cqp-20220630

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 June 30, 2022

☐ 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 July 29, 2022, the registrant had 484,030,123 common units outstanding.

CHENIERE ENERGY PARTNERS, L.P.

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	Definitions	1
Part I. Financial Information
Item 1.	Consolidated Financial Statements	3
	Consolidated Statements of Income	3
	Consolidated Balance Sheets	4
	Consolidated Statements of Partners’ Equity (Deficit)	5
	Consolidated Statements of Cash Flows	6
	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—Trade and Other Receivables, Net of Current Expected Credit Losses	8
	Note 5—Inventory	8
	Note 6—Property, Plant and Equipment, Net of Accumulated Depreciation	9
	Note 7—Derivative Instruments	9

	Note 8—Accrued Liabilities	12
	Note 9—Debt	13
	Note 10—Revenues from Contracts with Customers	14
	Note 11—Related Party Transactions	16
	Note 12—Net Income per Common Unit	20
	Note 13—Customer Concentration	22
	Note 14—Supplemental Cash Flow Information	22

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	33

Item 4.	Controls and Procedures	33

Part II. Other Information
Item 1.	Legal Proceedings	34

Item 1A.	Risk Factors	34



Item 6.	Exhibits	35

	Signatures	36

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DEFINITIONS

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

Common Industry and Other Terms


ASU						Accounting Standards Update
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
FASB						Financial Accounting Standards Board
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
IPM agreements						integrated production marketing agreements in which the gas producer sells to us gas on a global LNG index price, less a fixed liquefaction fee, shipping and other costs
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; one British thermal unit measures the amount of energy 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; one British thermal unit measures the amount of energy 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

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Abbreviated Legal Entity Structure

The following diagram depicts our abbreviated legal entity structure as of June 30, 2022, including our ownership of certain subsidiaries, and the references to these entities used in this quarterly report:

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

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PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per unit data)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenues
LNG revenues	$	2,959	$	1,597	$	5,447	$	3,266
LNG revenues—affiliate	1,135		211		1,892		425
LNG revenues—related party	4		—		4		—
Regasification revenues	68		67		136		134

Other revenues	15		14		30		27

Total revenues	4,181		1,889		7,509		3,852

Operating costs and expenses
Cost of sales (excluding items shown separately below)	3,144		888		5,706		1,836
Cost of sales—affiliate	57		12		62		54
Cost of sales—related party	1		1		1		1
Operating and maintenance expense	191		168		361		317
Operating and maintenance expense—affiliate	41		35		79		69
Operating and maintenance expense—related party	15		12		27		22
Development expense	—		1		—		1

General and administrative expense (recovery)	(3)		3		—		5
General and administrative expense—affiliate	24		21		47		42
Depreciation and amortization expense	156		138		309		277
Other	—		6		—		6

Total operating costs and expenses	3,626		1,285		6,592		2,630

Income from operations	555		604		917		1,222

Other income (expense)
Interest expense, net of capitalized interest	(216)		(209)		(419)		(426)
Loss on modification or extinguishment of debt	—		—		—		(54)

Other income, net	3		—		3		—

Total other expense	(213)		(209)		(416)		(480)

Net income	$	342	$	395	$	501	$	742

Basic and diluted net income per common unit	$	0.25	$	0.73	$	0.13	$	1.38


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

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

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in millions, except unit data)



	June 30,		December 31,
	2022		2021
ASSETS	(unaudited)
Current assets
Cash and cash equivalents	$	1,111	$	876
Restricted cash and cash equivalents	78		98
Trade and other receivables, net of current expected credit losses	723		580
Accounts receivable—affiliate	485		232
Accounts receivable—related party	—		1
Advances to affiliate	136		141
Inventory	170		176
Current derivative assets	153		21
Other current assets	104		87

Total current assets	2,960		2,212


Property, plant and equipment, net of accumulated depreciation	16,861		16,830
Operating lease assets	94		98
Debt issuance costs, net of accumulated amortization	10		12
Derivative assets	36		33
Other non-current assets, net	169		173

Total assets	$	20,130	$	19,358

LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	31	$	21
Accrued liabilities	1,576		1,073
Accrued liabilities—related party	6		4
Current debt, net of discount and debt issuance costs	1,497		—
Due to affiliates	58		67
Deferred revenue	124		155
Deferred revenue—affiliate	—		1
Current operating lease liabilities	9		8
Current derivative liabilities	478		16

Total current liabilities	3,779		1,345

Long-term debt, net of premium, discount and debt issuance costs	15,693		17,177

Operating lease liabilities	85		89
Derivative liabilities	3,178		11

Other non-current liabilities—affiliate	20		18



Partners' equity (deficit)
Common unitholders’ interest (484.0 million units issued and outstanding at both June 30, 2022 and December 31, 2021)	(2,043)		1,024

General partner’s interest (2% interest with 9.9 million units issued and outstanding at June 30, 2022 and December 31, 2021)	(582)		(306)
Total partners' equity (deficit)	(2,625)		718
Total liabilities and partners' equity (deficit)	$	20,130	$	19,358

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

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY (DEFICIT)

(in millions)

(unaudited)


Three and Six Months Ended June 30, 2022
	Common Unitholders’ Interest			General Partner’s Interest	Total Partners’ Deficit
	Units	Amount				Units			Amount














Balance at December 31, 2021	484.0	$	1,024		9.9		$	(306)		$	718
Net income	—	157			—		2			159
Novated IPM Agreement (see Note 14)	—	(2,712)			—		—			(2,712)
Distributions
Common units, $0.700/unit	—	(339)			—		—			(339)

General partner units	—	—			—		(56)			(56)
Balance at March 31, 2022	484.0	(1,870)			9.9		(360)			(2,230)





Net income	—	335			—		7			342

Distributions
Common units, $1.05/unit	—	(508)			—		—			(508)

General partner units	—	—			—		(229)			(229)

Balance at June 30, 2022	484.0	$	(2,043)		9.9		$	(582)		$	(2,625)


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
















Balance at December 31, 2020	484.0	$	714		9.9		$	(175)		$	539
Net income	—	340			—		7			347
Distributions
Common units, $0.655/unit	—	(316)			—		—			(316)
General partner units	—	—			—		(35)			(35)
Balance at March 31, 2021	484.0	$	738		9.9		$	(203)		$	535
Net income	—	387			—		8			395
Distributions
Common units, $0.660/unit	—	(320)			—		—			(320)
General partner units	—	—			—		(39)			(39)
Balance at June 30, 2021	484.0	$	805		9.9		$	(234)		$	571

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

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)


	Six Months Ended June 30,
	2022		2021
Cash flows from operating activities
Net income	$	501	$	742
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	309		277
Amortization of debt issuance costs, premium and discount	15		15
Loss on modification or extinguishment of debt	—		54
Losses (gains) on derivative instruments, net	819		(54)

Net cash provided by (used for) settlement of derivative instruments	(37)		18

Other	16		13

Changes in operating assets and liabilities:
Trade and other receivables, net of current expected credit losses	(208)		32
Accounts receivable—affiliate	(269)		119

Advances to affiliate	7		3
Inventory	4		(9)
Accounts payable and accrued liabilities	491		(48)
Accrued liabilities—related party	2		—
Due to affiliates	5		(13)
Deferred revenue	(31)		(32)
Other, net	(39)		(49)
Other, net—affiliate	1		7
Net cash provided by operating activities	1,586		1,075

Cash flows from investing activities
Property, plant and equipment	(239)		(316)

Net cash used in investing activities	(239)		(316)

Cash flows from financing activities
Proceeds from issuances of debt	—		1,500
Redemptions and repayments of debt	—		(1,500)
Debt issuance and other financing costs	—		(20)
Debt extinguishment costs	—		(40)

Distributions to owners	(1,132)		(710)
Other	—		8
Net cash used in financing activities	(1,132)		(762)

Net increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents	215		(3)
Cash, cash equivalents and restricted cash and cash equivalents—beginning of period	974		1,307
Cash, cash equivalents and restricted cash and cash equivalents—end of period	$	1,189	$	1,304

Balances per Consolidated Balance Sheet:


	June 30,
	2022
Cash and cash equivalents	$	1,111
Restricted cash and cash equivalents	78

Total cash, cash equivalents and restricted cash and cash equivalents	$	1,189

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

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1—NATURE OF OPERATIONS AND BASIS OF PRESENTATION

We own the natural gas liquefaction and export facility located in Cameron Parish, Louisiana at Sabine Pass (the “Sabine Pass LNG Terminal”) which has six operational Trains, with Train 6 achieving substantial completion on February 4, 2022, for a total production capacity of approximately 30 mtpa of LNG (the “Liquefaction Project”). The Sabine Pass LNG Terminal also has operational regasification facilities that include five LNG storage tanks, vaporizers and two marine berths, 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”).

We have increased available liquefaction capacity at our Liquefaction Project as a result of debottlenecking and other optimization projects. We hold a significant land position at the Sabine Pass LNG Terminal, which provides opportunity for further liquefaction capacity expansion. The development of this site or other projects, including infrastructure projects in support of natural gas supply and LNG demand, will require, among other things, acceptable commercial and financing arrangements before we make a positive final investment decision.

As of June 30, 2022, Cheniere owned 48.6% of our limited partner interest in the form of 239.9 million of our common units. Cheniere also owns 100% of our general partner interest and our incentive distribution rights (“IDRs”).

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements of CQP have been prepared in accordance with GAAP for interim financial information and in accordance 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, 2021.

Results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results of operations that will be realized for the year ending December 31, 2022.

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.

Recent Accounting Standards

ASU 2020-04

In March 2020, the FASB issued 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, which entitle the unitholders to participate in partnership distributions and exercise the rights and privileges available to limited partners under our partnership agreement. Although common unitholders are not obligated to fund losses of the Partnership, their capital account, which would be considered in allocating the net assets of the Partnership were it to be liquidated, continues to share in losses.

The general partner interest is entitled to at least 2% of all distributions made by us. In addition, the general partner holds IDRs, which allow the general partner to receive a higher percentage of quarterly distributions of available cash from

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

operating surplus 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.

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 we have paid to date have been made from accumulated operating surplus as defined in the partnership agreement.

As of June 30, 2022, our total securities beneficially owned in the form of common units were held 48.6% by Cheniere, 41.4% by CQP Target Holdco L.L.C. (“CQP Target Holdco”) and other affiliates of Blackstone Inc. (“Blackstone”) and Brookfield Asset Management Inc. (“Brookfield”) and 8.0% by the public. All of our 2% general partner interest was held by Cheniere. CQP Target Holdco’s equity interests are 50.00% owned by BIP Chinook Holdco L.L.C., an affiliate of Blackstone and 50.00% owned by BIF IV Cypress Aggregator (Delaware) LLC, an affiliate of Brookfield. The ownership of CQP Target Holdco, Blackstone and Brookfield are based on their most recent filings with the SEC.

NOTE 3—RESTRICTED CASH AND CASH EQUIVALENTS

Restricted cash and cash equivalents consist 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 June 30, 2022 and December 31, 2021, we had $78 million and $98 million of restricted cash and cash equivalents, 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—TRADE AND OTHER RECEIVABLES, NET OF CURRENT EXPECTED CREDIT LOSSES

Trade and other receivables, net of current expected credit losses consisted of the following (in millions):



	June 30,		December 31,
	2022		2021
Trade receivables	$	648	$	546
Other receivables	75		34
Total trade and other receivables, net of current expected credit losses	$	723	$	580

NOTE 5—INVENTORY

Inventory consisted of the following (in millions):



	June 30,		December 31,
	2022		2021
Materials	$	95	$	86
LNG	34		45
Natural gas	41		43
Other	—		2
Total inventory	$	170	$	176

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

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

Property, plant and equipment, net of accumulated depreciation consisted of the following (in millions):



	June 30,		December 31,
	2022		2021
LNG terminal
Terminal and interconnecting pipeline facilities	$	19,447	$	16,973

Construction-in-process	609		2,746
Accumulated depreciation	(3,199)		(2,893)
Total LNG terminal, net of accumulated depreciation	16,857		16,826
Fixed assets
Fixed assets	30		29
Accumulated depreciation	(26)		(25)
Total fixed assets, net of accumulated depreciation	4		4
Property, plant and equipment, net of accumulated depreciation	$	16,861	$	16,830

The following table shows depreciation expense and offsets to LNG terminal costs (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Depreciation expense	$	155	$	137	$	307	$	275
Offsets to LNG terminal costs (1)	—		—		148		—

(1)We recognize 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.

NOTE 7—DERIVATIVE INSTRUMENTS

We have entered into commodity derivatives consisting of natural gas supply contracts, including those under SPL’s IPM agreement, for the operation of the Liquefaction Project (“Physical Liquefaction Supply Derivatives”) and associated economic hedges (“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 Income to the extent not utilized for the commissioning process, in which case such changes are 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 (in millions):


	Fair Value Measurements as of
	June 30, 2022								December 31, 2021
	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)	$	4	$	(15)	$	(3,456)	$	(3,467)	$	2	$	(13)	$	38	$	27

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

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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, but not limited to, evaluation of whether the respective market exists from the perspective of market participants as infrastructure is developed.

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 and volatility.

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 and international LNG prices. The following table includes quantitative information for the unobservable inputs for our Level 3 Physical Liquefaction Supply Derivatives as of June 30, 2022 and December 31, 2021:

Net Fair Value Liability
(in millions)

Valuation Approach

Significant Unobservable Input

Range of Significant Unobservable Inputs / Weighted Average (1)

Physical Liquefaction Supply Derivatives

$(3,456)

Market approach incorporating present value techniques

Henry Hub basis spread

$(1.845) - $0.765 / $0.032

Option pricing model

International LNG pricing spread, relative to Henry Hub (2)

97% - 604% / 217%

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

(2)Spread contemplates U.S. dollar-denominated pricing.

Increases or decreases in basis or pricing spreads, 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 (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021			2022		2021
Balance, beginning of period	$	(3,162)	$	(36)		$	38	$	(21)
Realized and mark-to-market gains (losses):
Included in cost of sales	(309)		67			63		58
Purchases and settlements:
Purchases (1)	8		1			(3,549)		—
Settlements	7		1			(8)		(4)

Balance, end of period	$	(3,456)	$	33		$	(3,456)	$	33
Change in unrealized gains (losses) relating to instruments still held at end of period	$	(309)	$	67		$	63	$	58

(1)Includes any assignments during the period.

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 and the unconditional contractual right of set-off 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 depending on the position of the derivative. 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.

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Liquefaction Supply Derivatives

SPL holds Liquefaction Supply Derivatives which are primarily indexed to the natural gas market and international LNG indices. The remaining minimum terms of the Physical Liquefaction Supply Derivatives range up to 15 years, some of which commence upon the satisfaction of certain conditions precedent. The terms of the Financial Liquefaction Supply Derivatives range up to approximately two years.

The forward notional amount for our Liquefaction Supply Derivatives was approximately 5,484 TBtu and 5,194 TBtu as of June 30, 2022 and December 31, 2021, respectively, excluding notional amounts associated with extension options that were uncertain to be taken as of June 30, 2022.

The following table shows the effect and location of our Liquefaction Supply Derivatives recorded on our Consolidated Statements of Income (in millions):


	Gain (Loss) Recognized in Consolidated Statements of Income
Consolidated Statements of Income Location (1)	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
LNG revenues	$	4	$	—	$	4	$	—
Cost of sales	(298)		56		(823)		54

(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.

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)
Consolidated Balance Sheets Location	June 30, 2022		December 31, 2021
Current derivative assets	$	153	$	21
Derivative assets	36		33
Total derivative assets	189		54

Current derivative liabilities	(478)		(16)
Derivative liabilities	(3,178)		(11)
Total derivative liabilities	(3,656)		(27)

Derivative asset (liability), net	$	(3,467)	$	27

(1)Does not include collateral posted with counterparties by us of $9 million and $7 million, as of June 30, 2022 and December 31, 2021, respectively, which are included in other current assets in our Consolidated Balance Sheets.

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Consolidated Balance Sheets Presentation

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


	Liquefaction Supply Derivatives
As of June 30, 2022
Gross assets	$	232
Offsetting amounts	(43)
Net assets	$	189

Gross liabilities	$	(3,681)
Offsetting amounts	25
Net liabilities	$	(3,656)

As of December 31, 2021
Gross assets	$	79
Offsetting amounts	(25)
Net assets	$	54

Gross liabilities	$	(33)
Offsetting amounts	6
Net liabilities	$	(27)

NOTE 8—ACCRUED LIABILITIES

Accrued liabilities consisted of the following (in millions):



	June 30,		December 31,
	2022		2021
Natural gas purchases	$	1,160	$	786
Interest costs and related debt fees	203		180
LNG terminal and related pipeline costs	195		101
Other accrued liabilities	18		6
Total accrued liabilities	$	1,576	$	1,073

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

NOTE 9—DEBT

Debt consisted of the following (in millions):



	June 30,		December 31,
	2022		2021
SPL:
Senior Secured Notes:

5.625% due 2023	$	1,500	$	1,500
5.75% due 2024	2,000		2,000
5.625% due 2025	2,000		2,000
5.875% due 2026	1,500		1,500
5.00% due 2027	1,500		1,500
4.200% due 2028	1,350		1,350
4.500% due 2030	2,000		2,000
4.27% weighted average rate due 2037	1,282		1,282
Total SPL Senior Secured Notes	13,132		13,132
Working capital revolving credit and letter of credit reimbursement agreement (the “SPL Working Capital Facility”)	—		—
Total debt - SPL	13,132		13,132

CQP:
Senior Notes:


4.500% due 2029	1,500		1,500
4.000% due 2031	1,500		1,500
3.25% due 2032	1,200		1,200
Total CQP Senior Notes	4,200		4,200
Credit facilities (the “CQP Credit Facilities”)	—		—
Total debt - CQP	4,200		4,200
Total debt	17,332		17,332


Short-term debt	(1,497)		—
Unamortized premium, discount and debt issuance costs, net	(142)		(155)
Total long-term debt, net of premium, discount and debt issuance costs