Quarterly report pursuant to Section 13 or 15(d)

Related Party Transactions

v3.22.2.2
Related Party Transactions
 9 Months Ended
Sep. 30, 2022
Related Party Transactions [Abstract]  
Related Party Transactions RELATED PARTY TRANSACTIONS
Below is a summary of our related party transactions as reported on our Consolidated Statements of Operations (in millions):
Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
LNG Revenues
Natural Gas Transportation and Storage Agreements $ —  $ —  $ 4  $ — 
Other revenues
Operation and Maintenance Services Agreements 3  2  5  5 
Cost of sales
Natural Gas Supply Agreements (a) (1) —  53  —  124 
Natural Gas Transportation and Storage Agreements —  —  1  1 
Total cost of sales —  53  1  125 
Operating and maintenance expense
Natural Gas Transportation and Storage Agreements 18  14  45  41 
(a) Included in cost of sales:
Liquefaction Supply Derivative gain (1) —  6  —  13 
(1)Includes amounts recorded related to natural gas supply contracts that SPL and CCL had with related parties. These agreements ceased to be considered related party agreements during 2021, as discussed below.

Natural Gas Supply Agreement

CCL Natural Gas Supply Agreement

CCL was 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 CCL Project. The related party entity was acquired by a non-related party on November 1, 2021, therefore, as of such date, this agreement ceased to be considered a related party agreement.

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 CQP’s limited partner interests in September 2020. We recorded accrued liabilities of $8 million and $4 million as of September 30, 2022 and December 31, 2021, respectively, with this related party.

CCL is party to natural gas transportation agreements with Midship Pipeline Company, LLC (“Midship Pipeline”) in the ordinary course of business for the operation of the CCL Project, for a period of 10 years which began in May 2020. We recorded accrued liabilities of $1 million as of both September 30, 2022 and December 31, 2021 with this related party. We account for our investment in Midship Holdings, LLC (“Midship Holdings”), which manages the business and affairs of Midship Pipeline, as an equity method investment. During the three months ended September 30, 2022, we recognized other-than-temporary impairment losses of $67 million related to our investment in Midship Holdings primarily related to increased forecast construction-related and operating costs, which are presented in other income (expense), net. Our investment in Midship Holdings, net of impairment losses, was $11 million as of September 30, 2022, which was measured using an income approach that utilized level 3 fair value inputs such as projected earnings and discount rates.

CCL is party to a natural gas transportation agreement with ADCC Pipeline, LLC and its wholly owned subsidiary (collectively, “ADCC Pipeline”) in the ordinary course of business for the operation of the CCL Project, with an initial term of 20 years with extension rights. We have a 30% equity interest in ADCC Pipeline, as further described below.
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 $2 million of other receivables as of September 30, 2022 and December 31, 2021, respectively, for services provided to Midship Pipeline under these agreements.
Share Purchase Agreement

In June 2022, we entered into a purchase agreement to purchase approximately $350 million of Cheniere’s common shares beneficially owned by Icahn Capital LP and certain affiliates of Icahn Capital LP (the “Icahn Group”) pursuant to which we purchased an aggregate of approximately 2.68 million shares of our common stock at a price per share of $130.52, the closing price on our common shares on the date of execution of the purchase agreement. Pursuant to the Nomination and Standstill Agreement entered into on August 21, 2015 by Cheniere and the Icahn Group, the Icahn Group’s remaining director designee to our Board, Andrew Teno, resigned from our Board and all committees of our Board effective June 21, 2022. Additionally, as of such date, the Icahn Group ceased to be considered a related party.
Interest in ADCC Pipeline, LLCIn June 2022, Cheniere, through its wholly owned subsidiary Cheniere ADCC Investments, LLC, acquired a 30% equity interest in ADCC Pipeline. ADCC Pipeline will develop, construct and operate an approximately 42-mile natural gas pipeline project connecting the Agua Dulce natural gas hub to the CCL Project. We currently have a future commitment of up to approximately $93 million to fund our equity interest, which commitment is subject to a condition precedent that has not yet been satisfied.