Cheniere Energy's wholly owned limited partnership, Sabine Pass LNG, L.P. has entered into a terminal use and related agreement with Total LNG USA, Inc., a subsidiary of Total SA. Under the terms of the agreement, Total will receive the right to LNG regasification capacity of 1 billion cubic feet per day ("Bcf/d"), for a period of 20 years commencing no later than April 1, 2009. Total has the option to proceed with the transaction by electing to make an initial payment and to take other actions by November 15, 2004. If Total elects to proceed with the transaction, a second payment will be made upon the latter to occur of (a) approval by the Federal Energy Regulatory Commission ("FERC") to build the Sabine Pass terminal and (b) completion of related financing for construction of the facility. The advance payments will be amortized as a reduction of Total's tariff over a ten-year period. Total also has the right to terminate this transaction if the preceding conditions are not satisfied by June 30, 2005. For additional information, please refer to the Cheniere Energy Inc. concurrent filing with the Securities and Exchange Commission of a Current Report on Form 8-K, which is posted on Cheniere's Web site under the "Investor Relations SEC Filings" link.
Cheniere SP received its Draft Environmental Impact Statement from FERC on August 12, 2004, and should begin construction in the first quarter of 2005. The facility is designed to process 2.6 Bcf/d of LNG. Cheniere is also a 30% limited partner in Freeport LNG Development, L.P., a project which it began in 2000 and which received its final permit from FERC in July 2004.
"Cheniere will be very pleased to have Total as a major customer of the Sabine Pass LNG facility," said Keith Meyer, president of Cheniere LNG Inc., a wholly owned subsidiary of Cheniere Energy. "With Total anchoring the Sabine Pass terminal, and the 1.5 Bcf/d capacity of Freeport LNG fully committed, Cheniere has sponsored two of the most commercially advanced LNG receiving terminals under development in the United States. The terminal development at Corpus Christi will soon follow which will provide Cheniere the ability to offer highly reliable service across a range of ship channels, unloading berths and downstream markets."