Cheniere Energy, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Related Party Transactions

Related Party Transactions

6 Months Ended

Jun. 30, 2021

RELATED PARTY TRANSACTIONS

Natural Gas Supply Agreements

SPL and CCL are party to natural gas supply agreements with related parties in the ordinary course of business, to obtain a fixed minimum daily volume of feed gas for the operation of the Liquefaction Projects. These related parties are partially owned by The Blackstone Group Inc., who also partially owns Cheniere Partners’ limited partner interests.

SPL Natural Gas Supply Agreement

The term of the SPL 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. As of both June 30, 2021 and December 31, 2020, the notional amount for this agreement was 91 TBtu and had a fair value of zero.

CCL Natural Gas Supply Agreement

The term of the CCL agreement extends through March 2022. Under this agreement, CCL recorded $13 million in accrued liabilities, as of both June 30, 2021 and December 31, 2020.

The Liquefaction Supply Derivatives related to this agreement are recorded on our Consolidated Balance Sheets as follows (in millions, except notional amount):



	June 30,		December 31,
	2021		2020
Current derivative assets	$	4	$	3
Derivative assets	7		1

Notional amount (in TBtu)	132		60

We recorded the following amounts on our Consolidated Statements of Operations during the three and six months ended June 30, 2021 and 2020 related to this agreement (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Cost of sales (a)	$	36	$	25	$	71	$	48

(a) Included in costs of sales:
Liquefaction Supply Derivative gain	$	6	$	1	$	7	$	2

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 SPL Project, with initial primary terms of up to 10 years with extension rights. This related party is partially owned by Brookfield Asset Management, Inc., who indirectly acquired a portion of Cheniere Partners’ limited partner interests in September 2020. We recorded operating and maintenance expense of $12 million and $22 million and cost of sales of $1 million and $1 million during the three and six months ended June 30, 2021, respectively, and accrued liabilities of $4 million as of both June 30, 2021 and December 31, 2020 with this related party.

Operation and Maintenance Service Agreements

Cheniere LNG O&M Services, LLC (“O&M Services”), our wholly owned subsidiary, provides the development, construction, operation and maintenance services to Midship Pipeline pursuant to agreements in which O&M Services receives an agreed upon fee and reimbursement of costs incurred. O&M Services recorded $1 million and $3 million in the three months ended June 30, 2021 and 2020, respectively, and $3 million and $6 million in the six months ended June 30, 2021 and 2020, respectively, of other revenues and $1 million and $2 million of accounts receivable as of June 30, 2021 and December 31, 2020, respectively, for services provided to Midship Pipeline under these agreements.