IEEJ：November 2018©IEEJ2018

CHENIERE ENERGY, INC.
The LNG market: new opportunities and challenges
23rd International Gas and Power Summit, Paris . November 22, 2018

Eric BensaudeManaging Director – Commercial Operations and Asset Optimization

CHENIERE ENERGY, INC.
NYSE American: LNG

LNG MARKET OUTLOOK AND U.S. LNG’S FUNCTION
Andrew Walker – Vice President, Strategy and Communication
IEEJ – November 15, 2018

IEEJ：November 2018 © IEEJ2018

Safe Harbor Statements
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 of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements, other than statements of historical or present facts or conditions, 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 Partners, L.P. to pay distributions to its unitholders or Cheniere Energy, Inc. to pay dividends to its shareholders or participate in share or unit buybacks;•

statements regarding Cheniere Energy, Inc.’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 otherprojects, 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•

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•

statements regarding any financing transactions or arrangements, or ability to enter into such transactions;then of, by certain dates or at all;

products;•

statements relating to the construction of our proposed liquefaction facilities and natural gas liquefaction trains (“Trains”) and the construction of our pipelines, including statements concerning theengagement 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, andanticipated costs related thereto;•statements regarding any 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, run-rate SG&A estimates, cash flows, EBITDA, Adjusted EBITDA, distributable cash flow, distributable cash flow per share and unit, deconsolidated debt outstanding, anddeconsolidated contracted EBITDA, 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,” ”guidance,”“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 forwardlooking 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. Annual Reports on Form 10-K filed with the SEC on February 21, 2018, 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 thispresentation, 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.

2

IEEJ：November 2018 © IEEJ2018

Today’s Presentation
 U.S. Gas Market Overview
 U.S. LNG Update
 LNG Demand Outlook
 Impact of U.S. LNG

3IEEJ：November 2018 © IEEJ2018

Cheniere Company Overview～US$16B*
Market Cap～US$30B
Capital SpendLNG capacity

18 mtpa Operational
18 mtpa Under Construction
14 mtpa Under Development
1000+ Employees
6 Offices Worldwide− Houston− Washington− London− Singapore− Tokyo− Beijing
4 * Note: as of 1st Nov 2018

Sabine Pass Liquefaction Project

Located in Louisiana
Entered service as an import terminal in 2008
4 Bcf/d send-out capacity
Conversion to bi-directional facility via theaddition of liquefaction capacity

 First export cargo early 2016

Corpus Christi LNG Terminal Located in South Texas
 First ‘greenfield’ export facility under constructionin the USA First LNG expected in late 2018

Building an industry leading U.S. LNG export platform

IEEJ：November 2018 © IEEJ2018

Forecast LNG Industry Growth to 2035
Asia Pacific is forecasted to remain the top importing region, representing ~65% of total global demand in 2035

mtpa

Forecast LNG Supply
by Country to 2035

Forecast LNG Imports
by Region to 2035

mtpa
400

Asia Pacific

140
350
120
300
Qatar

100

250
Australia

80

200
60

RussiaMozambique

40

Europe &
FSU

100

20

AmericasMiddle East
Africa50002000 2005 2010 2015 2020 2025 2030 2035

“A new gas order is emerging, with US LNG
helping to accelerate a shift towards a more
flexible, liquid, global market.”
Source: Cheniere interpretation of Wood Mackenzie data (Q2 & Q3 2018).

5

150

2000

2005

2010

2015

2020

2025

2030

2035

“The transformation of LNG markets creates ahuge opportunity for gas users in Asia.”
IEA World Energy Outlook 2017

IEEJ：November 2018 © IEEJ2018

U.S. Gas Market Overview

6

IEEJ：November 2018 © IEEJ2018

US Natural Gas Production
US shale production has reached record levels: 56.4 Bcf/d as of July 2018

US shale &Marcellus/Utica cf.
ranked producing
countries (2017)

Bcfd Bcma

US Shale Gas Production (2004 to date)
60

600

Shale =
56 Bcf/d in July 2018,
or 68% of total US
natural gas production

Rest of US 'shale'
Permian (TX & NM)
50

RussianFederation(2nd)
US Shale

500
Utica (OH, PA & WV)
Marcellus (PA, WV, OH & NY)

40

400

Haynesville (LA & TX)
Eagle Ford (TX)

30

20

300

200

Fayetteville (AR)Barnett (TX)

Marcellus +Utica

Woodford (OK)Iran (3rd)

Bakken (ND & MT)
Canada /Qatar (4th/5th)

Antrim (MI, IN & OH)
10

100

0
2004

7

2006

2008

Source: EIA (2018), BP Statistical Review of Energy (2018)

2010

2012

2014

2016

2018

IEEJ：November 2018 © IEEJ2018

North America Natural Gas Cost of Supply Curve
An estimated 840 Tcf can be developed at $3 or less, compared to an assessment of 186 Tcf eight years ago
Break-even price at Henry Hub for North American natural gas resources (2018)$10

Break-even gas price ($/MMBtu)$8

Resource that canbe developed at a
HH of $3 or less$6

Resource that canbe developed at a
HH of $4 or less1250 Tcf
840 Tcf

$4
$2
$0
($2)
($4)

($6)

Date of Assessment
Tcf @ $3 or lessTcf @ $4 or less

($8)
($10)

2010
186
952

2018
840
1250

Source IHS Markit

($12)
0

250

500

750

1,000

1,250

Commercially recoverable gas resource (Tcf)
8

Source: IHS Markit July 2018; ‘The Shale Gale turns 10’ , Break-even price required to earn a 10% unlevered return

1,500

1,750

2,000

IEEJ：November 2018 © IEEJ2018

EIA Price Outlook for Henry Hub and WTI
Outlooks for oil shifted upwards in 2018, HH downwards.
$25

Historical

EIA Forecast$20$/MMBtu (nominal)

WTI
WTI IEO 2018$15
WTI IEO 2017

HH IEO 2018$10
HH IEO 2017

$5

$0
2010

9

HH

2012

2014

Source: US EIA IEO 2018 and 2017

2016

2018

2020

2022

2024

2026

2028

2030

IEEJ：November 2018 © IEEJ2018

US Gas Consumption By Sector
Domestic consumption set to grow by 21 Bcf/d to 2050. Exports set to grow by 23 Bcf/d
Bcf/d

118 Bcf/d
US Natural Gas Consumption by Sector
Exports

120

100

Production

Net LNG
exports

74 Bcf/d

80

60

49 Bcf/d

Domestic Consumption

Power
Transportation

40

Industrial

20

Commercial
Residential

0
2000

10

2005

2010

Source: US EIA 2018 AEO Reference Case

2015

2020

2025

2030

2035

2040

2045

2050

IEEJ：November 2018 © IEEJ2018

U.S. LNG Projects Overview

11

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U.S. LNG Capacity : Operating and Under Construction
U.S. LNG capacity set to reach ~70 mtpa in 2020
80

Nov-18Corpus Christi T3

70
Cheniere Export Project

Freeport T3

Non-Cheniere Export Project

Cameron LNG T3

60

Freeport T2
Cameron LNG T2

50

Elba Ph II

MTPAFreeport T1

40

Cameron LNG T1

30

Corpus Christi T2
Elba Ph I
Sabine Pass T5
Corpus Christi T1

20

Cove Point LNG T1

10

Sabine Pass T1-4

0
Jan-16

12

Jan-17Jan-18Jan-19Jan-20Jan-21

Jan-22IEEJ：November 2018 © IEEJ2018

Sabine Pass Terminal

13

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Sabine Pass Terminal

14

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Corpus Christi Liquefaction Terminal

October 201815

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US LNG Projects: Permitting Status
FERC Status (as of September 2018)
400
350

97
Commonwealth LNG
Fourchon LNG

300

14

Alaska LNG
Annova LNG
Calcasieu Pass LNG
Corpus Christi LNG Midscale
Driftwood LNG
Gulf LNG Energy
Jordan Cove*
Plaquemines LNG
Port Arthur LNG
Rio Grande LNG
Texas LNG
Freeport Train 4

 ~ 23 mtpa online

 ~ 51 mtpa under construction

 Over 300 mtpa proposed

mtpa

250
200

157

395

Lake Charles
SP T6
Cameron T4/5
Magnolia
Golden Pass

150
100

53

50

SP T1-5
Cameron T1-3
Freeport T1-3
Cove Point
CC T1-3
Elba

74

0
Total

No FERC filing

Sources: US FERC, US DOE, and press reports
Excludes Delfin LNG, which is outside FERC’s jurisdiction

16

Pre-filedFormal filing

Approved

FID*Previously denied by FERC and had to re-file

16

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LNG Demand Outlook

17

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Supply / Demand Forecast Supports Project Growth
mtpa

mtpa

500

100

2015 to 2030
CAGR: 4.8%

Production Capacity

LNG Trade Forecast

80
New
Supply

60
400

40
20

USA

0
Malaysia

2015

Qatar

Australia
Supply: Existing and Under Construction

300

U.S.

2020

Australia
200

Qatar

100

0
2000

2005

Source: Cheniere Research estimates; Wood Mackenzie for historical figures

18

2010

2015

2020

2025

2030

IEEJ：November 2018 © IEEJ2018

Asian Market Context
A high growth region …
2500

 Opportunities

Primary energy consumption growth(2015-2040)

 Demand for gas in Asia Pacific region expected to
double by 2040

Asia Pacific= 62% of total

 Forecast to become the largest gas consuming
region by 2030

MTOE

2000
1500
1000

 New markets, new buyers and new demand
segments for LNG are emerging

5000EuropeN.America

Eurasia

C&S America

Middle East

Asia Pacific= 44% of total

 Regional import dependency forecast to increase
from 23% in 2015 to 39% in 2040
EuropeEurasia

C&S America

AfricaN.America

Asia PacificMiddle East200
0

 But gas demand growth in Asia should not be taken
for granted …..

 Demand uncertainty a common theme across Asia
as the energy transition and market liberalisations
gather pace

600
400

 A more liquid and more responsive global LNG
trade will make gas more attractive

 Challenges

Gas consumption growth(2015-2040)

800
Bcma

AfricaAsia Pacific-500

 Although barriers to entry for LNG are reducing
some new markets will require help with thecommercial or technical aspects of LNG
 Coal likely to remain cheap – and tempting

Gas needs to remain affordable, reliable and secure
19

Source: IEA World Energy Outlook 2017 – New Policies Scenario

IEEJ：November 2018 © IEEJ2018

Forecast LNG Imports by Region
mtpa

Asia and Middle East

450

450

Bunkers - Asia/Middle East
400

400

Middle East
350

300

Atlantic Basin

mtpa

Bunkers - Atlantic
Africa350

Other Asia

EuropeChina

300

Other Asia

North America

India
250

250

Central & South America

JKT

China

200

200

India

150

150

100

100

50

0
2005

2010

2015

2020

2025

Source: Cheniere interpretation of Wood Mackenzie data (Q3 2018)20

Europe

JKT

2030

50

2035

0
2005

C. & S. America
2010

2015

2020

2025

2030

2035

IEEJ：November 2018 © IEEJ2018

Focus on Asia Pacific Markets
China continues to dominate the headlines
But South East Asia important as a region – in terms of growth and new importers
LNG demand growth: 2017 to 2035

5 drivers of Asia
Pacific demand
growth80

Philippines

60

VietnamDecliningindigenous/piped
supplySingapore40

Malaysia
Sri Lanka

mtpa

ThailandBangladesh

China

20

Increased private
sector activity

New LNG consuming
segments (eg.
bunkering & trucking)India
Indonesia-

South Korea
Pakistan

TaiwanAustralia
Japan

(20)

(40)

Source: Cheniere interpretation of Wood Mackenzie data (Q3 2018)21?

Pro-gas energy
policies

Supplement torenewable generation

IEEJ：November 2018 © IEEJ2018

Impact of U.S. LNG

22

IEEJ：November 2018 © IEEJ2018

Commercial Evolution of LNG
LNG trade by contract length
Bilateral deals

300

Slow evolution

Growing flexibility

Spot & short-term trade % of total

250

Spot &
short-term
trade*

35%
30%

27%

25%

mtpa

200

20%

15%
10%
5%

150

0%
1995

2000

2005

2010

2015

Mid &
long-term
contract
trade

100

50

0
1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

* Contract duration of 4 years or less (GIIGNL)
Source: CEDIGAZ World Outlook for 1965 – 1985 (assumes no spot volume), Poten and Partners (2001) 1985 to 2000, GIIGNL (2018) 2000 to 2018

23

2015

73%

IEEJ：November 2018 © IEEJ2018

U.S. LNG Exports Driving Change in the Industry

 Price diversity and greater pricetransparency

 Destination flexibility at buyer’s direction
 Growing liquidity
 FOB and DES hub formation
 Sustainable low-cost supply overthe long-run
24

A more responsive, more competitive,
more diverse, and more resilient LNG
trade system

IEEJ：November 2018 © IEEJ2018

Sabine Pass Cargo Destinations
More Than 475 Cargoes (>1,700 TBtu) Exported from Sabine Pass Since Startup
Delivered to 29 Countries and Regions Across the Globe

London, U.K.
France, Lithuania,
Poland, Netherlands,
United Kingdom

Washington, DC

Japan,South Korea

Beijing, China

Dominican
Republic,
PanamaMexicoHouston, TX

Italy, Malta,
Egypt, Turkey,
Jordan, Israel

Portugal,
Spain

Tokyo, Japan
China,
TaiwanKuwait,UAE,
Pakistan

Colombia

million tonnes
BrazilIndia,
ThailandSingapore

Sabine Pass Exports by Destination Region

cargo count

6

80
70
60
50
40
30
20
10
0

5
Chile

4
3

Cheniere LNG Facility

Cheniere Office
Cargo Delivery Destination

Argentina

2
1
0
Q2 2017

Sources: Cheniere Research, Kpler
Note: Cumulative cargoes and volumes as of October 31, 2018. MENA – Middle East & North Africa

25

Q3 2017
Asia

Q4 2017
Latin America

Q1 2018
ASIA

Q2 2018

Q3 2018MENAIEEJ：November 2018 © IEEJ2018

The LNG Trade is Evolving
Spot and Short-term Quantities

80

Spot and Short-term*

70

Short-term

60

Spot

50
40

Spot volumes(~60 mt)= 21% of total
trade in 2017

*Spot = delivered within 90
days, Short-term = 90 days
to 4 years

0
2005

2010

4

2

3

2013

2014

2015

2016

2017

Source: Cheniere interpretation of Wood Mackenzie data (2018)

Tendered Cargoes

800

Cargoes

9

2012

2015

Source: GIIGNL Annual Reports.

300

17

0
2000

400

10% of total
trade in 2017

15

5

10

500

25

10

20

600

28

LNG volumes accounted for by the fourcommodity trading houses with thelargest LNG volumes

20

30

700

Trading House Activity

30

mtpa

mtpa

90

JKM Swaps
Equivalent
to ~17% of
total trade in
2017*

Shown by year of cargodelivery – includes multiyear tenders & tenders notawarded / unknown ifawardedVolume (mt)
Cargoes% of trade
Cargoes pd eqv.

2015
0.5
9
0.2%
0.03

2016
2.4
42
0.9%
0.11

2017
9.8
169
3.4%
0.46

63
2018 YTD
23.2
403
9.9%
1.48

Equivalent
to 9.9% of
total trade
YTD 2018

Buy
Sell

200
100

*assuming
1 cargo =0.07 mt

0
2013

2014

2015

2016

2017

Source: Cheniere interpretation of ICIS Heren GLM publication (2013,2014, 2015) and Wood Mackenzie LNG Tender Tracker (2016 , 2017)

26

2015

2016

2017

Source: Cheniere interpretation of Platts news reports (2018)2018

IEEJ：November 2018 © IEEJ2018

Contracting Behavior Reacting to Changing Market Environment
Perception that market was well supplied, wider supply choice, plus growing demand uncertainty
resulted in increasing buyer focus on shorter-term / smaller volume contracts in recent years.
ACQ of Contracts by Duration

mtpa

ACQ of Contracts by Volume

mtpa

50

50

40

40

30

30

20

20

10

10
0

0

2011

2012

< 5 years

mtpa

2013

2014

5-10 years

2015

2016

11-19 years

2017

2011

2018
YTD

2013

<1 mtpa
3 to <4 mtpa

≥ 20 years

ACQ of Contracts by Pricing Indexation

2012

50

40

40

30

30

20

20

10

10

1 to <2 mtpa
4 to <5 mtpa

2016

2017

2018
YTD

2 to <3 mtpa
5 mtpa and larger

0

0
2011
Oil

2012

2013

2014

European hub

2015

2016

Henry Hub/AECO

2017
Hybrid

2018
YTD

2011

2012

2013

2014

Portfolio supply

To what extent is this cyclical versus structural?
27

2015

ACQ of Contracts by Source

mtpa

50

2014

Note: 2018 YTD = As of Oct. 15, 2018
Source: Cheniere interpretation of Wood Mackenzie data (Q3 2018)

2015

2016

Project specific

2017

2018
YTD

IEEJ：November 2018 © IEEJ2018

Cheniere’s LNG Supply Projects
Sabine Pass Liquefaction Project (Louisiana)

Corpus Christi Liquefaction Project (Texas)

Our long-term customers

Building an industry leading LNG export platform along the U.S. Gulf Coast28

IEEJ：November 2018 © IEEJ2018

Slowdown in LNG Supply Project FIDs Since 2015
FIDs Per Annum (Total Volume)
mtpa

HiatusQatar

Australia

U.S.

Hiatus

50
45
40
35
30
25
20
15
10
5
0
2004

2005

2006

2007

2008

2009
Qatar

Source: Cheniere interpretation of Wood Mackenzie data (Q3 2018)

29

2010

2011

Australia

2012
U.S.

2013

Other

2014

2015

2016

2017

2018

IEEJ：November 2018 © IEEJ2018

Competing Supply
Multiple LNG Export Projects Competing for 2022+ Market Demand
Arctic LNG 2

LNG Canada
Woodfibre LNG

Corpus Christi
Expansion

Sakhalin-2
Expansion

Sabine Pass Expansion
Other U.S. Gulf Coast
projects
Tortue FLNG

Qatar
Expansion

Fortuna FLNG
Mozambique LNG (Area 1)
Rovuma LNG (Area 4)
Pluto Expansion

PNG LNG
Expansion

Cheniere liquefaction project
Non-Cheniere liquefaction project (source Wood Mackenzie LNG FID Tracker Q3 2018 (1))
FID reached in October 201830

Notes: (1) FID Imminent or Building Momentum, Company
FID Target 2020 or earlier, or Wood Mackenzie expect
FID 2020 or earlier if no company date given

IEEJ：November 2018 © IEEJ2018

U.S. LNG: Changing the Industry
 U.S. LNG has already changed
the industry
 Price diversification and greater pricetransparency
 Destination flexibility at buyer’s
direction
 Increased supply availability andgreater market competition
 A sustainably low-cost supply over the
long-run And is set to drive further change Growing liquidity / hub formation /price discovery
 Resulting in a more competitive andmore resilient trade system

Forecasted U.S. LNG Output to 2022
mtpa
80

72
70

60

50

40

30

20

15

10

0
2015

2016

2017

2018

2019

2020

Source: Cheniere interpretation of Wood Mackenzie data (Q3 2018)

U.S. will be the third largest exporter by 2020
31

2021

2022

IEEJ：November 2018 © IEEJ2018

ありがとうございました

32

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