An Insight into the Evolution of the US LNG Market

Helena Wisden

Senior Manager Trading

Cheniere Energy, Inc

June 24th, 2011

Forward Looking Statements

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 and Section 21E of the Securities Exchange Act of 1933, as amended. All statements, other than statements of historical facts, included herein are “forward-looking statements.” Included among “forward-looking statements” are, among other things:

statements that we expect to commence or complete construction of a liquefaction facility by certain dates or at all;

statements that we expect to receive authorization from the Federal Energy Regulatory Commission, or FERC, or the Department of Energy, or DOE, to construct and operate a proposed liquefaction facility by a certain date, or at all;

statements regarding future levels of domestic or foreign natural gas production and consumption, or the future level of LNG imports into North America or exports from the U.S.A., or regarding projected future capacity of liquefaction or regasification facilities worldwide;

statements regarding any financing transactions or arrangements, whether on the part of Cheniere or at the project level;

statements regarding any commercial arrangements marketed or potential arrangements to be performed in the future, including any cash distributions and revenues anticipated to be received;

statements regarding the commercial terms and potential revenues from activities described in this presentation;

statements that our proposed liquefaction facility, when completed, will have certain characteristics, including a number of trains;

statements regarding our business strategy, our business plan or any other plans, forecasts, examples, models, forecasts or objectives, any or all of which are subject to change;

statements regarding estimated corporate overhead expenses; and

any other statements that relate to non-historical information.

These forward-looking statements are often identified by the use of terms and phrases such as “achieve,” “anticipate,” “believe,” “estimate,” “example,” “expect,” “forecast,” “opportunities,” “plan,” “potential,” “project,” “propose,” “subject to,” and similar terms and phrases. 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. and Cheniere Energy Partners, L.P. Current Reports on Form 8-K filed with the Securities and Exchange Commission on August 6, 2010, 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 we undertake no obligation to publicly update or revise any forward-looking statements.

Agenda

Recent developments in the North

American gas market

Could the USA become a new LNG

supplier?

U.S.A. Shale Gas Resources

EIA (Energy Information

Administration, US Government)

Reality: probably > 3,000 Tcf

EIA (2008)

20 Tcf

EIA (2009)

60 Tcf

EIA (2010)

347 Tcf

EIA (2011)

827 Tcf

U.S.A. Shale Production & Henry Hub Price

Other Barnett

Woodford Fayetteville

Haynesville

Marcellus

-

2

4

6

8

10

12

14

16

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Bcf/d

$-

$2

$4

$6

$8

$10

$12

$14

$16

$HH Cash

Haynesville

Marcellus

Woodford

Fayetteville

Barnett

Other

Sub-Total

0.0

0.0

0.0

0.0

0.2

0.9

1.1

1.3

0.2

0.5

1.4

4.9

0.9

9.6

3.1

1.0

0.9

2.0

5.0

0.9

12.9

2000 2009 2010

Annual Shale Gas Production (Bcf/d)

Hurricane

Katrina $147/Bbl

Oil Price

Peak

CA Energy

Crisis

Source: Lippman Consulting, Advanced Resources Intl. (shale production); Platts (HH prices)

Price Signals for Gas Plays

Price sends a message to producers “drill or don’t

drill”

Response depends on two factors:

– Cost of production

– Infrastructure for transportation

U.S.A. Gas Production Growth

26.8 26.6 26.0 25.1 23.0 21.8 20.5 19.8

15.7 17.0 17.8 17.8 18.9 19.2 19.5 19.3

3.0 4.4 6.1 9.3 12.2 14.7 19.125.1

4.84.8

5.45.2

5.2 4.64.8

4.9

50.352.8

55.357.4

59.3 60.363.9

69.1

2006 2007 2008 2009 2010 2012 2015 2020

Conventional Tight Gas Shale CBM

Source: Advanced Resources International Inc. (Aug 2010), EIA

71%

Forecast

Bcf/d U.S.A. Natural Gas Production

Unconventional gas = 61% of 2010 natural gas production

Potential 11 Bcf/d new production from unconventional gas 2015 vs 2009 (34%)

Low Production Cost and Vast Infrastructure Low Production Cost and Vast Infrastructure

Enormous UNC gas reserves

Infrastructure: extensive and in place

Production sustainable at ~ $5/MMBtu

Ark

om

a W

oo

dfo

rd

Co

re

Key North American Supply Sources (2015)

Marc

ell

us

Develo

pm

en

t B

reakeven

(U

S$/m

cf)

Pin

ed

ale

Fayett

evil

le

8

7

6

5

4

3

Barn

ett

Co

re

Hayn

esvil

le

Gra

nit

e W

ash

Hz

Eag

le F

ord

Bo

ssie

r L

w

Pic

ean

ce V

all

ey

An

ad

ark

o W

oo

dfo

rd

Pic

ean

ce H

igh

lan

ds

Barn

ett

No

n-c

ore

Ark

om

a W

oo

dfo

rd

No

n-c

ore

Co

tto

n V

all

ey

Source: Wood Mackenzie

Attractive Oil Linked Market Prices

0

2

4

6

8

10

12

14

16

18

20

2004 2005 2006 2007 2008 2009 2010

UK - NBP US Henry Hub Japan Avg LNG European Gas Contract

$/ MMBtu Regional Natural Gas & LNG Prices

~ 12% – 15%

of Oil Prices

$4.27

$7.39

$11.62

$9.02

Source: PIRA, Platts

Sabine Pass Liquefaction Project

Startup in mid-2015

US DOE Approval received

Up to four liquefaction trains with a

liquefaction capacity of 2 Bcf/d (16 MMt/y)

• Initial Phase to include 2

ConocoPhillips’ Optimized Cascade®

LNG Trains

• About 0.5 Bcf/d each

• Six GE LM2500+ gas turbine driven

refrigerant compressors per train

Highly Successful MOU Process

We have entered into MOU’s with 9

customers for 9.8 mtpa of capacity

commitments

These customers are representative

of the widespread interest in the

project

– Asia, Europe, Americas

– Traders, Utilities, End Users

Targeting 3.5 mtpa of customer

commitments for commercial viability

of each train

Continuing discussions with other

parties focused on processing

capacity, FOB, and DES sales

Delivered Cost Compares Favorably to Pacific Basin Price Formulas

Henry Hub priced LNG delivered cost:

– 115% x Henry Hub price + $2 + shipping cost

Gas production economics effectively caps Henry Hub at ~$6.00 - $6.50

Based on a JCC formula of 14.85% of JCC + $0.75, oil price exposure

becomes capped at ~ $75/bbl

$80 $90 $100

JCC Price $/bbl

DE

S L

NG

Pri

ce

$/M

MB

tu

$12

$14

$16

Poten & Partners Jan ‘10

Low Mid High

Henry Hub $5.00 $6.00 $7.00

FOB price $7.75 $8.90 $10.05

shipping to Asia $2.50 $2.50 $2.50

DES Price $10.25 $11.40 $12.55

JCC @ 0.1485 slope $64.0 $71.7 $79.5

compared to a formula of 14.85% JCC + $0.75

Capacity and LNG Sales Agreements Provide Various Benefits to Buyers

$8,00 $10,00 $12,00 $14,00 $16,00 $18,00 $20,00

HH-indexed Oil-indexed

1. Lower LNG delivered cost: Henry Hub priced LNG delivered cost to Asia is

significantly lower than oil-related long term supply alternatives.

2. Reduced volatility of portfolio cost: Henry Hub price that has a low correlation

to the other price indexes will reduce the volatility of the whole LNG portfolio

procurement cost.

3. Free destination flexibility: The combination of cargoes sold on an FOB basis

with total free destination flexibility and buyer’s right to cancel lifting of cargoes

gives the buyer the ability to arbitrage global natural gas / LNG prices.

4. Economical option: Buyer’s ability to optimize his deliveries by purchasing

replacement cargoes at a lower price if Henry Hub prices rise over world prices,

therefore reducing the overall cost of procurement and risk of Henry Hub

indexation.

Reliable Supply and a Powerful Portfolio Optimization Tool

LNG produced in the United States delivers

– The world’s finest natural gas resources to global consumers

– An exceptional degree of political and legal stability

– And a first-class approach to operations

Once complete, the Sabine Pass liquefaction facility will be one of the most

reliable LNG supply points in the world

Acquiring feed gas from the world’s largest and most liquid natural gas

market also provides some key advantages

– Feed gas can be acquired on a month-to-month basis

– No requirement for long-term supply agreements

– Prices reflect the benefits of the world’s largest and continuously growing underground

storage capacity of over 4 Tcf (113 Bcm)

– World’s largest & most liquid financial market available for hedging

Taken together, adding Henry Hub-indexed LNG to a conventional supply

portfolio adds a new degree of flexibility that should ultimately prove to be at

least as valuable as the current cost benefit