Commitments and Contingencies |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies |
COMMITMENTS AND CONTINGENCIES
We have 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, 2018, are not recognized as liabilities but require disclosures in our Consolidated Financial Statements.
LNG Terminal Commitments and Contingencies
Obligations under EPC Contracts
SPL has lump sum turnkey contracts with Bechtel for the engineering, procurement and construction of Train 5 and Train 6 of the Liquefaction Project. The EPC contract prices for Train 5 of the Liquefaction Project and Train 6 of the Liquefaction Project are approximately $3.1 billion and $2.5 billion, respectively, reflecting amounts incurred under change orders through December 31, 2018, and including estimated costs for an optional third marine berth. SPL has the right to terminate the EPC contracts 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 million depending on the termination date.
Obligations under SPAs
SPL has third-party SPAs which obligate SPL to purchase and liquefy sufficient quantities of natural gas to deliver contracted volumes of LNG to the customers’ vessels, subject to completion of construction of specified Trains of the Liquefaction Project.
Obligations under LNG TUAs
SPLNG has third-party TUAs with Total and Chevron U.S.A. Inc. to provide berthing for LNG vessels and for the unloading, storage and regasification of LNG at the Sabine Pass LNG terminal.
Obligations under Natural Gas Supply, Transportation and Storage Service Agreements
SPL primarily has index-based physical natural gas supply contracts to secure natural gas feedstock for the Liquefaction Project. The terms of these contracts range up to six years, some of which commence upon the satisfaction of certain conditions precedent. As of December 31, 2018, SPL has secured up to approximately 3,464 TBtu of natural gas feedstock through natural gas supply contracts, a portion of which are considered purchase obligations if the conditions precedent were met.
Additionally, SPL has transportation and storage service agreements for the Liquefaction Project. The initial terms of the transportation agreements range up to 20 years, with renewal options for certain contracts, and commence upon the occurrence of conditions precedent. The terms of the SPL storage service agreements range up to ten years.
As of December 31, 2018, SPL’s obligations under natural gas supply, transportation and storage service agreements for contracts in which conditions precedent were met were as follows (in millions):
Services Agreements
We have certain services agreements with affiliates. See Note 13—Related Party Transactions for information regarding such agreements.
Restricted Net Assets
At December 31, 2018, our restricted net assets of consolidated subsidiaries were approximately $2.5 billion.
Other Commitments
State Tax Sharing Agreements
SPLNG, SPL and CTPL have state tax sharing agreements with Cheniere. See Note 13—Related Party Transactions for information regarding such agreements.
Other Agreements
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, 2018, there were no pending legal matters that would reasonably be expected to have a material impact on our operating results, financial position or cash flows.
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