Commitments and Contingencies |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies |
COMMITMENTS AND CONTINGENCIES
Cheniere has various contractual obligations which are recorded as liabilities in our Consolidated Financial Statements. Other items, such as certain purchase commitments and other executed contracts which do not meet the definition of a liability as of December 31, 2015, are not recognized as liabilities but require disclosures in our Consolidated Financial Statements.
LNG Terminal Commitments and Contingencies
Obligations under LNG TUAs
SPLNG has entered into third-party TUAs with Total Gas & Power North America, Inc. (“Total”) and Chevron U.S.A. Inc. (“Chevron”) to provide berthing for LNG vessels and for the unloading, storage and regasification of LNG at the Sabine Pass LNG terminal.
Obligations under Bechtel EPC Contracts
SPL has entered into lump sum turnkey contracts with Bechtel for the engineering, procurement and construction of Trains 1 and 2 (the “EPC Contract (SPL Trains 1 and 2)”), Trains 3 and 4 (the “EPC Contract (SPL Trains 3 and 4)”) and Train 5 (the “EPC Contract (SPL Train 5)”) of the SPL Project.
The EPC Contract (SPL Trains 1 and 2), the EPC Contract (SPL Trains 3 and 4) and the EPC Contract (SPL Train 5) provide that SPL will pay Bechtel contract prices of $4.1 billion, $3.8 billion and $3.0 billion, respectively, subject to adjustment by change order. SPL has the right to terminate each EPC contract for its convenience, in which case Bechtel will be paid (1) the portion of the contract price for the work performed, (2) costs reasonably incurred by Bechtel on account of such termination and demobilization, and (3) a lump sum of up to $30.0 million depending on the termination date.
CCL has entered into lump sum turnkey contracts with Bechtel for the engineering, procurement and construction of Stage 1 (the “EPC Contract (CCL Stage 1)”) and Stage 2 (the “EPC Contract (CCL Stage 2”) of the CCL Project. The contract prices of the EPC Contract (CCL Stage 1) and EPC Contract (CCL Stage 2) are approximately $7.5 billion and $2.4 billion, respectively, reflecting amounts incurred under change orders through December 31, 2015. CCL has the right to terminate each of the EPC contracts for its convenience, in which case Bechtel will be paid the portion of the contract price for the work performed plus costs reasonably incurred by Bechtel on account of such termination and demobilization. If the EPC Contract (CCL Stage 1) is terminated, Bechtel will also be paid a lump sum of up to $30.0 million depending on the termination date. If the EPC Contract (CCL Stage 2) is terminated prior to the issuance of notice to proceed, Bechtel will also be paid a lump sum of up to $5.0 million, and if the EPC Contract (CCL Stage 2) is terminated after issuance of the notice to proceed, Bechtel will be paid a lump sum of up to $30.0 million depending on the termination date.
Obligations under SPAs
SPL has entered into third-party SPAs which obligate SPL to purchase and liquefy sufficient quantities of natural gas to deliver 1,030.0 million MMBtu per year of LNG to the customers’ vessels, subject to completion of construction of Trains 1 through 5 of the SPL Project.
CCL has entered into third-party SPAs which obligate CCL to purchase and liquefy sufficient quantities of natural gas to deliver 438.7 million MMBtu per year of LNG to the customers’ vessels, subject to completion of construction of Trains 1 through 3 of the CCL Project.
Obligations under Natural Gas Supply, Transportation and Storage Service Agreements
SPL has entered into index-based physical natural gas supply contracts to secure natural gas feedstock for the SPL Project. The terms of these contracts primarily range from approximately one to seven years and commence upon the occurrence of conditions precedent, including SPL’s declaration to the respective natural gas supplier that it is ready to commence the term of the supply arrangement in anticipation of the date of first commercial operation of the applicable, specified Trains of the SPL Project. As of December 31, 2015, SPL has secured up to approximately 2,154.2 million MMBtu of natural gas feedstock through natural gas purchase agreements, of which we determined that we have purchase obligations for the contracts for which conditions precedent were met.
Additionally, SPL has entered into transportation and storage service agreements for the SPL Project. The initial term of the transportation agreements ranges from 10 to 20 years, with renewal options for certain contracts, and commences upon the occurrence of conditions precedent. The term of our storage service agreements is typically three years.
As of December 31, 2015, SPL’s purchase obligations under natural gas supply, transportation and storage service agreements for contracts in which conditions precedent were met were as follows (in thousands):
Other Purchase Obligations
As of December 31, 2015, we had approximately $48.9 million in purchase obligations due over the next two years, primarily related to purchases of materials for the Corpus Christi Pipeline.
Restricted Net Assets
At December 31, 2015, our restricted net assets of consolidated subsidiaries were approximately $2.9 billion.
Obligations under Certain Guarantee Contracts
Cheniere and certain of its subsidiaries enter into guarantee arrangements in the normal course of business to facilitate transactions with third parties. These arrangements include financial guarantees, letters of credit and debt guarantees. As of December 31, 2015, there were no liabilities recognized under these guarantee arrangements.
Other Commitments
In the ordinary course of business, we have entered into certain multi-year licensing and service agreements, none of which are considered material to our financial position. Additionally, we have various lease commitments, as disclosed in Note 15—Leases.
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. In the opinion of management, as of December 31, 2015, there were no pending legal matters that would reasonably be expected to have a material impact on our consolidated operating results, financial position or cash flows.
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