Email Address:
  
  Password:
  
  

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:

 

1.

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.

 

2.

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.

 

1


3.

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.

 

4.

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.

 

5.

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.

 

6.

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.

 

7.

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


This is only a partial view of this document. We have millions of legal documents and clauses drafted by top law firms. learn more search for free browse for free learn more