EXHIBIT 10.7
LNG LEASE
AGREEMENT
This LNG LEASE AGREEMENT (the
“ Agreement ”) is entered into this 24th day of
June, 2008 (“ Effective Date ”) by Cheniere
Marketing, Inc., a Delaware corporation with its principle offices
located at 700 Milam Street, Suite 500, Houston, Texas (“
LESSOR ”), and Sabine Pass LNG, L.P., a Delaware
partnership with its principle offices located at 700 Milam
Street, Suite 800, Houston, Texas (“ LESSEE ”).
LESSOR or LESSEE may be referred to herein individually as a
“ Party ”, and together as the “
Parties ”.
WHEREAS , LESSOR is engaged in the business of procuring
cargoes of liquefied natural gas (“ LNG ”) from
multiple international suppliers for delivery to LNG regasification
terminals;
WHEREAS , LESSEE owns and operates that certain LNG
regasification terminal located on the Sabine Neches Waterway in
Cameron Parish, Louisiana (the “ Terminal
”);
WHEREAS , the Parties have entered into that certain
Amended and Restated LNG Terminal Use Agreement, dated
November 9, 2006, as amended (the “ TUA .”)
pursuant to which LESSEE provides certain terminal services
(“ Services ”) to LESSOR, permitting LESSOR to
deliver LNG to the Terminal and to receive regasified LNG for
redelivery as natural gas;
WHEREAS , LESSEE from time to time desires to lease LNG
for certain purposes required for the testing, commissioning, and
efficient operation of the Terminal, and LESSOR desires to lease
such LNG to LESSEE.
NOW, THEREFORE
, in consideration of the mutual
covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, LESSOR and LESSEE agree as follows:
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1.
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Lease of
LNG . Pursuant to the
terms of this Agreement, LESSEE may request, and LESSOR shall
provide, LNG for use at the Terminal for the purposes set forth in
Paragraph 2 (“ Lease LNG ”). Requests for Lease
LNG shall be made to LESSOR pursuant to Paragraph 3 of this
Agreement. Payment for the use of Lease LNG shall be made pursuant
to Paragraph 14 of this Agreement.
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2.
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Permitted
Uses of Lease LNG .
LESSEE shall be permitted to use Lease LNG for the purposes of
Terminal piping, tank, and equipment cool down and commissioning,
performance testing of process equipment and ancillary support
systems, and long-term thermal stabilization of the Terminal.
LESSEE shall be permitted to cause Lease LNG to be regasified in
its process equipment, and to allow it to be regasified naturally
as a result of the cooldown and thermal stabilization process.
LESSEE shall also be permitted to consume a portion of Lease LNG as
process fuel. All remaining Lease LNG shall be returned to LESSOR
in the form of regasified LNG and shall be redelivered to LESSOR by
LESSEE at any point of interconnection between the Terminal and an
interstate natural gas transmission pipeline (the “
Delivery Point ”), as may be specified from time to
time by LESSOR. In the event that any Lease LNG is lost by LESSEE,
the provisions of Paragraph 12 shall apply.
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1
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3.
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Requests for
Cargoes . LESSEE shall
have the right from time to time to request that LESSOR provide
cargoes of LNG for use by LESSEE pursuant to the terms of this
Agreement. LESSOR shall obtain market quotations for the
acquisition and delivery of LNG cargoes along with information
relating to delivery dates, quantity, and quality. LESSEE shall
choose the LNG cargo(es) LESSEE desires to lease from LESSOR, and
shall execute a Lease Confirmation in substantially the form set
forth in Exhibit A.
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4.
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Acquisition
of Cargoes . Upon receipt
by LESSOR of a duly executed Lease Confirmation by LESSEE, LESSOR
shall use commercially reasonable efforts to purchase and cause
such LNG cargo to be delivered to the Terminal. Once purchased and
scheduled for delivery by LESSOR, LNG acquired pursuant to this
Paragraph 4 shall become “Lease LNG”. Upon the delivery
of such Lease LNG to the Terminal, LESSEE shall have the custody
and use of the Lease LNG pursuant to Paragraph 2 of this agreement.
Unless otherwise stated herein, title to such Lease LNG shall at
all times remain with LESSOR. LESSOR hereby grants to LESSEE a
first-priority purchase-money security interest in and to the Lease
LNG, which shall be automatically removed and extinguished, without
further action of the Parties, with respect to any of the Lease LNG
at the time that the resulting regasified LNG is redelivered to
LESSOR as part of the Redelivery Quantity.
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5.
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Acquired
Cargoes . The cargoes
specified in Exhibit B have been previously requested by LESSEE,
acquired by LESSOR, and have been leased by LESSEE pursuant to the
terms of this Agreement.
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6.
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Lease
Payment . LESSEE shall
pay LESSOR nine decimal eight U.S. cents ($0.098) per MMBtu
delivered quantity of LNG in each LNG cargo, as measured at the
receiving flange of the Terminal (“ Lease Fee ”)
and shall assume full price risk of the purchase and sale of Lease
LNG, and to the extent requested by LESSOR, shall finance
activities hereunder according to Paragraph 8, as full compensation
for the lease services provided hereunder. All payments arising
hereunder shall be made according to the provisions of Paragraph
14.
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7.
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Receipt of
LNG cargoes .
Notwithstanding any provision of the TUA, LESSEE agrees to provide,
at its sole cost and expense, any and all Terminal Services that
may be required for the unloading, storage, and regasification of
any full or partial LNG cargo containing Lease LNG. The unloading,
storage, regasification, and redelivery of the Lease LNG shall not
be deemed to be services performed under the TUA, and the quantity
of services
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