24%	22%	28%		16%	21%		Customer A	26%	25%	27%	26%		24%	31%
Customer B	Customer B	14%	18%	15%	19%		20%	13%		Customer B	16%	15%	16%	15%		16%	21%
Customer C	Customer C	26%	22%	18%	20%		12%	22%		Customer C	17%	17%	18%	16%		16%	*
Customer D	Customer D	22%	19%	18%	21%		33%	13%		Customer D	18%	16%	16%	16%		17%	22%
Customer E	Customer E	*	*	*	*		0	13%		Customer E	12%	11%	12%	11%		*	*
Customer F		*	*	12%	*		11%	14%

* Less than 10%

NOTE 15—SUPPLEMENTAL CASH FLOW INFORMATION

The following table provides supplemental disclosure of cash flow information (in millions):

Nine Months Ended September 30,
2020 2019
Cash paid during the period for interest, net of amounts capitalized $ 636 $ 624


	Six Months Ended June 30,
	2021		2020
Cash paid during the period for interest on debt, net of amounts capitalized	$	410	$	483

The balance in property, plant and equipment, net of accumulated depreciation funded with accounts payable and accrued liabilities (including affiliate) was ~~$223~~$252 million and ~~$298~~$208 million as of ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Information Regarding Forward-Looking Statements

This quarterly report contains certain statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other than statements of historical or present facts or conditions, included herein or incorporated herein by reference are “forward-looking statements.” Included among “forward-looking statements” are, among other things:

•statements regarding our ability to pay distributions to our unitholders;

•statements regarding our expected receipt of cash distributions from SPLNG, SPL or CTPL;

•statements that we expect to commence or complete construction of our proposed LNG terminals, liquefaction facilities, pipeline facilities or other projects, or any expansions or portions thereof, by certain dates, or at all;

•statements regarding future levels of domestic and international natural gas production, supply or consumption or future levels of LNG imports into or exports from North America and other countries worldwide or purchases of natural gas, regardless of the source of such information, or the transportation or other infrastructure or demand for and prices related to natural gas, LNG or other hydrocarbon products;

•statements regarding any financing transactions or arrangements, or our ability to enter into such transactions;

•statements relating to the construction of our Trains, including statements concerning the engagement of any EPC contractor or other contractor and the anticipated terms and provisions of any agreement with any EPC or other contractor, and anticipated costs related thereto;

•statements regarding any SPA or other agreement to be entered into or performed substantially in the future, including any revenues anticipated to be received and the anticipated timing thereof, and statements regarding the amounts of total LNG regasification, natural gas liquefaction or storage capacities that are, or may become, subject to contracts;

•statements regarding counterparties to our commercial contracts, construction contracts and other contracts;

•statements regarding our planned development and construction of additional Trains, including the financing of such Trains;

•statements that our Trains, when completed, will have certain characteristics, including amounts of liquefaction capacities;

•statements regarding our business strategy, our strengths, our business and operation plans or any other plans, forecasts, projections, or objectives, including anticipated revenues, capital expenditures, maintenance and operating costs and cash flows, any or all of which are subject to change;

•statements regarding legislative, governmental, regulatory, administrative or other public body actions, approvals, requirements, permits, applications, filings, investigations, proceedings or decisions;

•statements regarding the outbreak of COVID-19 and its impact on our business and operating results, including any customers not taking delivery of LNG cargoes, the ongoing credit worthiness of our contractual counterparties, any disruptions in our operations or construction of our Trains and the health and safety of Cheniere’s employees, and on our customers, the global economy and the demand for LNG; and

•any other statements that relate to non-historical or future information.

All of these types of statements, other than statements of historical or present facts or conditions, are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “should,” “achieve,” “anticipate,” “believe,” “contemplate,” “continue,” “estimate,” “expect,” “intend,” “plan,” “potential,” “predict,” “project,” “pursue,” “target,” the negative of such terms or other comparable terminology. The forward-looking statements contained in this quarterly report are largely based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe that such estimates are reasonable, they are inherently uncertain and involve

2425

a number of risks and uncertainties beyond our control. In addition, assumptions may prove to be inaccurate. We caution that the forward-looking statements contained in this quarterly report are not guarantees of future performance and that such statements may not be realized or the forward-looking statements or events may not occur. Actual results may differ materially from those anticipated or implied in forward-looking statements as a result of a variety of factors described in this quarterly report and in the other reports and other information that we file with the SEC, including those discussed under “Risk Factors” in our annual report on Form 10-K for the fiscal year ended December ~~31, 2019~~ ~~and our~~ ~~quarterly report on Form 10-Q for the quarterly period ended March~~ 31, 2020. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these risk factors. These forward-looking statements speak only as of the date made, and other than as required by law, we undertake no obligation to update or revise any forward-looking statement or provide reasons why actual results may differ, whether as a result of new information, future events or otherwise.

Introduction

The following discussion and analysis presents management’s view of our business, financial condition and overall performance and should be read in conjunction with our Consolidated Financial Statements and the accompanying notes. This information is intended to provide investors with an understanding of our past performance, current financial condition and outlook for the future. Our discussion and analysis includes the following subjects:

•Overview of Business

•Overview of Significant Events

•~~Impact~~Results of ~~COVID-19 and Market Environment~~Operations

•Liquidity and Capital Resources

•~~Results of Operations~~Off-Balance Sheet Arrangements

•~~Off-Balance Sheet Arrangements~~

•Summary of Critical Accounting Estimates

•Recent Accounting Standards

Overview of Business

We are a publicly traded Delaware limited partnership formed by Cheniere in 2006. We provide clean, secure and affordable LNG to integrated energy companies, utilities and energy trading companies around the world. We aspire to conduct our business in a safe and responsible manner, delivering a reliable, competitive and integrated source of LNG to our customers.

The Sabine Pass LNG terminal, one of the largest LNG production facilities in the world, is located in Cameron Parish, Louisiana, ~~on the Sabine-Neches Waterway less than four miles from the Gulf Coast. Through our subsidiary, SPL, we are currently operating~~and has natural gas liquefaction facilities consisting of five operational natural gas liquefaction Trains and ~~are constructing~~ one additional Train under construction that is expected to be substantially completed in the first half of 2022, for a total production capacity of approximately 30 mtpa of LNG (the “Liquefaction Project”) ~~at the~~. The Sabine Pass LNG terminal ~~one of the largest LNG production facilities in the world. Through our subsidiary, SPLNG, we own and operate~~also has operational regasification facilities ~~at the Sabine Pass LNG terminal, which includes pre-existing infrastructure of~~ that include five LNG storage tanks with aggregate capacity of approximately 17 Bcfe, two existing marine berths and one under construction that can each accommodate vessels with nominal capacity of up to 266,000 cubic meters and vaporizers with regasification capacity of approximately 4 Bcf/d. We also own a 94-mile pipeline through our subsidiary, CTPL, that interconnects the Sabine Pass LNG terminal with a number of large interstate pipelines.

Additionally, we are committed to the responsible and proactive management of our most important environmental, social and governance (“ESG”) impacts, risks and opportunities. Cheniere published its 2020 Corporate Responsibility (“CR”) report, which details our strategy and progress on ESG issues, as well as our efforts on integrating climate considerations into our business strategy and taking a leadership position on increased environmental transparency, including conducting a climate scenario analysis and our plan to provide LNG customers with Cargo Emission Tags. Cheniere’s CR report is available at cheniere.com/IMPACT.

Overview of Significant Events

Our significant events since January 1, ~~2020~~2021 and through the filing date of this Form 10-Q include the following:

~~Strategic~~

•In August 2020, SPL entered into an arrangement with subsidiaries of Cheniere to provide the ability, in limited circumstances, to potentially fulfill commitments to LNG buyers in the event operational conditions impact operations at either the Sabine Pass or Corpus Christi liquefaction facilities. The purchase price for such cargoes would be (i)

~~115% of the applicable natural gas feedstock purchase price or (ii) a free-on-board U.S. Gulf Coast LNG market price, whichever is greater.~~

Operational

•As of ~~October~~July 31, ~~2020, more than 1,075~~2021, approximately 1,350 cumulative LNG cargoes totaling ~~approximately 75~~over 90 million tonnes of LNG have been produced, loaded and exported from the Liquefaction Project.

Financial

•~~In July 2020,~~We completed the ~~board~~following financing transactions:

◦During 2021, SPL entered into a series of ~~directors~~note purchase agreements for the sale of ~~our general partner confirmed and approved that, following the distribution with respect to the three months ended June 30, 2020, the financial tests required for conversion~~approximately $347 million aggregate principal amount of our subordinated units were met under the terms of our partnership agreement. Accordingly, effective August 17, 2020, the first business day following the payment of the distribution, all of our subordinated units were automatically converted into common unitsSenior Secured Notes due 2037 (the “2037 SPL Private Placement Senior Secured Notes”) on a ~~one-for-one basis~~private placement basis. The 2037 SPL Private Placement Senior Secured Notes are expected to be issued in the second half of 2021, subject to customary closing conditions, and the ~~subordination period was terminated.~~net proceeds will be used to strategically refinance a portion of SPL’s outstanding 6.25% SPL Senior Secured Notes due 2022 and pay related fees, costs and expenses. The 2037 SPL Private Placement Senior Secured Notes will be fully amortizing, with a weighted average life of over 10 years.

•◦In ~~May 2020, SPL~~March 2021, Cheniere Partners issued an aggregate principal amount of ~~$2.0~~approximately $1.5 billion of ~~4.500%~~4.000% Senior ~~Secured~~ Notes due ~~2030~~2031 (the ~~“2030 SPL~~“2031 CQP Senior Notes”). ~~Net~~The net proceeds of the ~~offering,~~2031 CQP Senior Notes, along with cash on hand, were used to ~~redeem all of SPL’s outstanding 5.625%~~refinance the 5.250% Senior ~~Secured~~ Notes due ~~2021~~2025 (the ~~“2021 SPL~~“2025 CQP Senior Notes”). and to pay fees and expenses in connection with the refinancing.

•In ~~March 2020, SPL entered into a $1.2 billion Working Capital Revolving Credit~~February 2021, Fitch Ratings (“Fitch”) changed the outlook of SPL’s senior secured notes rating to positive from stable and ~~Letter~~the outlook of ~~Credit Reimbursement Agreement (the “2020 SPL Working Capital Facility”), which refinanced its previous working capital facility, reduced~~our long-term issuer default rating and senior unsecured notes rating to positive from stable.

•In April 2021, S&P Global Ratings changed the ~~interest rate and extended the maturity date~~outlook on our ratings to ~~March 2025.~~positive from negative.

~~Impact~~Results of ~~COVID-19 and Market Environment~~Operations

The ~~business environment~~following charts summarize the total revenues and total LNG volumes loaded from our Liquefaction Project (including both operational and commissioning volumes) during the six months ended June 30, 2021 and 2020:

(1)

The six months ended June 30, 2021 excludes eight TBtu that were loaded at our affiliate’s facility.

Net income


	Three Months Ended June 30,						Six Months Ended June 30,
(in millions, except per share data)	2021		2020		Change		2021		2020		Change
Net income	$	395	$	406	$	(11)	$	742	$	841	$	(99)
Basic and diluted net income per common unit	0.73		0.78		(0.05)		1.38		1.62		(0.24)

Net income decreased by $11 million during the three months ended June 30, 2021 from the comparable period in ~~which we operate has been impacted by the recent downturn in the energy market~~2020, primarily as ~~well as the outbreak of COVID-19 and its progression into a pandemic in March 2020. As~~ a result of ~~these developments, our growth estimates for LNG in 2020 have moderated from previous expectations. Annual LNG demand grew by approximately 13% in 2019~~decreased margins due to ~~approximately 360 mtpa. In a report published in~~ the month of April 2020, IHS Markit projected LNG demand in 2020 to reach 363 mtpa, down from a pre-COVID-19 estimate of approximately 377 mtpa. This implies a year-over-year rate of growth of below 1% in 2020 compared to an implied pre-COVID-19 year-over-year growth estimate of approximately 5%. While worldwide demand increased by approximately 3%non-recurrence, during the ~~nine~~three months ended ~~September~~June 30, ~~2020 compared to the comparable period~~2021, of ~~2019, we continue to be cautiously optimistic on the outlook. Global economic indicators point to a start of a recovery in some parts of the world but risks~~accelerated revenues recognized from second waves of infections and re-instatement of lockdowns could exert bearish pressures on the market. LNG importers had to cope with strict virus containment measures throughout the first and second quarters of 2020, which negatively impacted gas and LNG demand and resulted in many buyers having to resort to extraordinary measures to manage LNG supply purchases and contractual commitments. Some of these measures included cargo deferrals and cancellations. As the market started to rebalance and storage inventories started to normalize, prices today have recovered from their second quarter lows. As an example, the Dutch Title Transfer Facility (“TTF”), a virtual trading point for natural gas in the Netherlands, settled October at $4.23/MMBtu, which is $3.09/MMBtu higher than the June 2020 settlement. The Japan Korea Marker (“JKM”), an LNG benchmark price assessment for spot physical cargoes delivered ex-ship into certain key markets in Asia, settled October at $4.31/MMBtu, which is $2.25/MMBtu higher than its July price posting. The number of LNG cargoes for which customers ~~have~~ notified us that they ~~will~~would not take delivery, ~~have reduced~~which were partially offset by increased revenue from ~~this summer,~~increased volume of LNG delivered between the periods, decreased loss on modification or extinguishment of debt and decreased interest expense, net of capitalized interest.

Net income decreased by $99 million during the six months ended June 30, 2021 from the comparable period in 2020, primarily as a ~~sign that the market is continuing to adjust and rebalance towards equilibrium. We do not expect these events to have a material adverse impact on our forecasted financial results for 2020,~~result of decreased margins due to the ~~highly contracted nature~~non-recurrence, during the six months ended June 30, 2021, of accelerated revenues recognized from LNG cargoes for which customers notified us that they would not take delivery, which were partially offset by increased revenue from increased volume of LNG delivered between the periods. In addition to decreased margins, net income also decreased due to increased loss on extinguishment of debt, which was partially offset by decreased interest expense, net of capitalized interest.

We enter into derivative instruments to manage our exposure to commodity-related marketing and price risk. Derivative instruments are reported at fair value on our Consolidated Financial Statements. In some cases, the underlying transactions being economically hedged are accounted for under the accrual method of accounting, whereby revenues and expenses are recognized only upon delivery, receipt or realization of the underlying transaction. Because the recognition of derivative instruments at fair value has the effect of recognizing gains or losses relating to future period exposure, use of derivative instruments may increase the volatility of our ~~business~~results of operations based on changes in market pricing, counterparty credit risk and other relevant factors.

Revenues


	Three Months Ended June 30,						Six Months Ended June 30,
(in millions, except volumes)	2021		2020		Change		2021		2020		Change
LNG revenues	$	1,597	$	1,332	$	265	$	3,266	$	2,781	$	485
LNG revenues—affiliate	211		61		150		425		249		176

Regasification revenues	67		68		(1)		134		135		(1)

Other revenues	14		9		5		27		23		4

Total revenues	$	1,889	$	1,470	$	419	$	3,852	$	3,188	$	664

LNG volumes recognized as revenues (in TBtu) (1)	313		207		106		638		534		104

(1) Excludes volume associated with cargoes for which customers notified us that they would not take delivery. During the ~~fact~~six months ended June 30, 2021, includes eight TBtu that ~~customers continue to be obligated to pay fixed fees for cargoes in relation to which they have exercised their contractual right to cancel. As such,~~were loaded at our affiliate’s facility.

Total revenues increased $419 million and $664 million during the three and ~~nine~~six months ended ~~September~~June 30, 2021, respectively, from the comparable periods in 2020, primarily as a result of increased revenues per MMBtu and higher volume of LNG delivered between the periods due to the delivery of all available volume of LNG during the three and six months ended June 30, 2021. During the three and six months ended June 30, 2020, we recognized ~~$109~~$388 million and ~~$513~~$404 million, respectively, in LNG revenues associated with LNG cargoes for which customers ~~have~~ notified us that they ~~will~~would not take delivery, of which ~~$21~~$244 million would have ~~otherwise~~ been recognized subsequent to ~~September~~June 30, 2020 ifhad the cargoes ~~were~~been lifted pursuant to the delivery schedules with the customers. LNG revenues during the three months ended ~~September~~June 30, 2020 excluded ~~$244~~$16 million ~~in prior period cancellations~~ that would have otherwise been recognized during the quarter if the cargoes were lifted pursuant to the delivery schedules with the customers. We ~~experienced decreased revenues during the three months ended September 30, 2020 because we recognized accelerated~~did not have revenues associated with LNG cargoes ~~that were scheduled~~ for ~~delivery during the current quarter in the prior quarter, when the~~which customers notified us that they ~~will~~would not take delivery ~~of such cargoes.~~during the three and six months ended June 30, 2021.

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Also included in LNG revenues are sales of certain unutilized natural gas procured for the liquefaction process and gains and losses from derivative instruments, which include the realized value associated with a portion of derivative instruments that settle through physical delivery. We recognized revenues of $12 million and $41 million during the three months ended June 30, 2021 and 2020, respectively, and $60 million and $81 million during the six months ended June 30, 2021 and 2020, respectively, related to these transactions.

~~In addition, in response to the COVID-19 pandemic, Cheniere has modified certain business~~Operating costs and workforce practices to protect the safety and welfare of its employees who continue to work at its facilities and offices worldwide, as well as implemented certain mitigation efforts to ensure business continuity. In March 2020, Cheniere began consulting with a medical advisor, and implemented social distancing through revised shift schedules, work from home policies and designated remote work locations where appropriate, restricted non-essential business travel and began requiring self-screening for employees and contractors. In April 2020, Cheniere began providing temporary housing for its workforce for our facilities, implemented temperature testing, incorporated medical and social workers to support employees, enforced prior self-isolation and screening for temporary housing and implemented marine operations with zero contact during loading activities. These measures have resulted in increased costs. While response measures continue to evolve and in most cases have moderated or ceased, we expect Cheniere to incur incrementalexpenses


	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2021		2020		Change		2021		2020		Change
Cost of sales	$	888	$	398	$	490	$	1,836	$	1,097	$	739
Cost of sales—affiliate	12		5		7		54		5		49
Cost of sales—related party	1		—		1		1		—		1
Operating and maintenance expense	168		165		3		317		317		—
Operating and maintenance expense—affiliate	35		48		(13)		69		81		(12)
Operating and maintenance expense—related party	12		—		12		22		—		22
Development expense	1		—		1		1		—		1

General and administrative expense	3		8		(5)		5		10		(5)
General and administrative expense—affiliate	21		24		(3)		42		49		(7)
Depreciation and amortization expense	138		138		—		277		276		1
Impairment expense and loss on disposal of assets	6		—		6		6		5		1

Total operating costs and expenses	$	1,285	$	786	$	499	$	2,630	$	1,840	$	790

Total operating costs ~~associated with business continuity~~ and ~~protection of its workforce until the risks associated with the pandemic diminish. We have incurred approximately $1 million and $36 million of such costs~~expenses increased during the three and ~~nine~~six months ended ~~September~~June 30, 2021 from the three and six months ended June 30, 2020, primarily as a result of increased cost of sales (including affiliate). Cost of sales includes costs incurred directly for the production and delivery of LNG from the Liquefaction Project, to the extent those costs are not utilized for the commissioning process. Cost of sales increased during the three and six months ended June 30, 2021 from the comparable periods in 2020 primarily due to the increase in pricing of natural gas feedstock and increased volume of LNG produced, partially offset by increased fair value of commodity derivatives to secure natural gas feedstock for the Liquefaction Project due to favorable shifts in long-term forward prices relative to our hedged position and a decrease in net costs associated with the sale of certain unutilized natural gas procured for the liquefaction process. Cost of sales also includes variable transportation and storage costs and other costs to convert natural gas into LNG.

Cost of sales—affiliate increased during the three and six months ended June 30, 2021 as a result of the cost of cargoes procured from our affiliate to fulfill our commitments to our long-term customers during operational constraints.

Other expense (income)


	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2021		2020		Change		2021		2020		Change
Interest expense, net of capitalized interest	$	209	$	236	$	(27)	$	426	$	470	$	(44)
Loss on modification or extinguishment of debt	—		42		(42)		54		43		11

Other income, net	—		—		—		—		(6)		6

Total other expense	$	209	$	278	$	(69)	$	480	$	507	$	(27)

Interest expense, net of capitalized interest, decreased during the three and six months ended June 30, 2021 from the comparable periods in 2020 primarily as a result of lower interest costs as a result of refinancing higher cost debt and an increase in the portion of total interest costs that is eligible for capitalization primarily due to the continued construction of the remaining assets of the Liquefaction Project. During the three months ended June 30, 2021 and 2020, we incurred $241 million and $259 million of total interest cost, respectively, of which we capitalized $32 million and $23 million, respectively. During the six months ended June 30, 2021 and 2020, we incurred $488 million and $513 million of total interest cost, respectively, of which we capitalized $62 million and $43 million, respectively.

Loss on modification or extinguishment of debt decreased during the three months ended June 30, 2021 from the three months ended June 30, 2020. Loss on modification or extinguishment of debt recognized in 2020 was primarily attributable to $43 million of debt extinguishment costs relating to the payment of early redemption fees and write off of unamortized debt premiums and issuance costs associated with the 5.625% Senior Secured Notes due 2021 (the “2021 SPL Senior Notes”). Loss

on modification or extinguishment of debt increased during the six months ended June 30, 2021 from the six months ended June 30, 2020, due to the recognition of $54 million of debt extinguishment costs relating to the payment of early redemption fees and premiums and write off of unamortized debt issuance costs with the redemption of the 2025 CQP Senior Notes.

Liquidity and Capital Resources

The following table provides a summary of our liquidity position at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 (in millions):

September 30, December 31,
2020 2019
Cash and cash equivalents $ 1,254 $ 1,781
Restricted cash designated for the following purposes:
Liquefaction Project 157 181
Available commitments under the following credit facilities:
$1.2 billion Amended and Restated SPL Working Capital Facility (“2015 SPL Working Capital Facility”) — 786
2020 SPL Working Capital Facility 787 —
CQP Credit Facilities executed in 2019 (“2019 CQP Credit Facilities”) 750 750



	June 30,		December 31,
	2021		2020
Cash and cash equivalents	$	1,239	$	1,210
Restricted cash designated for the Liquefaction Project	65		97

Available commitments under the following credit facilities:

$1.2 billion Working Capital Revolving Credit and Letter of Credit Reimbursement Agreement (the “2020 SPL Working Capital Facility”)	804		787
CQP Credit Facilities executed in 2019 (“2019 CQP Credit Facilities”)	750		750

CQP Senior Notes

The ~~$1.5 billion of 5.250% Senior Notes due 2025 (the “2025 CQP Senior Notes”),~~ $1.1 billion of 5.625% Senior Notes due 2026 (the “2026 CQP Senior Notes”) ~~and~~, $1.5 billion of 4.500% Senior Notes due 2029 (the “2029 CQP Senior Notes”) and the 2031 CQP Senior Notes (collectively, 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”). The CQP Senior Notes are governed by the same base indenture (the “CQP Base Indenture”). The ~~2025 CQP Senior Notes are further governed by the First Supplemental Indenture, the~~ 2026 CQP Senior Notes are further governed by the Second Supplemental Indenture, ~~and~~ the 2029 CQP Senior Notes are further governed by the Third Supplemental Indenture and the 2031 CQP Senior Notes are further governed by a Fifth Supplemental Indenture. The indentures governing the CQP Senior Notes contain terms and events of default and certain covenants that, among other things, limit our ability and the CQP Guarantors’ ability to incur liens and sell assets, enter into transactions with affiliates, enter into sale-leaseback transactions and consolidate, merge or sell, lease or otherwise dispose of all or substantially all of the applicable entity’s properties or assets.

At any time prior to October 1, ~~2020 for the 2025 CQP Senior Notes, October 1,~~ 2021 for the 2026 CQP Senior Notes, ~~and~~ October 1, 2024 for the 2029 CQP Senior Notes and March 1, 2026 for the 2031 CQP Senior Notes, we may redeem all or a part of the applicable CQP Senior Notes at a redemption price equal to 100% of the aggregate principal amount of the CQP Senior Notes redeemed, plus the “applicable premium” set forth in the respective indentures governing the CQP Senior Notes, plus accrued and unpaid interest, if any, to the date of redemption. In addition, at any time prior to October 1, ~~2020 for the 2025 CQP Senior Notes, October 1,~~ 2021 for the 2026 CQP Senior Notes, ~~and~~ October 1, 2024 for the 2029 CQP Senior Notes and March 1, 2024 for the 2031 CQP Senior Notes, we may redeem up to 35% of the aggregate principal amount of the CQP Senior Notes with an amount of cash not greater than the net cash proceeds from certain equity offerings at a redemption price equal to ~~105.250% of the aggregate principal amount of the 2025 CQP Senior Notes,~~ 105.625% of the aggregate principal amount of the 2026 CQP Senior Notes, ~~and~~ 104.5% of the aggregate principal amount of the 2029 CQP Senior Notes and 104.000% of the aggregate principal amount of the 2031 CQP Senior Notes redeemed, plus accrued and unpaid interest, if any, to the date of redemption. We also may at any time on or after October 1, ~~2020 through the maturity date of October 1, 2025 for the 2025 CQP Senior Notes, October 1,~~ 2021 through the maturity date of October 1, 2026 for the 2026 CQP Senior Notes, ~~and~~ October 1, 2024 through the maturity date of October 1,

2029 for the 2029 CQP Senior Notes and March 1, 2026 through the maturity date of March 1, 2031 for the 2031 CQP Senior Notes, redeem the CQP Senior Notes, in whole or in part, at the redemption prices set forth in the respective indentures governing the CQP Senior Notes.

The CQP Senior Notes are our senior obligations, ranking equally in right of payment with our other existing and future unsubordinated debt and senior to any of our future subordinated debt. In the event that the aggregate amount of our secured indebtedness and the secured indebtedness of the CQP Guarantors (other than the CQP Senior Notes or any other series of notes issued under the CQP Base Indenture) outstanding at any one time exceeds the greater of (1) $1.5 billion and (2) 10% of net tangible assets, the CQP Senior Notes will be secured to the same extent as such obligations under the 2019 CQP Credit Facilities. The obligations under the 2019 CQP Credit Facilities are secured on a first-priority basis (subject to permitted encumbrances) with liens on substantially all our existing and future tangible and intangible assets and our rights and the rights of the CQP Guarantors and equity interests in the CQP Guarantors (except, in each case, for certain excluded properties set forth in the 2019 CQP Credit Facilities). The liens securing the CQP Senior Notes, if applicable, will be shared equally and ratably (subject to permitted liens) with the holders of other senior secured obligations, which include the 2019 CQP Credit Facilities obligations and any future additional senior secured debt obligations.

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 its guarantee obligations and (4) upon the legal defeasance or satisfaction and discharge of obligations under the indenture governing the CQP Senior Notes. 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.

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. Each guarantee contains a provision intended to limit the Guarantor’s liability to the maximum amount that it could incur without causing the incurrence of obligations under its guarantee to be a fraudulent conveyance or transfer under U.S. federal or state law. However, there can be no assurance as to what standard a court will apply in making a determination of the maximum liability of the CQP Guarantors. Moreover, this provision may not be effective to protect the guarantee from being voided under fraudulent conveyance laws. 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 Cheniere Partners (“Parent Issuer”), and the CQP Guarantors (together with the Parent Issuer, the “Obligor Group”) on a combined basis. Investments in and equity in the earnings of SPL and, subject to certain conditions governing its guarantee, Sabine Pass LP (collectively with SPL, the “Non-Guarantors”), which are not currently members of the Obligor Group, have been excluded. Intercompany balances and transactions between entities in the Obligor Group have been eliminated. Although the creditors of the Obligor Group have no claim against the Non-Guarantors, the Obligor Group may gain access to the assets of the Non-Guarantors upon bankruptcy, liquidation or reorganization of the Non-Guarantors due to its investment in these entities. However, such claims to the assets of the Non-Guarantors would be subordinated to the any claims by the Non-Guarantors’ creditors, including trade creditors. See Sabine Pass LNG Terminal—SPL Senior Notes for additional detail on restrictions of Non-Guarantor debt.



Summarized Balance Sheets (in millions)	June 30,		December 31,
	2021		2020
ASSETS
Current assets
Cash and cash equivalents	$	1,239	$	1,210
Accounts receivable from Non-Guarantors	30		46
Other current assets	50		42
Current assets—affiliate	135		137
Current assets with Non-Guarantors	1		—
Total current assets	1,455		—

Property, plant and equipment, net of accumulated depreciation	2,459		2,493
Other non-current assets, net	112		117
Total assets	$	4,026	$	2,610

LIABILITIES
Current liabilities
Due to affiliates	$	133	$	156
Deferred revenue from Non-Guarantors	21		22

Other current liabilities	114		100

Total current liabilities	268		278

Long-term debt, net of premium, discount and debt issuance costs	4,057		4,060
Other non-current liabilities	83		85
Non-current liabilities—affiliate	15		17
Total liabilities	$	4,423	$	4,440

Summarized Balance Sheets (in millions) September 30, December 31,
2020 2019
ASSETS
Current assets
Cash and cash equivalents $ 1,254 $ 1,781
Accounts receivable from Non-Guarantors 36 43
Other current assets 41 33
Current assets—affiliate 114 145
Total current assets 1,445 2,002
Property, plant and equipment, net 2,508 2,533
Other non-current assets, net 120 122
Total assets $ 4,073 $ 4,657
LIABILITIES
Current liabilities
Due to affiliates $ 125 $ 158
Deferred revenue from Non-Guarantors 21 21
Deferred revenue—affiliate — 1
Other current liabilities 168 111
Other current liabilities from Non-Guarantors — —
Total current liabilities 314 291
Long-term debt, net 4,059 4,055
Other non-current liabilities 86 83
Non-current liabilities—affiliate 18 20
Total liabilities $ 4,477 $ 4,449


Summarized Statement of Income (in millions)	~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021

Revenues	$	~~230~~161
Revenues from Non-Guarantors	~~389~~264
Total revenues	~~619~~425

Operating costs and expenses	~~132~~98
Operating costs and expenses—affiliate	~~149~~96
Total operating costs and expenses	~~281~~194

Income from operations	~~338~~231
Net income	~~176~~69

2019 CQP Credit Facilities

In May 2019, we entered into the 2019 CQP Credit Facilities, which consisted of the $750 million term loan (“CQP Term Facility”), which was prepaid and terminated upon issuance of the 2029 CQP Senior Notes in September 2019, and theWe have a $750 million revolving credit facility (“under the 2019 CQP ~~Revolving Facility”).~~Credit Facilities. Borrowings under the 2019 CQP Credit Facilities will be used to fund the development and construction of Train 6 of the Liquefaction Project and for general corporate purposes, subject to a sublimit, and the 2019 CQP Credit Facilities are also available for the issuance of letters of credit. As of both ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, we had $750 million of available commitments and no letters of credit issued or loans outstanding under the 2019 CQP Credit Facilities.

The 2019 CQP Credit Facilities mature on May 29, 2024. Any outstanding balance may be repaid, in whole or in part, at any time without premium or penalty, except for interest rate breakage costs. The 2019 CQP Credit Facilities contain conditions precedent for extensions of credit, as well as customary affirmative and negative covenants, and limit our ability to

make restricted payments, including distributions, to once per fiscal quarter and one true-up per fiscal quarter as long as certain conditions are satisfied.

The 2019 CQP Credit Facilities are unconditionally guaranteed and secured by a first priority lien (subject to permitted encumbrances) on substantially all of our and the CQP Guarantors’ existing and future tangible and intangible assets and rights and equity interests in the CQP Guarantors (except, in each case, for certain excluded properties set forth in the 2019 CQP Credit Facilities).

Sabine Pass LNG Terminal

Liquefaction Facilities

The Liquefaction Project is one of the largest LNG production facilities in the world. We are currently operating five Trains and two marine berths at the Liquefaction Project, and are constructing one additional ~~Train. We have received authorization from~~Train that is expected to be substantially completed in the ~~FERC to site, construct~~first half of 2022, and ~~operate Trains 1 through 6, as well as for the construction of~~ a third marine berth. We have achieved substantial completion of the first five Trains of the Liquefaction Project and commenced commercial operating activities for each Train at various times starting in May 2016. The following table summarizes the project completion and construction status of Train 6 of the Liquefaction Project as of ~~September~~June 30, ~~2020:~~2021:


						Train 6
Overall project completion percentage						~~70.9%~~89.6%
Completion percentage of:
Engineering						~~97.8%~~99.7%
Procurement						~~98.2%~~99.9%
Subcontract work						~~48.0%~~70.2%
Construction						~~34.6%~~79.3%
Date of expected substantial completion						2H1H 2022

The ~~following~~DOE has issued three orders ~~have been issued by the DOE~~ authorizing the export of ~~domestically produced LNG by vessel from the Sabine Pass LNG terminal:~~

•~~Trains 1 through 4—FTA countries and non-FTA countries through December 31, 2050, in an amount up to a combined total of the equivalent of 16 mtpa (approximately 803 Bcf/yr of natural gas).~~

•Trains 1 through 4—FTA countries and non-FTA countries through December 31, 2050, in an amount up to a combined total of the equivalent of approximately 203 Bcf/yr of natural gas (approximately 4 mtpa).

•~~Trains 5 and 6—FTA countries and non-FTA countries through December 31, 2050, in an amount up to a combined total of 503.3 Bcf/yr of natural gas (approximately 10 mtpa).~~

~~The DOE issued an order authorizing SPL to export~~ domestically produced LNG by vessel from the Sabine Pass LNG terminal to FTA countries and non-FTA countries ~~over a two-year period commencing January 2020, in an aggregate amount~~through December 31, 2050, up to ~~the~~a combined total equivalent of ~~600 Bcf~~approximately 1,509.3 Bcf/yr (approximately 30 mtpa) of natural ~~gas (however, exports under this order, when combined with exports under~~gas.

In December 2020, the ~~orders above, may not exceed 1,509 Bcf/yr).~~DOE announced a new policy in which it would no longer issue short-term export authorizations separately from long-term authorizations. Accordingly, the DOE amended each of SPL’s long-term authorizations to include short-term export authority, and vacated the short-term orders.

An application was filed in September 2019 seeking authorization to make additional exports from the Liquefaction Project to FTA countries for a 25-year term and to non-FTA countries for a 20-year term in an amount up to the equivalent of approximately 153 Bcf/yr of natural gas, for a total Liquefaction Project export capacity of approximately 1,662 Bcf/yr. The terms of the authorizations are requested to commence on the date of first commercial export from the Liquefaction Project of the volumes contemplated in the application. In April 2020, the DOE issued an order authorizing SPL to export to FTA countries related to this application, for which the term was subsequently extended through December 31, 2050, but has not yet issued an order authorizing SPL to export to non-FTA countries for the corresponding LNG volume. A corresponding application for authorization to increase the total LNG production capacity of the Liquefaction Project from the currently authorized level to approximately 1,662 Bcf/yr was also submitted to the FERC and is currently pending.

Customers

SPL has entered into fixed price long-term SPAs generally with terms of 20 years (plus extension rights) and with a weighted average remaining contract length of approximately 17 years (plus extension rights) ~~with eight third parties~~ for Trains 1 through 6 of the Liquefaction Project to make available an aggregate amount of LNG that is approximately 75% of the total production capacity from these Trains, potentially increasing up to approximately 85% after giving effect to an SPA that Cheniere has committed to provide to ~~us by the end of 2020.~~us. Under these SPAs, the customers will purchase LNG from SPL ~~on a free on board (“FOB”) basis~~ 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 approximately 115% of Henry Hub. The 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. We refer to the fee component that is applicable regardless of a cancellation or suspension of LNG cargo deliveries under the SPAs as the fixed fee component of the price under SPL’s SPAs. We refer to the fee component that is applicable only in connection with LNG cargo deliveries as the variable fee component of the price under SPL’s SPAs. The variable fees under SPL’s SPAs were generally sized at the time of entry into each SPA with the intent to cover the costs of gas purchases and transportation and liquefaction fuel to produce the LNG to be sold under each such SPA. The SPAs and contracted volumes to be made available under the SPAs are not tied to a specific Train; however, the term of each SPA generally commences upon the date of first commercial delivery of a specified Train.

In aggregate, the annual fixed fee portion to be paid by the third-party SPA customers is approximately $2.9 billion for Trains 1 through 5. After giving effect to an SPA that Cheniere has committed to provide to SPL and upon the date of first commercial delivery of Train 6, the annual fixed fee portion to be paid by the third-party SPA customers ~~would~~is expected to increase to at least $3.3 ~~billion, which is expected to occur upon the date of first commercial delivery of Train 6.~~billion.

In addition, Cheniere Marketing has agreements with SPL to purchase: (1) at Cheniere Marketing’s option, any LNG produced by SPL in excess of that required for other customers, ~~and~~ (2) up to 4330 cargoes scheduled for delivery in ~~2020~~2021 at a price of 115% of Henry Hub plus ~~$1.67~~$0.728 per MMBtu and (3) up to 31 cargoes to be delivered between 2021 and 2026 at a price of 115% of Henry Hub plus $1.72 per MMBtu.

Natural Gas Transportation, Storage and Supply

To ensure SPL is able to transport adequate natural gas feedstock to the Sabine Pass LNG terminal, it has entered into transportation precedent and other agreements to secure firm pipeline transportation capacity with CTPL and third-party pipeline companies. SPL has entered into firm storage services agreements with third parties to assist in managing variability in natural gas needs for the Liquefaction Project. SPL has also entered into enabling agreements and long-term natural gas supply contracts with third parties in order to secure natural gas feedstock for the Liquefaction Project. As of ~~September~~June 30, ~~2020,~~2021, SPL had secured up to approximately ~~5,051~~5,025 TBtu of natural gas feedstock through long-term and short-term natural gas supply contracts with remaining terms that range up to 10 years, a portion of which is subject to conditions precedent.

Construction

SPL entered into lump sum turnkey contracts with Bechtel Oil, Gas and Chemicals, Inc. (“Bechtel”) for the engineering, procurement and construction of Trains 1 through 6 of the Liquefaction Project, under which Bechtel charges a lump sum for all work performed and generally bears project cost, schedule and performance risks unless certain specified events occur, in which case Bechtel may cause SPL to enter into a change order, or SPL agrees with Bechtel to a change order.

The total contract price of the EPC contract for Train 6 of the Liquefaction Project is approximately $2.5 billion, including estimated costs for the third marine berth that is currently under construction. As of ~~September~~June 30, ~~2020,~~2021, we have incurred ~~$1.8~~$2.1 billion under this contract.

Regasification Facilities

The Sabine Pass LNG terminal has operational regasification capacity of approximately 4 Bcf/d and aggregate LNG storage capacity of approximately 17 Bcfe. Approximately 2 Bcf/d of the regasification capacity at the Sabine Pass LNG terminal has been reserved under two long-term third-party TUAs, under which SPLNG’s customers are required to pay fixed monthly fees, whether or not they use the LNG terminal. Each of Total Gas & Power North America, Inc. (“Total”) and

Chevron U.S.A. Inc. (“Chevron”) has reserved approximately 1 Bcf/d of regasification capacity and is obligated to make monthly capacity payments to SPLNG aggregating approximately $125 million annually, prior to inflation adjustments, for 20 years that commenced in 2009. Total S.A. has guaranteed Total’s obligations under its TUA up to $2.5 billion, subject to certain exceptions, and Chevron Corporation has guaranteed Chevron’s obligations under its TUA up to 80% of the fees payable by Chevron.

The remaining approximately 2 Bcf/d of capacity has been reserved under a TUA by SPL. SPL is obligated to make monthly capacity payments to SPLNG aggregating approximately $250 million annually, prior to inflation adjustments, continuing until at least May 2036. SPL entered into a partial TUA assignment agreement with Total, whereby upon substantial completion of Train 5 of the Liquefaction Project, SPL gained access to substantially all of Total’s capacity and other services provided under Total’s TUA with SPLNG. This agreement provides SPL with additional berthing and storage capacity at the Sabine Pass LNG terminal that may be used to provide increased flexibility in managing LNG cargo loading and unloading activity, permit SPL to more flexibly manage its LNG storage capacity and accommodate the development of Train 6. Notwithstanding any arrangements between Total and SPL, payments required to be made by Total to SPLNG will continue to be made by Total to SPLNG in accordance with its TUA. During each of the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, SPL recorded ~~$32~~$33 million, ~~as operating~~ and ~~maintenance expense under this partial TUA assignment agreement. During~~during each of the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, SPL recorded ~~$97~~$65 million ~~and $72 million, respectively,~~ as operating and maintenance expense under this partial TUA assignment agreement.

Under each of these TUAs, SPLNG is entitled to retain 2% of the LNG delivered to the Sabine Pass LNG terminal.

Capital Resources

We currently expect that SPL’s capital resources requirements with respect to the Liquefaction Project will be financed through project debt and borrowings, cash flows under the SPAs and equity contributions from us. We believe that with the net proceeds of borrowings, available commitments under the 2020 SPL Working Capital Facility and 2019 CQP Credit Facilities, cash flows from operations and equity contributions from us, SPL will have adequate financial resources available to meet its currently anticipated capital, operating and debt service requirements with respect to Trains 1 through 6 of the Liquefaction Project. Additionally, SPLNG generates cash flows from the TUAs, as discussed above.

The following table provides a summary of our capital resources from borrowings and available commitments for the Sabine Pass LNG ~~Terminal,~~terminal, excluding equity contributions to our subsidiaries and cash flows from operations (as described in Sources and Uses of Cash), at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 (in millions):


		September 30,		December 31,			June 30,		December 31,
		2020		2019			2021		2020
Senior notes (1)	Senior notes (1)	$	17,750	$	17,750	Senior notes (1)	$	17,750	$	17,750
Credit facilities outstanding balance (2)	Credit facilities outstanding balance (2)	—		—		Credit facilities outstanding balance (2)	—		—
Letters of credit issued (3)	Letters of credit issued (3)	413		414		Letters of credit issued (3)	396		413
Available commitments under credit facilities (3)	Available commitments under credit facilities (3)	1,537		1,536		Available commitments under credit facilities (3)	1,554		1,537
Total capital resources from borrowings and available commitments (4)	Total capital resources from borrowings and available commitments (4)	$	19,700	$	19,700	Total capital resources from borrowings and available commitments (4)	$	19,700	$	19,700

(1) Includes SPL’s ~~2021 SPL Senior Notes,~~ 6.25% Senior Secured Notes due 2022, 5.625% Senior Secured Notes due 2023, 5.75% Senior Secured Notes due 2024, 5.625% Senior Secured Notes due 2025, 5.875% Senior Secured Notes due 2026 (the “2026 SPL Senior Notes”), 5.00% Senior Secured Notes due 2027 (the “2027 SPL Senior Notes”), 4.200% Senior Secured Notes due 2028 (the “2028 SPL Senior Notes”), 4.500% Senior Secured Notes due 2030 (the “2030 SPL Senior ~~Notes~~Notes”) and 5.00% Senior Secured Notes due 2037 (the “2037 SPL Senior Notes”) (collectively, the “SPL Senior Notes”) and our CQP Senior Notes.

(2) Includes outstanding balances under the ~~2015 SPL Working Capital Facility,~~ 2020 SPL Working Capital Facility and 2019 CQP Credit Facilities, inclusive of any portion of the 2020 SPL Working Capital Facility and 2019 CQP Credit Facilities that may be used for general corporate purposes.

(3) Consists of ~~2015 SPL Working Capital Facility,~~ 2020 SPL Working Capital Facility and 2019 CQP Credit Facilities.

(4) Does not include equity contributions that may be available from Cheniere’s borrowings and available cash and cash equivalents.

~~For additional information regarding our debt agreements related to the Sabine Pass LNG Terminal, see~~ ~~Note 11—Debt~~ ~~of our Notes to Consolidated Financial Statements in our annual report on Form 10-K for the fiscal year ended December 31, 2019.~~

SPL Senior Notes

The SPL Senior Notes are governed by a common indenture (the “SPL Indenture”) and the terms of the 2037 SPL Senior Notes are governed by a separate indenture (the “2037 SPL Senior Notes Indenture”). Both the SPL Indenture and the 2037 SPL Senior Notes Indenture contain terms and events of default and certain covenants that, among other things, limit SPL’s ability and the ability of SPL’s restricted subsidiaries to incur additional indebtedness or issue preferred stock, make certain investments or pay dividends or distributions on capital stock or subordinated indebtedness or purchase, redeem or retire capital stock, sell or transfer assets, including capital stock of SPL’s restricted subsidiaries, restrict dividends or other payments by restricted subsidiaries, incur liens, enter into transactions with affiliates, dissolve, liquidate, consolidate, merge, sell or lease all or substantially all of SPL’s assets and enter into certain LNG sales contracts. Subject to permitted liens, the SPL Senior Notes are secured on a pari passu first-priority basis by a security interest in all of the membership interests in SPL and substantially all of SPL’s assets. SPL may not make any distributions until, among other requirements, deposits are made into debt service reserve accounts as required and a debt service coverage ratio test of 1.25:1.00 is satisfied.

At any time prior to three months before the respective dates of maturity for each series of the SPL Senior Notes (except for the 2026 SPL Senior Notes, 2027 SPL Senior Notes, 2028 SPL Senior Notes, 2030 SPL Senior Notes and 2037 SPL Senior Notes, in which case the time period is six months before the respective dates of maturity), SPL may redeem all or part of such series of the SPL Senior Notes at a redemption price equal to the ‘make-whole’ price (except for the 2037 SPL Senior Notes, in which case the redemption price is equal to the “optional redemption” price) set forth in the respective indentures governing the SPL Senior Notes, plus accrued and unpaid interest, if any, to the date of redemption. SPL may also, at any time within three months of the respective maturity dates for each series of the SPL Senior Notes (except for the 2026 SPL Senior Notes, 2027 SPL Senior Notes, 2028 SPL Senior Notes, 2030 SPL Senior Notes and 2037 SPL Senior Notes, in which case the time period is within six months of the respective dates of maturity), redeem all or part of such series of the SPL Senior Notes at a redemption price equal to 100% of the principal amount of such series of the SPL Senior Notes to be redeemed, plus accrued and unpaid interest, if any, to the date of redemption.

~~Both the 2037 SPL Senior Notes Indenture and the SPL Indenture include restrictive covenants.~~

SPL may incur additional indebtedness in the future, including by issuing additional notes, and such indebtedness could be at higher interest rates and have different maturity dates and more restrictive covenants than the current outstanding indebtedness of SPL, including the SPL Senior Notes and the 2020 SPL Working Capital Facility. Under the 2037 SPL Senior Notes Indenture and the SPL Indenture, SPL may not make any distributions until, among other requirements, deposits are made into debt service reserve accounts as required and a debt service reserve ratio test of 1.25:1.00 is satisfied. Semi-annual principal

payments for the 2037 SPL Senior Notes are due on March 15 and September 15 of each year beginning September 15, 2025 and are fully amortizing according to a fixed sculpted amortization schedule.

~~2015~~During 2021, SPL ~~Working Capital Facility~~

~~In March 2020, SPL terminated~~entered into a series of note purchase agreements for the ~~remaining commitments under the 2015 SPL Working Capital Facility. As~~sale of ~~December 31, 2019, SPL had $786 million of available commitments, $414~~approximately $347 million aggregate principal amount of the 2037 SPL Private Placement Senior Secured Notes on a private placement basis. The 2037 SPL Private Placement Senior Secured Notes are expected to be issued ~~letters~~in the second half of ~~credit~~2021, subject to customary closing conditions, and nothe net proceeds will be used to strategically refinance a portion of SPL’s outstanding ~~borrowings under the 2015~~6.25% SPL ~~Working Capital Facility.~~Senior Secured Notes due 2022 and pay related fees, costs and expenses. The 2037 SPL Private Placement Senior Secured Notes will be fully amortizing, with a weighted average life of over 10 years.

2020 SPL Working Capital Facility

In March 2020, SPL entered into the 2020 SPL Working Capital Facility with aggregate commitments of $1.2 billion, which replaced the ~~2015~~$1.2 billion Amended and Restated SPL Working Capital ~~Facility.~~Facility (the “2015 SPL Working Capital Facility”). The 2020 SPL Working Capital Facility is intended to be used for loans to SPL, swing line loans to SPL and the issuance of letters of credit on behalf of SPL, primarily for (1) the refinancing of the 2015 SPL Working Capital Facility, (2) fees and expenses related to the 2020 SPL Working Capital Facility, (3) SPL and its future subsidiaries’ gas purchase obligations and (4) SPL and certain of its future subsidiaries’ general corporate purposes. SPL may, from time to time, request increases in the commitments under the 2020 SPL Working Capital Facility of up to $800 million. As of ~~September~~June 30, 2021 and December 31, 2020, SPL had $804 million and $787 million of available commitments and $396 million and $413 million aggregate amount of issued letters of credit, respectively. As of both June 30, 2021 and December 31, 2020, SPL had no outstanding borrowings under the 2020 SPL Working Capital Facility.

The 2020 SPL Working Capital Facility matures on March 19, 2025, but may be extended with consent of the lenders. The 2020 SPL Working Capital Facility provides for mandatory prepayments under customary circumstances.

The 2020 SPL Working Capital Facility contains customary conditions precedent for extensions of credit, as well as customary affirmative and negative covenants. SPL is restricted from making certain distributions under agreements governing its indebtedness generally until, among other requirements, satisfaction of a 12-month forward-looking and backward-looking 1.25:1.00 debt service reserve ratio test. The obligations of SPL under the 2020 SPL Working Capital Facility are secured by substantially all of the assets of SPL as well as a pledge of all of the membership interests in SPL and certain future subsidiaries of SPL on a pari passu basis by a first priority lien with the SPL Senior Notes.

Restrictive Debt Covenants

As of ~~September~~June 30, ~~2020,~~2021, we and SPL were in compliance with all covenants related to our respective debt agreements.

LIBOR

The use of LIBOR is expected to be phased out by ~~the end of 2021.~~June 2023. It is currently unclear whether LIBOR will be utilized beyond that date or whether it will be replaced by a particular rate. We intend to continue working with our lenders to pursue any amendments to our debt agreements that are currently subject to LIBOR following LIBOR cessation and will continue to monitor, assess and plan for the phase out of LIBOR.

Sources and Uses of Cash

The following table summarizes the sources and uses of our cash, cash equivalents and restricted cash for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 (in millions). The table presents capital expenditures on a cash basis; therefore, these amounts differ from the amounts of capital expenditures, including accruals, which are referred to elsewhere in this report. Additional discussion of these items follows the table.

Nine Months Ended September 30,
2020 2019
Operating cash flows $ 1,333 $ 977
Investing cash flows (795) (1,157)
Financing cash flows (1,089) 531
Net increase (decrease) in cash, cash equivalents and restricted cash (551) 351
Cash, cash equivalents and restricted cash—beginning of period 1,962 1,541
Cash, cash equivalents and restricted cash—end of period $ 1,411 $ 1,892


	Six Months Ended June 30,
	2021		2020
Sources of cash, cash equivalents and restricted cash:
Net cash provided by operating activities	$	1,075	$	874
Proceeds from issuances of debt	1,500		1,995
Other	8		—
	$	2,583	$	2,869
Uses of cash, cash equivalents and restricted cash:
Property, plant and equipment	$	(316)	$	(581)
Repayments of debt	(1,500)		(2,000)
Debt issuance and other financing costs	(20)		(34)
Debt extinguishment costs	(40)		(39)

Distributions to owners	(710)		(668)
Other	—		(1)
	(2,586)		(3,323)
Net decrease in cash, cash equivalents and restricted cash	$	(3)	$	(454)

Operating Cash Flows

Our operating cash net inflows during the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020 ~~and 2019~~ were ~~$1,333~~$1,075 million and ~~$977~~$874 million, respectively. The ~~$356~~$201 million increase in operating cash inflows in ~~2020~~2021 compared to ~~2019~~2020 was primarily related to ~~decreased operating costs~~cash provided by working capital primarily from payment timing differences and ~~expenses.~~timing of cash receipts from the sale of LNG cargoes.

~~Investing Cash Flows~~Proceeds from Issuance of Debt, Repayments of Debt, Debt Issuance and Other Financing Costs and Debt Extinguishment Costs

~~Investing cash net outflows during~~During the ~~nine~~six months ended ~~September~~June 30, 2021, we issued an aggregate principal amount of $1.5 billion of the 2031 CQP Senior Notes and incurred $20 million of debt issuance costs related to this issuance. The proceeds from this issuance, together with cash on hand, were used to redeem all of the outstanding 2025 CQP Senior Notes, and we paid $40 million of debt extinguishment costs, mainly related to premiums associated with this redemption.

During the six months ended June 30, 2020, we entered into the 2020 SPL Working Capital Facility to replace the 2015 SPL Working Capital Facility and ~~2019 were $795~~issued an aggregate principal amount of $2.0 billion of the 2030 SPL Senior Notes, which was used to redeem all of SPL’s outstanding 2021 SPL Senior Notes. We incurred $34 million of debt issuance costs primarily related to up-front fees paid upon closing of the 2030 SPL Senior Notes and ~~$1,157~~the 2020 SPL Working Capital Facility and $39 million ~~respectively,~~of debt extinguishment costs related to the redemption of the 2021 SPL Senior Notes.

Property, Plant and Equipment

Cash outflows for property, plant and equipment were primarily ~~used to fund~~for the construction costs for the Liquefaction Project. These costs are capitalized as construction-in-process until achievement of substantial completion.

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~~Financing Cash Flows~~

~~Financing cash net outflows of $1,089 million during the nine months ended September 30, 2020 was primarily a result of:~~

•~~issuance of an aggregate principal amount of $2.0 billion of the 2030 SPL Senior Notes, which was used to redeem all of the outstanding 2021 SPL Senior Notes;~~

•~~$39 million of debt extinguishment costs related to the redemption of the 2021 SPL Senior Notes;~~

•~~$34 million of debt issuance costs related to up-front fees paid upon closing of the 2030 SPL Senior Notes and the 2020 SPL Working Capital Facility; and~~

•~~$1,011 million of distributions to unitholders.~~

~~Financing cash net inflows of $531 million during the nine months ended September 30, 2019 was primarily a result of:~~

•~~$730 million of borrowings and repayments under the 2019 CQP Credit Facilities;~~

•~~issuance of an aggregate principal amount of $1.5 billion of the 2029 CQP Senior Notes, which was used to prepay the outstanding balance of the term loan under the 2019 CQP Credit Facilities;~~

•~~$33 million of debt issuance costs related to the up-front fees paid upon the issuance of the 2019 CQP Credit Facilities and 2029 CQP Senior Notes; and~~

•~~$935 million of distributions to unitholders.~~

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. All distributions paid to date have been made from accumulated operating surplus. The following provides a summary of distributions paid by us during the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019:~~2020:

Total Distribution (in millions)
Date Paid Period Covered by Distribution Distribution Per Common Unit Distribution Per Subordinated Unit Common Units Subordinated Units General Partner Units Incentive Distribution Rights
August 14, 2020 April 1 - June 30, 2020 $ 0.645 $ 0.645 $ 225 $ 88 $ 7 $ 22
May 15, 2020 January 1 - March 31, 2020 0.64 0.64 223 86 7 20
February 14, 2020 October 1- December 31, 2019 0.63 0.63 220 85 6 18
August 14, 2019 April 1 - June 30, 2019 0.61 0.61 213 83 6 15
May 15, 2019 January 1 - March 31, 2019 0.60 0.60 209 81 6 13
February 14, 2019 October 1 - December 31, 2018 0.59 0.59 206 80 6 12


						Total Distribution (in millions)
Date Paid	Period Covered by Distribution	Distribution Per Common Unit		Distribution Per Subordinated Unit		Common Units		Subordinated Units		General Partner Units		Incentive Distribution Rights
May 14, 2021	January 1 - March 31, 2021	$	0.660	$	—	$	320	$	—	$	7	$	30
February 12, 2021	October 1 - December 31, 2020	0.655		—		316		—		7		27



May 15, 2020	January 1 - March 31, 2020	0.64		0.64		223		86		7		20
February 14, 2020	October 1 - December 31, 2019	0.63		0.63		220		85		6		18

On ~~October~~July 27, ~~2020,~~2021, we declared a ~~$0.650~~$0.665 distribution per common unit and the related distribution to our general partner and incentive distribution right holders to be paid on ~~November~~August 13, ~~2020~~2021 to unitholders of record as of ~~November~~August 6, ~~2020~~2021 for the period from ~~July~~April 1, ~~2020~~2021 to ~~September 30, 2020.~~

The subordinated units will receive distributions only to the extent we have available cash above the initial quarterly distributions requirement for our common unitholders and general partner along with certain reserves. Such available cash could be generated through new business development. In July 2020, the board of directors of our general partner confirmed and approved that, following the distribution with respect to the three months ended June 30, 2020, the financial tests required for conversion of our subordinated units were met under the terms of our partnership agreement. Accordingly, effective August 17, 2020, the first business day following the payment of the distribution, all of our subordinated units were automatically converted into common units on a one-for-one basis and the subordination period was terminated.

~~Results of Operations~~

The following charts summarize the number of Trains that were in operation during the year ended December 31, 2019 and the nine months ended September 30, 2020 and total revenues and total LNG volumes loaded (including both operational and commissioning volumes) during the nine months ended September 30, 2020 and 2019:

~~(1)~~

~~The nine months ended September 30, 2020 excludes 11 TBtu that was loaded at our affiliate’s facility.~~

Our consolidated net loss was $67 million, or $(0.08) per common unit (basic and diluted), for the three months ended September 30, 2020, compared to net income of $110 million, or $0.19 per common unit (basic and diluted), for the three months ended September 30, 2019. This $177 million decrease in net income was primarily attributable to the impact of prior period elections by our long-term SPA customers to exercise their contractual right to not take delivery of LNG cargoes that were scheduled to be delivered this quarter.

Our consolidated net income was $774 million, or $1.55 per common unit (basic and diluted), for the nine months ended September 30, 2020, compared to $727 million, or $1.38 per common unit (basic and diluted), for the nine months ended September 30, 2019. This $47 million increase in net income was primarily a result of increased margins due to lower pricing of natural gas feedstock and additional LNG volume available to be sold from an additional Train that has reached substantial completion between the periods, a portion of which the customers elected not to take delivery but were required to pay a fixed fee with respect to the contracted volumes, partially offset by increases in (1) interest expense, net of capitalized interest, (2)

~~loss on modification or extinguishment of debt incurred in conjunction with the refinancing of the 2021 SPL Senior Notes and (3) depreciation and amortization expense.~~

We enter into derivative instruments to manage our exposure to commodity-related marketing and price risk. Derivative instruments are reported at fair value on our Consolidated Financial Statements. In some cases, the underlying transactions economically hedged receive accrual accounting treatment, whereby revenues and expenses are recognized only upon delivery, receipt or realization of the underlying transaction. Because the recognition of derivative instruments at fair value has the effect of recognizing gains or losses relating to future period exposure, use of derivative instruments may increase the volatility of our results of operations based on changes in market pricing, counterparty credit risk and other relevant factors.

~~Revenues~~

Three Months Ended September 30, Nine Months Ended September 30,
(in millions, except volumes) 2020 2019 Change 2020 2019 Change
LNG revenues $ 807 $ 1,140 $ (333) $ 3,588 $ 3,678 $ (90)
LNG revenues—affiliate 103 257 (154) 352 1,017 (665)
Regasification revenues 67 66 1 202 199 3
Other revenues 5 13 (8) 28 36 (8)
Total revenues $ 982 $ 1,476 $ (494) $ 4,170 $ 4,930 $ (760)
LNG volumes recognized as revenues (in TBtu) 132 277 (145) 666 845 (179)

Total revenues decreased during the three and nine months ended September 30, 2020 from the three and nine months ended September 30, 2019, primarily as a result of decreased volumes recognized as revenues between the periods due to LNG cargoes for which customers have notified us that they will not take delivery, although these decreases were partially offset by the revenues associated with LNG cargoes for which customers have notified us that they will not take delivery. LNG revenues during the three and nine months ended September 30, 2020 included $109 million and $513 million, respectively, in such revenues, of which $21 million would have otherwise been recognized subsequent to September 30, 2020, if the cargoes were lifted pursuant to the delivery schedules with the customers. LNG revenues during the three months ended September 30, 2020 excluded $244 million in prior period cancellations that would have otherwise been recognized during the quarter if the cargoes were lifted pursuant to the delivery schedules with the customers. LNG revenues—affiliate also decreased during the three and nine months ended September 30, 2020 from the three and nine months ended September 30, 2019 due to less sales made to Cheniere Marketing at lower pricing. We experienced decreased revenues during the three months ended September 30, 2020 because we recognized accelerated revenues associated with LNG cargoes that were scheduled for delivery during the current quarter in the prior quarter, when the customers notified us that they will not take delivery of such cargoes. We expect our LNG revenues to increase in the future upon Train 6 of the Liquefaction Project becoming operational.

Prior to substantial completion of a Train, amounts received from the sale of commissioning cargoes from that Train are offset against LNG terminal construction-in-process, because these amounts are earned or loaded during the testing phase for the construction of that Train. During the nine months ended September 30, 2019, we realized offsets to LNG terminal costs of $48 million corresponding to 10 TBtu of LNG that were related to the sale of commissioning cargoes. We did not realize any offsets to LNG terminal costs during the three and nine months ended September 30, 2020 and the three months ended September 30, 2019.

Also included in LNG revenues are sales of unutilized natural gas procured for the liquefaction process and gains and losses from derivative instruments, which include the realized value associated with a portion of derivative instruments that settle through physical delivery. We recognized revenues of $130 million and $35 million during the three months ended September 30, 2020 and 2019, respectively, and $211 million and $114 million during the nine months ended September 30, 2020 and 2019, respectively, related to these transactions.

~~Operating costs and expenses~~

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2020 2019 Change 2020 2019 Change
Cost of sales $ 454 $ 742 $ (288) $ 1,551 $ 2,501 $ (950)
Cost of sales—affiliate 33 6 27 38 6 32
Operating and maintenance expense 146 172 (26) 463 472 (9)
Operating and maintenance expense—affiliate 34 34 — 115 100 15
General and administrative expense 2 3 (1) 12 9 3
General and administrative expense—affiliate 24 34 (10) 73 82 (9)
Depreciation and amortization expense 137 138 (1) 413 390 23
Impairment expense and loss on disposal of assets — 1 (1) 5 6 (1)
Total operating costs and expenses $ 830 $ 1,130 $ (300) $ 2,670 $ 3,566 $ (896)

Our total operating costs and expenses decreased during the three and nine months ended September 30, 2020 from the three and nine months ended September 30, 2019, primarily as a result of decreased cost of sales from lower volumes and pricing of natural gas feedstock.

Cost of sales includes costs incurred directly for the production and delivery of LNG from the Liquefaction Project, to the extent those costs are not utilized for the commissioning process. Cost of sales decreased during the three months ended September 30, 2020 from the three months ended September 30, 2019, due to the decrease in the volumes of natural gas feedstock during the periods, whereas the decrease during the nine months ended September 30, 2020 from the nine months ended September 30, 2019 was primarily due to decreases in both the pricing and volumes of natural gas feedstock between the periods. Partially offsetting these decreases were increases in costs associated with a portion of derivative instruments that settle through physical delivery and increased losses from commodity derivatives to secure natural gas feedstock for the Liquefaction Project, primarily due to an unfavorable shift in long-term forward prices relative to our hedged position. Cost of sales—affiliate increased during the three and nine months ended September 30, 2020 from the three and nine months ended September 30, 2019 for the cost of cargoes procured from our affiliate to fulfill our commitments to our long-term customers during operational interruption, such as the one we experienced during the shutdown of the Liquefaction Project during Hurricane Laura in September 2020.

Operating and maintenance expense (including affiliate) primarily includes costs associated with operating and maintaining the Liquefaction Project. Operating and maintenance expense (including affiliates) decreased during the three months ended September 30, 2020 from the three months ended September 30, 2019 due to a decrease in third-party service and maintenance contract costs and other operating costs, as the three months ended September 30, 2019 included cost of turnaround and related activities at the Liquefaction Project that did not recur in the comparable period of 2020. Operating and maintenance expense (including affiliates) increased during the nine months ended September 30, 2020 from the nine months ended September 30, 2019 due to an increase in TUA reservation charges due to Total under the partial TUA assignment agreement and increased natural gas transportation and storage capacity demand charges paid to third parties from operating Train 5 of the Liquefaction Project following its substantial completion, partially offset by the decreased costs associated with turnaround and related activities. Additionally, operating and maintenance expense (including affiliates) during the three and nine months ended September 30, 2020 includes costs incurred in response to the COVID-19 pandemic, as further described earlier in ~~Impact of COVID-19 and Market Environment. Operating and maintenance expense (including affiliates) also includes payroll and benefit costs of operations personnel, insurance and regulatory costs and other operating costs.~~

Depreciation and amortization expense increased during the nine months ended September 30, 2020 from the nine months ended September 30, 2019, as the assets related to Train 5 of the Liquefaction Project began depreciating upon reaching substantial completion in March 2019.

~~Other expense (income)~~

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2020 2019 Change 2020 2019 Change
Interest expense, net of capitalized interest $ 221 $ 231 $ (10) $ 691 $ 648 $ 43
Loss on modification or extinguishment of debt — 13 (13) 43 13 30
Other income, net (2) (8) 6 (8) (24) 16
Total other expense $ 219 $ 236 $ (17) $ 726 $ 637 $ 89

Interest expense, net of capitalized interest, decreased during the three months ended September 30, 2020 compared to the three months ended September 30, 2019, primarily due to an increase in the portion of total interest costs that was eligible for capitalization as the construction of Train 6 commenced in May 2019. Interest expense, net of capitalized interest, increased during the nine months ended September 30, 2020 from the three and nine months ended September 30, 2019 due to higher interest costs as a result of the issuance of the 2029 CQP Senior Notes in September 2019. During the three months ended September 30, 2020, this increase was partially offset by an increase in the portion of total interest costs that was eligible for capitalization. During both the three months ended September 30, 2020 and 2019, we incurred $246 million of total interest cost, of which we capitalized $25 million and $15 million, respectively, which was primarily related to interest costs incurred to construct the remaining assets of the Liquefaction Project. During the nine months ended September 30, 2020 and 2019, we incurred $759 million and $718 million of total interest cost, respectively, of which we capitalized $68 million and $70 million, respectively, which was primarily related to interest costs incurred to construct the remaining assets of the Liquefaction Project.

Loss on modification or extinguishment of debt decreased during the three months ended September 30, 2020 from the comparable periods in 2019. The loss on modification or extinguishment of debt in 2019 was related to the termination of $750 million of commitments under the 2019 CQP Credit Facilities in connection with the issuance of the 2029 CQP Senior Notes. Loss on modification or extinguishment of debt increased during the nine months ended September 30, 2020 from the comparable period in 2019, due to the recognition of $43 million of debt extinguishment costs relating to the payment of early redemption fees and write off of unamortized debt premiums and issuance costs associated with the redemption of the 2021 SPL Senior Notes.2021.

Off-Balance Sheet Arrangements

As of ~~September~~June 30, ~~2020,~~2021, we had no transactions that met the definition of off-balance sheet arrangements that may have a current or future material effect on our consolidated financial position or operating results.

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. There have been no significant changes to our critical accounting estimates from those disclosed in our annual report on Form 10-K for the fiscal year ended December 31, ~~2019~~2020.

Recent Accounting Standards

For descriptions of recently issued accounting standards, see Note 1—Nature of Operations and Basis of Presentation of our Notes to Consolidated Financial Statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Marketing and Trading Commodity Price Risk

We have entered into commodity derivatives consisting of natural gas supply contracts for the commissioning and operation of the Liquefaction Project (“Liquefaction Supply Derivatives”). In 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):

September 30, 2020 December 31, 2019
Fair Value Change in Fair Value Fair Value Change in Fair Value
Liquefaction Supply Derivatives $ (12) $ 5 $ 24 $ 1


	June 30, 2021				December 31, 2020
	Fair Value		Change in Fair Value		Fair Value		Change in Fair Value
Liquefaction Supply Derivatives	$	15	$	3	$	(21)	$	4

See Note 7—Derivative Instruments for additional details about our derivative instruments.

3938

ITEM 4. CONTROLS AND PROCEDURES

We maintain a set of disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports filed by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. As of the end of the period covered by this report, we evaluated, under the supervision and with the participation of our general partner’s management, including our general partner’s Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 of the Exchange Act. Based on that evaluation, our general partner’s Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

During the most recent fiscal quarter, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

4039

PART II. OTHER INFORMATION

ITEM 1. 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. ~~There~~Other than discussed below, there have been no material changes to the legal proceedings disclosed in our annual report on Form 10-K for the fiscal year ended December 31, ~~2019~~2020.

In February 2018, the Pipeline and Hazardous Materials Safety Administration (“PHMSA”) issued a Corrective Action Order (the “CAO”) to SPL in connection with a minor LNG leak from one tank and minor vapor release from a second tank at the Sabine Pass LNG terminal. These two tanks have been taken out of operational service while we conduct analysis, repair and remediation. On April 20, 2018, SPL and PHMSA executed a Consent Agreement and Order (the “Consent Order”) that replaces and supersedes the CAO. On July 9, 2019, PHMSA and FERC issued a joint letter setting out operating conditions required to be met prior to SPL returning the tanks to service. In July 2021, PHMSA issued a Notice of Probable Violation (“NOPV”) and Proposed Civil Penalty to SPL alleging violations of federal pipeline safety regulations relating to the 2018 SPL tank incident and proposing civil penalties totaling $2,214,900. We continue to coordinate with PHMSA and FERC to address the matters relating to the February 2018 leak, including repair approach and related analysis. We do not expect that the Consent Order and related analysis, repair and remediation or resolution of the NOPV will have a material adverse impact on our financial results or operations.

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors disclosed in our annual report on Form 10-K for the fiscal year ended December 31, ~~2019, except for the updates presented in our~~ ~~quarterly report on Form 10-Q for the quarterly period ended March 31,~~ 2020.

ITEM 5. OTHER INFORMATION

On August 4, 2021, SPL and Cheniere Marketing entered into a letter agreement (amending and restating the letter agreement between the parties dated February 23, 2021) for the sale of up to eighty-one (81) cargoes to be scheduled for delivery between 2021 and 2027 at a price equal to 115% of Henry Hub plus $1.96 per MMBtu. On August 4, 2021, SPL and Cheniere Marketing also entered into a letter agreement for the sale of (i) up to six (6) cargoes scheduled for delivery in the 2022 Contract Year and up to six (6) cargoes scheduled for delivery in the 2023 Contract Year at a price equal to 115% of Henry Hub plus $1.768 per MMBtu; and (ii) up to six (6) cargoes scheduled for delivery in the 2022 Contract Year at a price equal to 115% of Henry Hub plus $1.952 per MMBtu.

ITEM 6. EXHIBITS

Exhibit No.

Description

4.1*

~~Fourth Supplemental Indenture, dated as of November 5, 2020, between the Partnership, the guarantors party thereto and The Bank of New York Mellon, as Trustee under the Indenture~~

10.1*

Change ~~order~~orders to the Lump Sum Turnkey Agreement for the Engineering, Procurement and Construction of the Sabine Pass LNG Stage 4 Liquefaction Facility, dated November 7, 2018, by and between SPL and Bechtel Oil Gas and Chemicals, Inc.: (i) the Change Order ~~CO-00023~~CO-00043 Third Berth ~~Vapor Fence Provisional Sum Scope Removal and Closeout,~~SVT Loading Arm Spares, dated ~~June 22, 2020,~~April 9, 2021, (ii) the Change Order ~~CO-00024 Train 6 Thermowell Upgrades,~~CO-00044 Third Berth U/G Directional Drilling & Cathodic Protection Provisional Sum Closures, dated ~~June 22, 2020,~~April 9, 2021 , (iii) the Change Order ~~CO-00025 Third Berth Bubble Curtain,~~CO-00045 Winter Storm Impacts, dated ~~June 22, 2020,~~April 9, 202 1 , (iv) the Change Order ~~CO-00026 Third Berth Fuel~~CO-00046 NGPL Security Provisional Sum ~~Closure Change Order,~~Interim Adjustment, dated ~~July 14, 2020,~~June 15, 2021, (v) the Change Order ~~CO-00027 Third Berth Currency Provisional Sum Closure Change Order,~~CO-00047 80 Acres Bridge, dated ~~July 20, 2020,~~June 15, 2021 and (vi) the Change Order ~~CO-00028 Train 6 Hot Oil WHRU PSV Bypass,~~CO-00048 AGRU Additions for Lean Solvent Overpressure, dated June 15, 2021

10.2*

Letter Agreement, dated August ~~11, 2020~~4 , 2021, regarding the Amended and ~~(vii) the Change Order CO-00029 Change in Law IMO 2020 Regulatory Change – Low Sulphur Emissions on Marine Vessels,~~Restated LNG Sale and Purchase Agreement (FOB), dated August ~~25, 2020~~5, 2014, between SPL and Cheniere Marketing International LLP (as assignee of Cheniere Marketing, LLC)

10.3*

Letter Agreement, dated August 4 , 2021, regarding the Amended and Restated LNG Sale and Purchase Agreement (FOB), dated August 5, 2014, between SPL and Cheniere Marketing International LLP (as assignee of Cheniere Marketing, LLC)

22.1

List of Issuers and Guarantor Subsidiaries (Incorporated by reference to Exhibit 22.1 to the ~~Company’s~~Partnership's Quarterly Report on Form 10-Q (SEC File No. 001-33366), filed on ~~August 6, 2020)~~May 4, 2021)

31.1*

Certification by Chief Executive Officer required by Rule 13a-14(a) and 15d-14(a) under the Exchange Act

31.2*

Certification by Chief Financial Officer required by Rule 13a-14(a) and 15d-14(a) under the Exchange Act

32.1**

Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2**

Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*

XBRL Instance Document

101.SCH*

XBRL Taxonomy Extension Schema Document

101.CAL*

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*

XBRL Taxonomy Extension Labels Linkbase Document

101.PRE*

XBRL Taxonomy Extension Presentation Linkbase Document

104*

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)



*			Filed herewith.
**			Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		CHENIERE ENERGY PARTNERS, L.P.
		By:	Cheniere Energy Partners GP, LLC, its general partner






Date:	~~November 5, 2020~~August 4, 2021	By:	/s/ Zach Davis
			Zach Davis
			Senior Vice President and Chief Financial Officer
			(on behalf of the registrant and as principal financial officer)

Date:	~~November 5, 2020~~August 4, 2021	By:	/s/ Leonard E. Travis
			Leonard E. Travis
			Senior Vice President and Chief Accounting Officer
			(on behalf of the registrant and as principal accounting officer)


	Gross Amounts Recognized		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts Presented in the Consolidated Balance Sheets
Offsetting Derivative Assets (Liabilities)
As of September 30, 2020




Liquefaction Supply Derivatives	$	47	$	(3)	$	44
Liquefaction Supply Derivatives	(59)		3		(56)
As of December 31, 2019


Liquefaction Supply Derivatives	$	51	$	(2)	$	49
Liquefaction Supply Derivatives	(27)		2		(25)


	Maturity Date	Interest Rate	Principal Amount Issued (in millions)
Three Months Ended June 30, 2020
SPL — 4.500% Senior Secured Notes due 2030 (the “2030 SPL Senior Notes”) (1)	May 15, 2030	4.500%	$	2,000

Nine Months Ended September 30, 2020 total			$	2,000