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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 September 30, 2022
or
    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)
Delaware20-5913059
(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 classTrading SymbolName of each exchange on which registered
Common Units Representing Limited Partner InterestsCQPNYSE 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 filerAccelerated filer
Non-accelerated filerSmaller 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 October 31, 2022, the registrant had 484,031,623 common units outstanding.




CHENIERE ENERGY PARTNERS, L.P.
TABLE OF CONTENTS







i

DEFINITIONS

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

Common Industry and Other Terms
ASUAccounting Standards Update
Bcfbillion cubic feet
Bcf/dbillion cubic feet per day
Bcf/yrbillion cubic feet per year
Bcfebillion cubic feet equivalent
DOEU.S. Department of Energy
EPCengineering, procurement and construction
FASBFinancial Accounting Standards Board
FERCFederal Energy Regulatory Commission
FTA countriescountries with which the United States has a free trade agreement providing for national treatment for trade in natural gas
GAAPgenerally accepted accounting principles in the United States
Henry Hubthe 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 agreementsintegrated 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
LIBORLondon Interbank Offered Rate
LNGliquefied 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
MMBtumillion 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
mtpamillion tonnes per annum
non-FTA countriescountries 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
SECU.S. Securities and Exchange Commission
SPALNG 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
Trainan industrial facility comprised of a series of refrigerant compressor loops used to cool natural gas into LNG
TUAterminal use agreement



1

Abbreviated Legal Entity Structure

The following diagram depicts our abbreviated legal entity structure as of September 30, 2022, including our ownership of certain subsidiaries, and the references to these entities used in this quarterly report:
cqp-20220930_g1.jpg
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. 



2



PART I.     FINANCIAL INFORMATION

ITEM 1.    CONSOLIDATED FINANCIAL STATEMENTS
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per unit data)
(unaudited)

Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Revenues
LNG revenues$3,130 $1,791 $8,577 $5,057 
LNG revenues—affiliate1,376 453 3,268 878 
LNG revenues—related party  4  
Regasification revenues455 68 591 202 
Other revenues15 12 45 39 
Total revenues4,976 2,324 12,485 6,176 
Operating costs and expenses 
Cost of sales (excluding items shown separately below)4,739 1,342 10,445 3,178 
Cost of sales—affiliate104 8 166 62 
Cost of sales—related party  1 1 
Operating and maintenance expense189 148 550 465 
Operating and maintenance expense—affiliate39 34 118 103 
Operating and maintenance expense—related party18 12 45 34 
General and administrative expense3 2 3 7 
General and administrative expense—affiliate23 22 70 64 
Depreciation and amortization expense160 140 469 417 
Other   7 
Total operating costs and expenses5,275 1,708 11,867 4,338 
Income (loss) from operations(299)616 618 1,838 
Other income (expense) 
Interest expense, net of capitalized interest(222)(210)(641)(636)
Loss on modification or extinguishment of debt (27) (81)
Other income, net7 2 10 2 
Total other expense(215)(235)(631)(715)
Net income (loss)$(514)$381 $(13)$1,123 
Basic and diluted net income (loss) per common unit (1)$(1.49)$0.69 $(1.36)$2.07 
Weighted average basic and diluted number of common units outstanding484.0 484.0 484.0 484.0 
(1)In computing basic and diluted net income (loss) per common unit, net income (loss) is reduced by the amount of undistributed net income (loss) allocated to participating securities other than common units, as required under the two-class method. See Note 12—Net Income (Loss) per Unit.

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

3

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions, except unit data)

September 30,December 31,
20222021
ASSETS(unaudited) 
Current assets  
Cash and cash equivalents$988 $876 
Restricted cash and cash equivalents195 98 
Trade and other receivables, net of current expected credit losses805 580 
Accounts receivable—affiliate447 232 
Accounts receivable—related party 1 
Advances to affiliate150 141 
Inventory241 176 
Current derivative assets27 21 
Margin deposits59 7 
Contract assets387  
Other current assets74 80 
Total current assets3,373 2,212 
Property, plant and equipment, net of accumulated depreciation16,827 16,830 
Operating lease assets91 98 
Debt issuance costs, net of accumulated amortization9 12 
Derivative assets33 33 
Other non-current assets, net167 173 
Total assets$20,500 $19,358 
LIABILITIES AND PARTNERS’ EQUITY (DEFICIT) 
Current liabilities
Accounts payable$31 $21 
Accrued liabilities1,657 1,073 
Accrued liabilities—related party8 4 
Current debt, net of discount and debt issuance costs1,498  
Due to affiliates56 67 
Deferred revenue162 155 
Deferred revenue—affiliate1 1 
Current operating lease liabilities9 8 
Current derivative liabilities1,157 16 
Other current liabilities4  
Total current liabilities4,583 1,345 
Long-term debt, net of premium, discount and debt issuance costs15,699 17,177 
Operating lease liabilities82 89 
Finance lease liabilities18  
Derivative liabilities3,981 11 
Other non-current liabilities—affiliate21 18 
Partners’ equity (deficit)
Common unitholders’ interest (484.0 million units issued and outstanding at both September 30, 2022 and December 31, 2021)
(3,059)1,024 
General partner’s interest (2% interest with 9.9 million units issued and outstanding at September 30, 2022 and December 31, 2021)
(825)(306)
Total partners’ equity (deficit)(3,884)718 
Total liabilities and partners’ equity (deficit)$20,500 $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 Nine Months Ended September 30, 2022
Common Unitholders’ InterestGeneral Partner’s InterestTotal Partners’ Equity (Deficit)
UnitsAmountUnitsAmount
Balance at December 31, 2021484.0 $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, 2022484.0 (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, 2022484.0 (2,043)9.9 (582)(2,625)
Net loss— (503)— (11)(514)
Distributions
Common units, $1.06/unit
— (513)— — (513)
General partner units— — — (232)(232)
Balance at September 30, 2022484.0 $(3,059)9.9 $(825)$(3,884)

Three and Nine Months Ended September 30, 2021
Common Unitholders’ InterestGeneral Partner’s InterestTotal Partners’ Equity
UnitsAmountUnitsAmount
Balance at December 31, 2020484.0 $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, 2021484.0 738 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, 2021484.0 805 9.9 (234)571 
Net income— 373 — 8 381 
Distributions
Common units, $0.665/unit
— (322)— — (322)
General partner units— — — (41)(41)
Balance at September 30, 2021484.0 $856 9.9 $(267)$589 
The accompanying notes are an integral part of these consolidated financial statements.

5

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)

 Nine Months Ended September 30,
20222021
Cash flows from operating activities  
Net income (loss)$(13)$1,123 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization expense469 417 
Amortization of debt issuance costs, premium and discount22 22 
Loss on modification or extinguishment of debt 81 
Total losses (gains) on derivative instruments, net2,447 (64)
Net cash provided by (used for) settlement of derivative instruments(54)10 
Other28 19 
Changes in operating assets and liabilities:
Trade and other receivables, net of current expected credit losses(290)(41)
Accounts receivable—affiliate(231)(13)
Advances to affiliate(10)11 
Inventory(67)(26)
Margin deposits(52)(25)
Contract assets(387) 
Accounts payable and accrued liabilities592 165 
Accrued liabilities—related party5 1 
Due to affiliates2 (6)
Deferred revenue6 29 
Other, net(30)(37)
Other, net—affiliate5 1 
Net cash provided by operating activities2,442 1,667 
Cash flows from investing activities  
Property, plant and equipment(356)(495)
Net cash used in investing activities(356)(495)
Cash flows from financing activities  
Proceeds from issuances of debt 2,700 
Redemptions and repayments of debt (2,172)
Debt issuance and other financing costs (35)
Debt extinguishment costs (61)
Distributions(1,877)(1,073)
Other 8 
Net cash used in financing activities(1,877)(633)
Net increase in cash, cash equivalents and restricted cash and cash equivalents209 539 
Cash, cash equivalents and restricted cash and cash equivalents—beginning of period974 1,307 
Cash, cash equivalents and restricted cash and cash equivalents—end of period$1,183 $1,846 

Balances per Consolidated Balance Sheet:
September 30,
2022
Cash and cash equivalents$988 
Restricted cash and cash equivalents195 
Total cash, cash equivalents and restricted cash and cash equivalents$1,183 
The accompanying notes are an integral part of these consolidated financial statements.

6

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 having achieved 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 three marine berths, with the third berth having achieved substantial completion on October 27, 2022. We also own a 94-mile pipeline through our subsidiary, CTPL, that interconnects the Sabine Pass LNG Terminal with a number of large interstate and intrastate 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 September 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 and reflect all normal recurring adjustments which are, in the opinion of management, necessary for a fair statement of the financial results for the interim periods presented. 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 nine months ended September 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 standard is effective from March 12, 2020 to December 31, 2022. We have not yet applied the optional expedients available under the standard because we have not yet modified any of our existing contracts indexed to LIBOR, mainly our credit facilities as further described in Note 9—Debt, for reference rate reform. However, we do not expect the impact of applying the optional expedients to any future contract modifications to be material, and we do not expect the transition to a replacement rate index to have a material impact on our future cash flows.

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.

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(unaudited)
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 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 September 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 50.0% owned by BIP Chinook Holdco L.L.C., an affiliate of Blackstone, and 50.0% 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. As of September 30, 2022 and December 31, 2021, we had $195 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):
September 30,December 31,
20222021
Trade receivables$761 $546 
Other receivables44 34 
Total trade and other receivables, net of current expected credit losses$805 $580 

NOTE 5—INVENTORY

Inventory consisted of the following (in millions):
September 30,December 31,
20222021
Materials$100 $86 
LNG107 45 
Natural gas32 43 
Other2 2 
Total inventory$241 $176 

8

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):
September 30,December 31,
20222021
LNG terminal  
Terminal and interconnecting pipeline facilities$19,459 $16,973 
Construction-in-process699 2,746 
Accumulated depreciation(3,356)(2,893)
Total LNG terminal, net of accumulated depreciation16,802 16,826 
Fixed assets  
Fixed assets29 29 
Accumulated depreciation(26)(25)
Total fixed assets, net of accumulated depreciation3 4 
Assets under finance lease
Tug vessels23  
Accumulated depreciation(1) 
Total assets under finance lease, net of accumulated depreciation22  
Property, plant and equipment, net of accumulated depreciation$16,827 $16,830 

The following table shows depreciation expense and offsets to LNG terminal costs (in millions):
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Depreciation expense$158 $139 $465 $414 
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 Operations 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
September 30, 2022December 31, 2021
Quoted Prices in Active Markets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
TotalQuoted Prices in Active Markets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Total
Liquefaction Supply Derivatives asset (liability)$(30)$(24)$(5,024)$(5,078)$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.
9

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 September 30, 2022:
Net Fair Value Liability
(in millions)
Valuation ApproachSignificant Unobservable InputRange of Significant Unobservable Inputs / Weighted Average (1)
Physical Liquefaction Supply Derivatives$(5,024)Market approach incorporating present value techniquesHenry Hub basis spread
$(2.495) - $0.677 / $(0.028)
Option pricing modelInternational LNG pricing spread, relative to Henry Hub (2)
91% - 865% / 243%
(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 September 30,Nine Months Ended September 30,
2022202120222021
Balance, beginning of period$(3,456)$33 $38 $(21)
Realized and mark-to-market gains (losses):
Included in cost of sales(1,545)25 (155)79 
Purchases and settlements:
Purchases (1)3 4 (4,896)6 
Settlements(24)(3)(11)(5)
Transfers out of Level 3, net (2)(2)   
Balance, end of period$(5,024)$59 $(5,024)$59 
Change in unrealized gains (losses) relating to instruments still held at end of period$(1,545)$25 $(155)$79 
(1)Includes the assignment of an IPM agreement that occurred during the period, as discussed in Note 14—Supplemental Cash Flow Information.
(2)Transferred out of Level 3 as a result of unobservable market for the underlying natural gas purchase agreements.

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
10

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(unaudited)
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.
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 events or states of affairs. The terms of the Financial Liquefaction Supply Derivatives range up to approximately three years.

The forward notional amount for our Liquefaction Supply Derivatives was approximately 5,220 TBtu and 5,194 TBtu as of September 30, 2022 and December 31, 2021, respectively, excluding notional amounts associated with extension options that were uncertain to be taken as of September 30, 2022.

The following table shows the effect and location of our Liquefaction Supply Derivatives recorded on our Consolidated Statements of Operations (in millions):
Gain (Loss) Recognized in Consolidated Statements of Operations
 Consolidated Statements of Operations Location (1)
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
LNG revenues$(3)$ $1 $ 
Cost of sales(1,625)10 (2,448)64 
(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 LocationSeptember 30, 2022December 31, 2021
Current derivative assets$27 $21 
Derivative assets33 33 
Total derivative assets60 54 
Current derivative liabilities(1,157)(16)
Derivative liabilities(3,981)(11)
Total derivative liabilities(5,138)(27)
Derivative asset (liability), net$(5,078)$27 
(1)Does not include collateral posted with counterparties by us of $59 million and $7 million, as of September 30, 2022 and December 31, 2021, respectively, which are included in other current assets in our Consolidated Balance Sheets.

11

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(unaudited)
Consolidated Balance Sheets Presentation