CHENIERE ENERGY, INC. - gastechevent.com Fusco_Cheniere.… · • statements that Cheniere Energy, Inc. expects to commence or complete construction of its proposed LNG terminals,

CHENIERE ENERGY, INC.

Jack Fusco

CEO - Cheniere

April 5th, 2017

Gastech - Tokyo

Keynote Address – Session 1:Contracting, Pricing & Trading of Gas & LNG

Forward Looking Statements

2

This presentation contains certain statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange

Act of 1934, as amended. All statements, other than statements of historical facts, included or incorporated by reference herein are “forward-looking statements.” Included among “forward-looking statements” are, among other things:

• statements regarding the ability of Cheniere Energy, Inc. to pay dividends to its shareholders or participate in share buybacks, Cheniere Energy Partners, L.P. to pay distributions to its unitholders or Cheniere Energy Partners LP

Holdings, LLC to pay dividends to its shareholders;

• statements regarding Cheniere Energy Inc.’s, Cheniere Energy Partners LP Holdings, LLC’s or Cheniere Energy Partners, L.P.’s expected receipt of cash distributions from their respective subsidiaries;

• statements that Cheniere Energy Partners, L.P. expects to commence or complete construction of its proposed liquefied natural gas (“LNG”) terminals, liquefaction facilities, pipeline facilities or other projects, or any expansions or

portions thereof, by certain dates or at all;

• statements that Cheniere Energy, Inc. expects to commence or complete construction of its proposed LNG terminals, liquefaction facilities, pipeline facilities or other projects, or any expansions or portions thereof, by certain dates or at

all;

• statements regarding future levels of domestic and international natural gas production, supply or consumption or future levels of LNG imports into or exports from North America and other countries worldwide, or purchases of natural

gas, regardless of the source of such information, or the transportation or other infrastructure, or demand for and prices related to natural gas, LNG or other hydrocarbon products;

• statements regarding any financing transactions or arrangements, or ability to enter into such transactions;

• statements relating to the construction of our proposed liquefaction facilities and natural gas liquefaction trains (“Trains”) and the construction of the Corpus Christi Pipeline, including statements concerning the engagement of any

engineering, procurement and construction ("EPC") contractor or other contractor and the anticipated terms and provisions of any agreement with any EPC or other contractor, and anticipated costs related thereto;

• statements regarding any LNG sale and purchase agreement (“SPA”) or other agreement to be entered into or performed substantially in the future, including any revenues anticipated to be received and the anticipated timing thereof,

and statements regarding the amounts of total LNG regasification, natural gas liquefaction or storage capacities that are, or may become, subject to contracts;

• statements regarding counterparties to our commercial contracts, construction contracts and other contracts;

• statements regarding our planned development and construction of additional Trains or pipelines, including the financing of such Trains or pipelines;

• statements that our Trains, when completed, will have certain characteristics, including amounts of liquefaction capacities;

• statements regarding our business strategy, our strengths, our business and operation plans or any other plans, forecasts, projections or objectives, including anticipated revenues, capital expenditures, maintenance and operating costs,

cash flows, EBITDA, adjusted EBITDA, Net Loss, As Adjusted and Net Loss per share, As Adjusted, any or all of which are subject to change;

• statements regarding projections of revenues, expenses, earnings or losses, working capital or other financial items;

• statements regarding legislative, governmental, regulatory, administrative or other public body actions, approvals, requirements, permits, applications, filings, investigations, proceedings or decisions;

• statements regarding our anticipated LNG and natural gas marketing activities; and

• any other statements that relate to non-historical or future information.

These forward-looking statements are often identified by the use of terms and phrases such as “achieve,” “anticipate,” “believe,” “contemplate,” “develop,” “estimate,” “example,” “expect,” “forecast,” “goals,” “opportunities,” “plan,”

“potential,” “project,” “propose,” “subject to,” “strategy,” “target,” and similar terms and phrases, or by use of future tense. Although we believe that the expectations reflected in these forward-looking statements are reasonable, they

do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. Our

actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in “Risk Factors” in the Cheniere Energy, Inc., Cheniere Energy Partners, L.P.

and Cheniere Energy Partners LP Holdings, LLC Annual Reports on Form 10-K filed with the SEC on February 19, 2016, which are incorporated by reference into this presentation. All forward-looking statements attributable to us or

persons acting on our behalf are expressly qualified in their entirety by these ”Risk Factors.” These forward-looking statements are made as of the date of this presentation, and other than as required by law, we undertake no obligation

to update or revise any forward-looking statement or provide reasons why actual results may differ, whether as a result of new information, future events or otherwise.

Cheniere Global Overview

3

Source: DOE 2017

Cheniere Office

Cheniere LNG Facility

Portugal

UAE

Kuwait India

Brazil

Argentina

Houston, TX

Santiago, Chile

Washington, DC

London, U.K.

Singapore

SPL Cargo Delivery Destination

China

Spain

Mexico

Dominican

Republic

Italy

Egypt

Turkey

Jordan

Malta

Japan

South Korea

Tokyo, Japan

Chile

Sabine Pass has now loaded 100 cargoes – which were delivered to 18 countries across the globe

Sabine Pass Liquefaction Project

4

U.S. LNG Exports Driving Change in the Industry

Destination-free, flexible volumes

Growing liquidity

FOB and DES hub formation

New markets facilitated by abundant, competitively

priced gas

5

A more responsive, more competitive,

more diverse and more resilient LNG

trade system

0

50

100

150

200

250

300

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

mtp

a

Commercial Evolution

6

* Contract duration of 4 years or less (GIIGNL)

Source: CEDIGAZ World Outlook for 1965 – 1985 (assumes no spot volume), Poten and Partners 1985 – 2000 (2001), GIIGNL 2000 - 2016 (2016)

LNG trade by contract length

Spot &

short-term

trade*

Mid &

long-term

contract

trade

28%

72%

Bilateral deals Slow evolution Growing flexibility

0

500

1000

No

n-

OE

CD

Asia

Mid

dle

Ea

st

Eu

rop

e &

Eu

rasia

Am

eri

ca

s

Afr

ica

OE

CD

Asia

Asian Market Context

A high growth region …

7

… but LNG market-place evolving

and buyer requirements changingPrimary energy consumption growth

(2015-2040)

0

50

100

150

Non

-O

EC

DA

sia

Am

eri

ca

s

Mid

dle

Ea

st

Eu

rop

e &

Eu

rasia

Afr

ica

OE

CD

Asia

Gas consumption growth

(2015-2040)

Source: EIA International Energy Outlook 2016

Increasing demand uncertainty

Increasing market competition

Evolving business models

But security of supply still important

Asia = 57% of total

Bcm

aQ

ua

d B

Btu

Asia = 48% of total

LNG SPAs Signed in 2016

8

0

1

2

3

4

5

6

Ja

n

Feb

Ma

r

Ap

r

Ma

y

Ju

n

Ju

l

Au

g

Se

p

Oct

No

v

De

c

mt

New projects

Existing/UC/Portfolio

10

7

5

10

3

0

2

4

6

8

10

12

< = 0.5 >0.5 to1.0

>1.0 to1.5

>1.5 to2.0

>2.0 to2.5

> 2.5

No. o

f d

ea

ls

Volume of deal (mt)

0

2

4

6

8

10

12

5 yrs >5 to 10yrs

>10 to15 yrs

>15 to20 yrs

mt

LNG deals signed by volume LNG deals signed by term

LNG deals signed by project type

~25 mt in deals signed

~65% of deals signed were for volumes of 1 mtpa or less

Over 50% had terms at 10 years or under

Only 25% were signed against new project volume

2016 deal highlights

0

5

10

15

20

25

30

35

40

45

2016 2030

Short-

term

Long

or

Mid-

term

JERA portfolio plan

Source: Press reports, Cheniere Research, and JERA

No.

of

deals

68 3

9

ST

LT

MT

LNG Contract Pricing

9

0

50

100

150

200

250

300

350

400

450

2000 2005 2010 2015 2020 2025

mtp

a

Henry Hub

Europe gas

Hybrid

Oil

LNG demand

Oil index

HH index

LNG contracts by price index

98%

82%

61%

28%

Note: Contracts excluded for projects not FIDed

Source: Cheniere interpretation of Wood Mackenzie data (Q4 2016)

Percent

of

contracts

LNG trade

forecast

Price index diversity is

increasing as more Henry

Hub contracts come into

force

The extent to which

diversification continues

will depend on contracts

signed in the coming

years

0

100

200

300

400

500

2000 2005 2010 2015 2020 2025 2030

mtp

a

LNG demand

expected to nearly

double from 2015

to 2030

Supply-demand

gap projected to

open shortly after

2020 as trade

grows and existing

production declines

~30 LNG trains(1)

need to take FID by

2025 to meet

forecasted demand

through 2030

10

Qatar

LNG trade

forecast

Australia

New supply

(127 mtpa)

Supply:

existing and

under

construction

USA

2015 to 2030

CAGR(%) = 4.4

Source: Cheniere Research

(1) Assuming 85% utilization of nameplate capacity ~150 mtpa of new liquefaction capacity would be required. 5 mtpa trains = 30 trains.

LNG Supply – Demand Gap Opens Post 2020

LNG supply by country vs. trade outlook

New LNG Market Realities

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Fragmenting /

Evolving market

place

Globalising /

Commoditising

industry – with

regional nature

New contract

structures:

price index, term,

flexibility

Supplier challenge:

how to lower cost,

innovate &

create new markets

New market

realities …

… will require

new commercial

solutions …

… but will also have

to be financeable

Conclusions

Flexible US LNG has started to flow – and has responded to global market

signals. SPL has delivered cargoes to 18 markets – so far.

US trains under construction will drive increasing flexibility and liquidity of

trade – making the global trade system more responsive, more competitive

and more resilient – to the benefit of buyers and sellers

US LNG supply wave is ‘not done yet’ – Cheniere poised to grow its LNG

platform with two permitted, brownfield trains

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Thank You

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