<PAGE>

                                                                    Exhibit 10.8

                     PARTNERSHIP INTEREST PURCHASE AGREEMENT

                                      among

                            CONTANGO SUNDANCE, INC.,

                               CONTANGO OIL & GAS,

                               CHENIERE LNG, INC.

                                       and

                              CHENIERE ENERGY, INC.


                            dated as of March 1, 2003

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                       Page
<S>                                                                    <C>
1.   EXERCISE OF OPTION, PURCHASE AND SALE OF STOCK                       2
     1.1  Purchase of the Assigned Interest ........................      2
     1.2  Consideration ............................................      2
     1.3  Additional Provisions Related to the Consideration .......      2
     1.4  Security Agreement .......................................      3

2.   CLOSING .......................................................      3
     2.1  The Closing ..............................................      3
     2.2  Deliveries ...............................................      3

3.   REPRESENTATIONS AND WARRANTIES OF THE CHENIERE ENTITIES .......      3
     3.1  Due Organization .........................................      3
     3.2  Authorization ............................................      4
     3.3  Litigation and Administrative Proceedings ................      4
     3.4  Percentage Interests of the Company ......................      4

4.   REPRESENTATIONS OF CONTANGO ...................................      4
     4.1  Authorization ............................................      4
     4.2  Approvals ................................................      5
     4.3  Litigation and Administrative Proceedings ................      5
     4.4  Investigation ............................................      5
     4.5  Investment Representations ...............................      6

5.   CERTAIN COVENANTS OF THE CONTANGO ENTITIES ....................      6
     5.1  Confidential Information .................................      6
     5.2  Further Action; Reasonable Commercial Efforts ............      7
     5.3  Partnership Agreement ....................................      7
     5.4  Assigned Interest ........................................      7
     5.5  Return of Funds ..........................................      9

6.   INDEMNIFICATION ...............................................      9
     6.1  Survival .................................................      9
     6.2  Indemnification by Cheniere ..............................      9
     6.3  Indemnification by Contango ..............................      9
     6.4  Indemnification Procedures ...............................     10

7.   ASSIGNMENT AND OFFSET .........................................     11
     7.1  Right of First Refusal ...................................     11
     7.2  Offset Right .............................................     12
     7.3  Put Option ...............................................     12
     7.4  Equitable Relief .........................................     12
</TABLE>

                                        i

<PAGE>

                                TABLE OF CONTENTS
                                  (continued)

<TABLE>
<CAPTION>
                                                                       Page
<S>                                                                    <C>
8.   CERTAIN DEFINITIONS ...........................................     12

9.   GENERAL .......................................................     13
     9.1   Cooperation .............................................     13
     9.2   Designee; Successors and Assigns ........................     13
     9.3   Entire Agreement ........................................     13
     9.4   Counterparts ............................................     13
     9.5   Brokers and Agents ......................................     13
     9.6   Payment of Expenses .....................................     14
     9.7   Notices .................................................     14
     9.8   Governing Law ...........................................     14
     9.9   Amendment to Partnership Agreement ......................     14
     9.10  Exercise of Rights and Remedies .........................     15
     9.11  No Strict Construction ..................................     15
     9.12  Time ....................................................     15
     9.13  Survival ................................................     15
     9.14  Reformation and Severability ............................     15
</TABLE>

                                       ii

<PAGE>

                              PARTNERSHIP INTEREST
                               PURCHASE AGREEMENT

     THIS PARTNERSHIP INTEREST PURCHASE AGREEMENT (the "Agreement") is made as
of the 1st day of March, 2003, among Contango Sundance, Inc., a Delaware
corporation ("Contango"), Contango Oil & Gas, a Delaware corporation and an
affiliate of Contango ("O&G" and collectively with Contango, the "Contango
Entities"), Cheniere LNG, Inc, a Delaware corporation ("Cheniere LNG"), and
Cheniere Energy, Inc., a Delaware corporation ("Cheniere" and collectively with
Cheniere LNG, the "Cheniere Entities").

     WHEREAS, Cheniere LNG has entered into an Amended and Restated Limited
Partnership Agreement ("Partnership Agreement") for Freeport LNG Development,
L.P., a Delaware limited partnership (the "Partnership") pursuant to which
Cheniere LNG received a forty percent (40%) limited partnership interest in the
Partnership and Freeport LNG Investments, LLC (together with its successors and
assigns under the Partnership Agreement, "Investments") received a sixty-percent
(60%) limited partnership interest in the Partnership; and

     WHEREAS, Contango and Cheniere entered into that certain Option Purchase
Agreement dated June 4, 2002 (as amended by the Extension and Amendment to the
Option Agreement dated December 15, 2002, the "Option Agreement") pursuant to
which Contango has the right and option to purchase from Cheniere (the "Option")
a ten percent (10%) interest in the Partnership; and

     WHEREAS, in connection with the execution of the Option Purchase Agreement,
Cheniere delivered to O&G a Secured Promissory Note in the initial principal
amount of $750,000 (the "Note") and a Security Agreement dated June 4, 2002
securing such Note (the "Security Agreement"); and

     WHEREAS, Contango has delivered notice of the exercise of such Option prior
to the First Option Expiration Date (as defined in the Option Agreement)
pursuant to which it notified Cheniere of its intent to purchase the interest in
the Partnership defined in Section 5.4 of this Agreement as the "Assigned
Interest;"

     WHEREAS, it is an integral part of this Agreement that O&G deliver the Note
and terminate the Security Agreement at the Closing;

     WHEREAS, O&G has determined that its execution, delivery and performance of
this Agreement directly benefits, and are in the best interest of, O&G; and

     WHEREAS, Contango wishes to exercise the Option to purchase the Assigned
Interest, and Cheniere LNG wishes to sell (and Cheniere wishes to cause Cheniere
LNG to sell) the Assigned Interest to Contango.

     NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements set forth below, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

<PAGE>

1.   EXERCISE OF OPTION, PURCHASE AND SALE OF STOCK

     1.1  Purchase of the Assigned Interest. Subject to the terms and conditions
     of this Agreement, Cheniere LNG agrees to sell, transfer and assign to
     Contango, and Contango agrees to purchase from Cheniere LNG, the Assigned
     Interest in the Partnership.

     1.2  Consideration. In consideration of the sale, transfer and delivery of
     the Assigned Interest, Contango shall deliver the following (the "Purchase
     Price"):

          (a)  at Closing, $750,000 in immediately available funds ("Closing
          Amount");

          (b)  on the fifteenth day of each calendar month starting on June 15,
          2003 and ending on April 15, 2004, $100,000 in immediately available
          funds (subject to earlier payment of such amounts in accordance with
          (d) below);

          (c)  on May 15, 2004, $83,333 in immediately available funds (subject
          to earlier payment of such amount in accordance with (d) below); and

          (d)  on the later to occur of (i) the date 10 days after Contango has
          received written notice of Project Approval (as defined in the
          Partnership Agreement) which notice may occur prior to the actual
          approval and (ii) the date on which Project Approval (as defined in
          the Partnership Agreement) is obtained, $400,000 (plus any unpaid
          portion of the amounts described in (b) and (c) above in the event
          that Project Approval is obtained prior to May 15, 2004) in
          immediately available funds.

     The amounts described in (b), (c) and (d) above are collectively referred
to herein as the "Additional Amount."

     In addition, Contango assumes the obligations set forth in the definition
of Assigned Interest under Section 5.4.

     1.3  Additional Provisions Related to the Consideration.

          (a)  Contango may surrender and deliver the Note to satisfy in full
          its obligation related to the Closing Amount. Contango and O&G each
          hereby agree that upon the consummation of the transactions
          contemplated by this Agreement, neither Contango nor O&G is entitled
          to any further payments of principal or interest under the Note, that
          Cheniere has satisfied all obligations to Contango and O&G under the
          Note, and that the Note is discharged in full and is of no further
          force or effect. Upon execution of this Agreement, Contango will
          deliver or cause to be delivered to Cheniere the original Note marked
          "CANCELED."

          (b)  The Parties agree that effective upon the Closing, the Security
          Agreement and the security interest created thereby is terminated and
          O&G and Contango release all of the property constituting collateral
          thereunder.

                                        2

<PAGE>

     1.4 Security Agreement. Contango's obligation to pay the Additional Amount
     is secured by a security interest in the Assigned Interest and Contango
     shall execute, simultaneously with the Closing hereunder, a Security and
     Pledge Agreement of even date herewith between Contango and Cheniere LNG
     setting forth the terms and conditions of such security interest and
     specifying certain remedies.

2.   CLOSING

     2.1 The Closing. The transactions contemplated by this Agreement (the
     "Closing") shall take place at 10:00 a.m., Houston time, at the offices of
     Andrews & Kurth L.L.P., 600 Travis, Suite 4200, Houston, Texas 77002, on
     March 1, 2003 (the "Closing Date").

     2.2 Deliveries. In addition to the other things required to be done hereby,
     at the Closing, (a) O&G and/or Contango shall deliver to the Cheniere
     Entities, if not previously delivered to the Cheniere Entities, (i) the
     Note, (ii) a Security and Pledge Agreement, and (iii) all certificates and
     such other instruments and documents required pursuant hereto to be
     delivered by or on behalf of each of the Contango Entities at or prior to
     the Closing, or reasonably requested by Cheniere in connection herewith and
     (b) the Cheniere Entities shall deliver to Contango (i) a warrant to
     purchase 300,000 shares of Cheniere common stock at an exercise price of
     $2.50 per share in the form attached as Exhibit 2.2(b)(i), (ii) a joinder
     to the Amended and Restated Partnership Agreement, duly executed by the
     parties thereto, admitting Contango as a substituted limited partner (as
     contemplated by Article XVII of the Partnership Agreement) in the
     partnership, which joinder shall be in the form attached hereto as Exhibit
     2.2(b)(ii) and (iii) all certificates and such other instruments and
     documents required pursuant hereto to be delivered by or on behalf of each
     of the Cheniere Entities at or prior to the Closing, or reasonably
     requested by the Contango Entities in connection herewith.

3.   REPRESENTATIONS AND WARRANTIES OF THE CHENIERE ENTITIES

     Each of the Cheniere Entities jointly and severally represents and warrants
to Contango that each of the following representations and warranties is true as
of the date of this Agreement.

     3.1 Due Organization. The Partnership is a limited partnership duly
     organized and validly existing under the laws of Delaware, and to
     Cheniere's Knowledge, is duly authorized, qualified and licensed under all
     applicable laws, regulations, ordinances and orders of Government
     Authorities to own its properties and assets and to carry on its business
     in the places and in the manner as it is now conducted. True and correct
     copies of the Partnership's Certificate of Limited Partnership, as amended
     and Amended and Restated Limited Partnership Agreement are attached to
     Exhibit 3.1. Each of the Cheniere Entities is a corporation duly organized,
     validly existing and in good standing under the laws of Delaware and is
     duly authorized, qualified and licensed under all applicable laws,
     regulations, ordinances and orders of Government Authorities to own its
     properties and assets and to carry on its business in the places and in the
     manner as it is now conducted, except as disclosed on Schedule 3.1.

                                        3

<PAGE>

     3.2  Authorization. Each of the Cheniere Entities has full legal right,
     power and authority to enter into this Agreement and any agreement,
     document or certificate contemplated hereby and to perform its obligations
     hereunder and to consummate the transactions contemplated hereby. The
     execution, delivery and performance of this Agreement and the consummation
     of the transactions contemplated hereby do not and will not (i) violate or
     conflict with any provision of any of the Cheniere Entities' Certificate of
     Incorporation or Bylaws, (ii) violate or conflict with any provision of, or
     be an event that is a violation of, or result in the modification,
     cancellation or acceleration of, any obligation under, or result in the
     imposition or creation of any Encumbrances upon any of the assets of the
     Cheniere Entities or, to Cheniere's Knowledge, the Partnership pursuant to
     any mortgage, lien, lease, agreement or instrument to which any of the
     Cheniere Entities or, to Cheniere's Knowledge, the Partnership is a party
     or by which any of the Cheniere Entities or, to Cheniere's Knowledge, the
     Partnership, is bound, (iii) violate or conflict with any Legal Requirement
     applicable to (x) any of the Cheniere Entities or, to Cheniere's Knowledge,
     the Partnership or (y) any of the Cheniere Entities' properties or assets
     or any other material restriction of any kind or character to which it or
     they are subject or, to the Cheniere's Knowledge, any of the Partnership's
     properties or assets or any other material restriction of any kind or
     character to which it or they are subject, or (iv) require any
     authorization, consent, order, permit or approval of, or notice to, or
     filing, registration or qualification with, any Government Authority and,
     except for the general partner of the Partnership, any other Person. This
     Agreement has been duly executed and delivered by each of the Cheniere
     Entities and, assuming the due execution and delivery hereof by Contango
     and the consent of the general partner of the Partnership, this Agreement
     constitutes the legal, valid and binding obligation of the Cheniere
     Entities.

     3.4  Litigation and Administrative Proceedings. There is no litigation,
     proceeding or investigation pending or, to the knowledge of Cheniere,
     threatened against the Cheniere Entities in any federal, state or local
     court, or before any administrative agency, that seeks to enjoin or
     prohibit, or otherwise questions the validity of, any action taken or to be
     taken pursuant to or in connection with this Agreement.

     3.5  Percentage Interests of the Company. Prior to the consummation of the
     transactions contemplated by this Agreement, Cheniere LNG owns a forty
     percent limited partnership interest in the Partnership and such interest
     is free and clear of all Encumbrances. Upon consummation of this Agreement
     in accordance with its terms, Contango will acquire good and valid title in
     the Assigned Interest, free and clear of all Encumbrances. As of the
     effective date of the Partnership Agreement, Cheniere LNG's capital account
     in the Partnership was $9,333,333.

4.   REPRESENTATIONS OF CONTANGO

     Each of the Contango Entities, jointly and severally represents and
warrants to Cheniere that each of the following representations and warranties
is true as of the date of this Agreement:

     4.1  Authorization. Contango is a corporation duly organized, validly
     existing and in good standing under the laws of Delaware, and is duly
     authorized, qualified and licensed

                                        4

<PAGE>

     under all applicable laws, regulations, ordinances, and orders of
     Governmental Authorities to own its properties and assets and carry on its
     business in places and in the manner as it is now conducted. O&G is a
     corporation duly organized, validly existing and in good standing under the
     laws of Delaware, and is duly authorized, qualified and licensed under all
     applicable laws, regulations, ordinances, and orders of Governmental
     Authorities to own its properties and assets and carry on its business in
     places and in the manner as it is now conducted. Each of the Contango
     Entities has full legal right, power and authority to enter into this
     Agreement and any agreement, document or certificate contemplated hereby
     and to perform its obligations hereunder and to consummate the transactions
     contemplated hereby. The execution, delivery and performance of this
     Agreement and the consummation of the transactions contemplated hereby do
     not and will not (i) violate or conflict with any provision of, or be an
     event that is (or with the passage of time will result in) a violation of,
     or result in the modification, cancellation or acceleration of (whether
     after the giving of notice or lapse of time or both), any obligation under,
     or result in the imposition or creation of any Encumbrances upon any of the
     assets of Contango or O&G pursuant to any mortgage, lien, lease, agreement
     or instrument to which Contango or O&G is a party or by which Contango or
     O&G is bound, (ii) violate or conflict with any Legal Requirement
     applicable to Contango or O&G or any of their respective properties or
     assets or any other material restriction of any kind or character to which
     it or they are subject, or (iii) require any authorization, consent, order,
     permit or approval of, or notice to, or filing, registration or
     qualification with, any Government Authority or any other Person. This
     Agreement has been duly executed and delivered by Contango and O&G and,
     assuming the due execution and delivery hereof by the Cheniere Entities,
     this Agreement constitutes the legal, valid and binding obligation of
     Contango and O&G.

     4.2  Approvals. No authorization, consent or approval of, or registration
     or filing with, any Governmental Authority or any other Person is or was
     required to be obtained or made by Contango or O&G in connection with the
     execution, delivery or performance of this Agreement.

     4.3  Litigation and Administrative Proceedings. There is no litigation,
     proceeding or investigation pending or, to the knowledge of Contango or
     O&G, threatened against Contango in any federal, state or local court, or
     before any administrative agency, that seeks to enjoin or prohibit, or
     otherwise questions the validity of, any action taken or to be taken
     pursuant to or in connection with this Agreement.

     4.4  Investigation. Contango is acquiring the Assigned Interest based on
     its own investigation and for investment for its own account, and not with
     the view to, or for resale in connection with, any distribution of any part
     thereof, and it has no present intention of selling, granting any
     participation in or otherwise distributing the Assigned Interest. Contango
     has received and reviewed the Partnership Agreement. Contango understands
     that the Assigned Interest to be purchased has not been registered under
     the Securities Act of 1933, as amended, or applicable state and other
     securities laws by reason of a specific exemption from the registration
     provisions of the Securities Act and applicable state and other securities
     laws, the availability of which depends upon, among

                                       5

<PAGE>

     other things, the bona fide nature of the investment intent and the
     accuracy of Contango's and O&G's representations as expressed herein.

     4.5  Investment Representations.

          (a)  The Assigned Interest is being acquired by Contango for
          Contango's own account and for investment purposes only and not with a
          view to any resale or distribution thereof, in whole or in part, to
          others, and Contango is not participating, directly or indirectly, in
          a distribution of the Assigned Interest and will not take, or cause to
          be taken, any action that would cause Contango to be deemed an
          "underwriter" of such Assigned Interest as defined in Section 2(11) of
          the Securities Act of 1933, as amended.

          (b)  Contango has had access to all materials, books, records,
          documents, and information relating to the Partnership and has been
          able to verify the accuracy of, and to supplement, the information
          contained therein.

          (c)  Contango has had an opportunity to ask questions of, and receive
          satisfactory answers from, representatives of Cheniere, Cheniere LNG
          and/or the Partnership concerning all material aspects of the
          Partnership and its proposed business, and any request for such
          information has been fully complied with to the extent Cheniere,
          Cheniere LNG or the Partnership possesses such information or can
          acquire it without unreasonable effort or expense.

          (d)  Contango is an "accredited investor" within the meaning of Rule
          501 of the Securities Act of 1933, as amended.

          (e)  Contango is an investor who has such knowledge and experience in
          financial and business matters as to be capable of evaluating the
          merits and risks of an investment in the Partnership based upon (i)
          the information furnished by Cheniere, Cheniere LNG and the
          Partnership; (ii) Contango's personal knowledge of the business and
          affairs of the Partnership; (iii) the records, files, and plans of the
          Partnership to which Contango has had full access; (iv) such
          additional information as Contango may have requested and has received
          from Cheniere, Cheniere LNG or the Partnership; and (v) the
          independent inquiries and investigations undertaken by Contango.

          (f)  No person has made any direct or indirect representation or
          warranty of any kind to Contango with respect to the economic return
          which may accrue to Contango. Contango has consulted with its own
          advisors with respect to an investment in the Partnership.

5.   CERTAIN COVENANTS OF THE CONTANGO ENTITIES

     5.1  Confidential Information. Contango and O&G hereby agree that, except
     as required by law, they will not disclose any confidential information to
     any Person for any purpose whatsoever, including any information related to
     the Partnership, this Agreement or the terms hereof. In addition, Contango
     hereby acknowledges that upon the

                                        6

<PAGE>

     consummation of the transactions contemplated by this Agreement, Contango
     shall become bound by the obligations of a limited partner as set froth in
     the Partnership Agreement including all provisions related to
     confidentiality. Cheniere shall be entitled to an injunction restraining
     Contango and/or O&G from disclosing, in whole or in part, any confidential
     information. Notwithstanding the foregoing, each of the Cheniere Entities
     acknowledges that in connection with the Closing hereunder, Contango shall
     issue a press release (the form of which shall be provided in advance to
     Cheniere) announcing the purchase of the Assigned Interest.

     5.2  Further Action; Reasonable Commercial Efforts. Subject to the terms
     and conditions hereof, each party hereto shall use its reasonable
     commercial efforts to take, or to cause to be taken, all appropriate
     action, and to do, or to cause to be done, all things necessary, proper or
     advisable under applicable laws to consummate and make effective the
     transactions contemplated hereby.

     5.3  Partnership Agreement. Effective upon the Closing, Contango shall join
     in the execution of the Partnership Agreement (including the execution of
     the attached joinder) and hereby agrees to execute and deliver a
     counterpart of the Partnership Agreement and any other documents,
     agreements or certificates requested by the general partner of the
     Partnership. Contango hereby agrees to be bound by and comply with all the
     provisions of such Partnership Agreement applicable to it including, but
     not limited to, any provision that limits or restricts the assignment or
     transfer of the Assigned Interest.

     5.4  Assigned Interest. The parties to this Agreement agree that the
     Assigned Interest consists of the following rights and obligations:

          (a)  Distributions. The Assigned Interest shall be entitled to a 10%
          Percentage Interest (as defined in the Partnership Agreement) with
          respect to all distributions made pursuant to Sections 5.1(b)(v) and
          5.2 of the Partnership Agreement and shall be entitled to
          distributions in accordance with its Capital Account (as defined in
          the Partnership Agreement) or its 10% Percentage Interest, as the case
          may be, in accordance with the provisions of Section 5.4 of the
          Partnership Agreement. The Assigned Interest shall have no right to
          any distributions under any other provisions of the Partnership
          Agreement including under Sections 3.4(b), 5.1(a) or 5.3 of the
          Partnership Agreement.

          (b)  Allocation of Profits and Losses. The Assigned Interest shall be
          allocated the amount of Profit or Loss (as such terms are defined in
          the Partnership Agreement) allocable to a Limited Partner with a 10%
          Percentage Interest under the provisions of Article 4 of the
          Partnership Agreement.

          (c)  Capital Account. The Assigned Interest shall have a Capital
          Account as of the Closing Date of $2,333,333, equal to 25% of the
          Capital Account of Cheniere LNG immediately prior to the Closing, such
          Capital Account to be adjusted thereafter in accordance with Section
          4.1 of the Partnership Agreement.

                                       7

<PAGE>

          (d)  Obligations of Contango. As the holder of the Assigned Interest,
          Contango shall have all of the obligations of a Limited Partner of the
          Partnership with a 10% Percentage Interest, except to the extent
          otherwise expressly limited pursuant to this Section 5.4.

          (e)  Rights of Contango. As the holder of the Assigned Interest,
          Contango shall have the rights to distributions, allocations of
          Profits and Losses, and Capital Account under the Partnership
          Agreement set forth in this Section 5.4 and shall have all other
          rights of a Substituted Limited Partner (as contemplated by Article
          XVII of the Partnership Agreement) of the Partnership with a 10%
          Percentage Interest except the following:

               (i)    Contango has, and shall have, no right to any distribution
               under Sections 3.4(b), 5.1(a) or 5.3 of the Partnership
               Agreement;

               (ii)   Contango has, and shall have, no approval rights pursuant
               to Section 10.2 of the Partnership Agreement;

               (iii)  Contango has, and shall have, no right to consultation
               pursuant to Section 10.2(c) of the Partnership Agreement;

               (iv)   Contango has, and shall have, no rights under Section
               10.10 of the Partnership Agreement;

               (v)    Contango has, and shall have, no rights under Section 11.1
               of the Partnership Agreement;

               (vi)   Contango has, and shall have, no rights under Section
               12.2(u) of the Partnership Agreement;

               (vii)  Contango has, and shall have, no approval rights under
               Section 14.3 of the Partnership Agreement;

               (viii) Contango has, and shall have, no rights under Section
               14.5(d) or (e) of the Partnership Agreement;

               (ix)   Contango has, and shall have, no rights under Section 14.6
               of the Partnership Agreement; and

               (x)    Contango has, and shall have, no rights under Section 22.1
               of the Partnership Agreement.

          (f)  Notwithstanding anything to the contrary contained herein,
          Contango shall not be responsible for any obligation of Cheniere LNG
          (i) under Section 6.2(g)(iii) of the Partnership Agreement and (ii) to
          pay the Reimbursement Amount under Section 16.2 of the Partnership
          Agreement.

                                       8

<PAGE>

     5.5  Return of Funds. Contango hereby agrees that in the event it receives
     any funds from the Partnership that it is not entitled to receive, but to
     which Cheniere LNG is entitled, whether distributed under Section 5.1, 5.3
     or as a result of accelerated payments under Section 3.4(b) or otherwise,
     then Contango will receive such funds in trust for the benefit of Cheniere
     LNG and shall immediately assign and deliver such amounts to Cheniere LNG.

6.   INDEMNIFICATION

     6.1  Survival. The representations, warranties, covenants and agreements of
     the parties made in this Agreement shall survive (and not be affected in
     any respect by) the Closing. Notwithstanding the foregoing, the
     representations and warranties and the right of indemnification with
     respect to each representation and warranty contained in this Agreement
     shall terminate on the date (the "Survival Date") occurring sixty (60) days
     after the second (2nd) anniversary of the Closing Date. The right to
     indemnification with respect to such representations and warranties, and
     the liability of either party with respect thereto, shall not terminate
     with respect to any claim, whether or not fixed as to liability or
     liquidated as to amount, with respect to which such party has been given
     written notice prior to the Survival Date.

     6.2  Indemnification by Cheniere. The Cheniere Entities shall indemnify,
     defend, protect and hold harmless Contango and its respective successors
     and assigns and its directors, officers, employees, attorneys, agents and
     affiliates (each a "Contango Indemnified Person"), at all times from and
     after the date of this Agreement (subject to any limitation on the survival
     of representations and warranties set forth in Section 6.1) against all
     losses, claims, damages, actions, suits, proceedings, demands, assessments,
     adjustments, costs and expenses ("Losses") (including specifically, but
     without limitation, reasonable attorneys' fees and expenses of
     investigation ("Legal Expenses")) based upon, resulting from or arising out
     of (a) any inaccuracy or breach of any representation or warranty of the
     Cheniere Entities contained in this Agreement and (b) the breach by the
     Cheniere Entities, or the failure by the Cheniere Entities to observe, any
     of the covenants or other agreements contained in this Agreement.

     6.3  Indemnification by Contango. Contango shall indemnify, defend, protect
     and hold harmless Cheniere, its successors and assigns and its directors,
     officers, employees, attorneys, agents and affiliates (each a "Cheniere
     Indemnified Person") at all times from and after the date of this Agreement
     (subject to any limitation on the survival of representations and
     warranties set forth in Section 6.1) against all Losses (including
     specifically, but without limitation, Legal Expenses) based upon, resulting
     from or arising out of (a) any inaccuracy or breach of any representation
     or warranty of Contango contained in this Agreement, and (b) the breach by
     Contango of, or the failure by Contango to observe, any of its covenants or
     other agreements contained in or made pursuant to this Agreement.

                                       9

<PAGE>

     6.4  Indemnification Procedures.

          (a)  Promptly after receipt by any person entitled to indemnification
          under Section 6.2 or 6.3 (an "indemnified party") of notice of the
          commencement of any action, suit or proceeding by a person not a party
          to this Agreement in respect of which the indemnified party will seek
          indemnification hereunder (a "Third Party Action"), the indemnified
          party shall notify the person that is obligated to provide such
          indemnification (the "indemnifying party") thereof in writing, but any
          failure to so notify the indemnifying party shall not relieve it from
          any liability that it may have to the indemnified party under Section
          6.2 or 6.3, except to the extent that the indemnifying party is
          prejudiced by the failure to give such notice. The indemnifying party
          shall be entitled to participate in the defense of such Third Party
          Action and to assume control of such defense (including settlement of
          such Third Party Action) with counsel reasonably satisfactory to such
          indemnified party; provided, however, that:

               (i)   the indemnified party shall be entitled to participate in
               the defense of such Third Party Action and to employ counsel at
               its own expense (which shall not constitute Legal Expenses for
               purposes of this Agreement) to assist in the handling of such
               Third Party Action;

               (ii)  the indemnifying party shall obtain the prior written
               approval of the indemnified party before entering into any
               settlement of such Third Party Action or ceasing to defend
               against such Third Party Action, if pursuant to or as a result of
               such settlement or cessation, injunctive or other equitable
               relief would be imposed against the indemnified party or the
               indemnified party would be materially adversely affected thereby;

               (iii) no indemnifying party shall consent to the entry of any
               judgment or enter into any settlement that does not include as an
               unconditional term thereof the giving by each claimant or
               plaintiff to each indemnified party of a release from all
               liability in respect of such Third Party Action; and

               (iv)  the indemnifying party shall not be entitled to control the
               defense of any Third Party Action unless the indemnifying party
               confirms in writing its assumption of such defense and continues
               to pursue the defense reasonably and in good faith.

     After written notice by the indemnifying party to the indemnified party of
its election to assume control of the defense of any such Third Party Action in
accordance with the foregoing, (i) the indemnifying party shall not be liable to
such indemnified party hereunder for any Legal Expenses subsequently incurred by
such indemnified party attributable to defending against such Third Party
Action, and (ii) as long as the indemnifying party is reasonably contesting such
Third Party Action in good faith, the indemnified party shall not admit any
liability with respect to, or settle, compromise or discharge the claim
underlying, such Third Party Action without the indemnifying party's prior
written consent. If the indemnifying party does not assume control of the
defense of such Third Party Action in accordance with this Section 6.4, the
indemnified party

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<PAGE>

shall have the right to defend and/or settle such Third Party Action in such
manner as it may deem reasonably appropriate at the cost and expense of the
indemnifying party provided that the indemnifying party has received written
notice of the proposed settlement and the terms thereof, and the indemnifying
party will promptly reimburse the indemnified party therefor in accordance with
this Section 6. The reimbursement of fees, costs and expenses required by this
Section 6 shall be made by periodic payments during the course of the
investigation or defense, as and when bills are received or expenses incurred.

          (b)  If an indemnified party becomes entitled to any indemnification
          from an indemnifying party pursuant to this Agreement, such
          indemnification payment shall be made in cash upon demand.

          (c)  If an indemnified party has actual knowledge of any facts or
          circumstances other than the commencement of a Third Party Action
          which cause in good faith it to believe that it is entitled to
          indemnification under this Section 6, then such indemnified party
          shall promptly give the indemnifying party notice thereof in writing,
          but any failure to so notify the indemnifying party shall not relieve
          it from any liability that it may have to the indemnified party under
          Section 6.2 or 6.3, as the case may be, except to the extent that the
          indemnifying party is prejudiced by the failure to give such notice.

          (d)  The remedies provided in this Section 6 shall be the exclusive
          remedy for monetary damages (whether at law or in equity) with respect
          to matters subject to indemnification under Section 6.2(a) or Section
          6.3(a) hereof.

7.   ASSIGNMENT AND OFFSET

     7.1  Right of First Refusal. In the event Contango (or its permitted
     transferees or assigns), proposes to or does attempt to transfer, assign,
     distribute, pledge, hypothecate, encumber or otherwise dispose of
     ("Transfer") all or any part of the Assigned Interest ("Offered Interest")
     to any other partner in the Partnership or any affiliate of any partner of
     the Partnership, the Offered Interest shall be offered for a purchase price
     payable entirely in cash and shall first be offered for sale to Cheniere in
     accordance with this Section 7.1. Contango shall deliver a notice to
     Cheniere (the "Offer Notice") containing a description of the proposed
     transaction and the terms thereof, including a description of the Interest
     being sold and such Offer Notice shall contain an offer to sell to Cheniere
     the Offered Interest. Such offer to sell shall contain the same terms and
     conditions and shall be for the same consideration as described in the
     Offer Notice. For a period of 30 business days after such Offer Notice is
     received by Cheniere, Cheniere may, by notice to Contango accept the offer
     to acquire such Offered Interest in whole but not in part. Such acceptance
     shall specify the proposed date for closing such acquisition, which date
     shall not be later than 90 days from the date the notice of acceptance is
     sent to Contango. In the event that Cheniere does not agree to purchase the
     Offered Interest, Contango shall have the right to proceed with the sale or
     transfer on the terms specified in the Offer Notice; provided, however,
     that if Contango does not consummate such sale or transfer within 180 days
     after the date of the Offer Notice or proposes to consummate the
     transaction on terms that differ in any material respect more favorable to
     the transferee

                                       11

<PAGE>

     from the terms set forth in the Offer Notice, the right of first refusal
     contemplated by this Section 7.1 shall again be applicable. In the event
     Contango (or its permitted transferees or assigns) proposes to Transfer all
     or any part of the Assigned Interest to any other Person, Contango will
     notify Cheniere at least 30 days prior to consummating a transfer of such
     portion of the Assigned Interest.

     7.2 Offset Right. In the event Contango fails to pay any Additional Amount
     when due, Cheniere LNG shall have the right to require Contango to reassign
     to Cheniere LNG, and Contango will transfer to Cheniere LNG, all right,
     title and interest in and to all or a portion of the Assigned Interest in
     satisfaction of Contango's obligation to pay the Additional Amount. The
     amount of such offset shall be equal to (A) Contango's Percentage Interest
     (as defined in the Partnership Agreement) multiplied by (B) a ratio, the
     numerator of which shall be the Additional Amount not timely paid, and the
     denominator of which shall be (i) $2,333,333 multiplied by (ii) 0.9, as
     follows:

     (Contango's Percentage Interest)   X   $(Additional Amount not timely paid)
     --------------------------------       ------------------------------------
                    1                                ($2,333,333)(0.9)

     Contango will take such actions and do all things necessary, proper or
     advisable in order to effect the transactions contemplated by this Section
     7.2.

     7.3 Put Option. In the event that Investments exercises its right to
     withdraw from the Partnership prior to March 31, 2003 pursuant to Section
     16.2 of the Partnership Agreement, Contango shall have the right to
     transfer the Assigned Interest to Cheniere LNG in exchange for the Closing
     Amount in the form of a promissory note from Cheniere identical to the
     existing Note and the execution of a security agreement substantially
     identical to the existing Security Agreement.

     7.4 Equitable Relief. The parties hereto agree that legal remedies may be
     inadequate to enforce the provisions of this Agreement including this
     Article VII and equitable relief, including specific performance and
     injunctive relief, may be used to enforce the provisions of this Agreement.

8.   CERTAIN DEFINITIONS

     "Affiliate" (whether or not capitalized) shall mean, with respect to any
person, any other person that directly, or through one or more intermediaries,
controls or is controlled by or is under common control with such first person.
As used in this definition, "control" shall mean possession, directly or
indirectly, of power to direct or cause the direction of management or policies
(whether through ownership of securities or other ownership interest, by
contract or otherwise).

     "Business Day" means each day other than a Saturday, a Sunday, a legal
holiday or a day on which commercial banks are authorized or required to be
closed in Houston, Texas.

     "Encumbrances" shall mean mortgages, liens, pledges, encumbrances (legal or
equitable), claims, charges, security interests, covenants, conditions, voting
and other

                                       12

<PAGE>

restrictions, rights-of-way, easements, options, encroachments, rights of others
and any other matters affecting title, except, in the case of the Assigned
Interest, for restrictions on the sale or other disposition thereof imposed by
federal or state securities laws.

     "Government Authority" shall mean any government or state (or any
subdivision thereof), whether domestic, foreign or multinational, or any agency,
authority, bureau, commission, department or similar body or instrumentality
thereof, or any government court or tribunal.

     "Knowledge" shall mean facts that are actually known by any officer or
director of the applicable party (without any duty to investigate).

     "Legal Requirement" shall mean any law, statute, ordinance, code, rule,
regulation, standard, judgment, decree, writ, ruling, arbitration award,
injunction, order or other requirement of any Government Authority.

     "Person" (whether or not capitalized) shall mean and include an individual,
corporation, company, limited liability company, limited liability partnership,
partnership, joint venture, association, trust, and other unincorporated
organization or entity including any Government Authority.

9.   GENERAL

     9.1  Cooperation. Cheniere and Contango shall each deliver or cause to be
     delivered to the other on the Closing Date, and at such other times and
     places as shall be reasonably agreed to, such additional instruments as the
     other may reasonably request for the purpose of carrying out this
     Agreement.

     9.2  Designee; Successors and Assigns. This Agreement and the rights of the
     parties hereunder shall be binding upon and shall inure to the benefit of
     the parties hereto and their respective successors and permitted assigns.

     9.3  Entire Agreement. This Agreement (including the Exhibits attached
     hereto and the Schedules delivered pursuant hereto) and the other writings
     specifically identified herein or contemplated hereby contain the entire
     agreement and understanding between the Cheniere Entities and the Contango
     Entities with respect to the transactions contemplated herein and supersede
     any prior agreement and understanding relating to the subject matter of
     this Agreement. This Agreement may be modified or amended only by a written
     instrument executed by the Contango Entities and the Cheniere Entities
     acting through their respective duly authorized officers.

     9.4  Counterparts. This Agreement may be executed simultaneously in two or
     more counterparts, each of which shall be deemed an original and all of
     which together shall constitute but one and the same instrument.

     9.5  Brokers and Agents. Each party represents and warrants that it
     employed no broker or agent in connection with this transaction and agrees
     to indemnify the other

                                       13

<PAGE>

     against all loss, cost, damages or expense arising out of claims for fees
     or commission of brokers employed or alleged to have been employed by such
     indemnifying party.

     9.6  Payment of Expenses. Each of the parties hereto shall pay all its own
     costs and expenses incurred in connection with this Agreement and the
     transactions contemplated hereby. Any sales, use, excise, value added,
     business, goods and services, transfer, stamp, recording, documentary,
     registration, conveyancing or similar taxes, duties or other expenses
     related to the transactions contemplated by this Agreement, applicable to
     the transfer of the Assigned Interest shall be borne by Contango. Each
     party shall use commercially reasonable efforts to avail itself of any
     available exemptions from any such taxes, and to cooperate with the other
     party in providing any information and documentation that may be necessary
     to obtain such exemptions.

     9.7  Notices. All notices of communication required or permitted hereunder
     shall be in writing and may be given by depositing the same in United
     States mail, addressed to the party to be notified, postage prepaid and
     registered or certified with return receipt requested, or by delivering the
     same in person.

          (a) If to the Cheniere Entities, addressed to:

                      Cheniere Energy, Inc.
                      333 Clay Street, Suite 3400
                      Houston, Texas 77002
                      Attention:
                      Facsimile No.:

          with a copy to:

                      Andrews & Kurth L.L.P.
                      600 Travis, Suite 4200
                      Houston, Texas 77002
                      Attn: Michael Overman
                      (713) 220-4734 - Telephone
                      (713) 220-4285 -Facsimile

          (b) If to the Contango Entities, addressed to:

                      Contango Sundance, Inc.
                      3700 Buffalo Speedway, Suite 960
                      Houston, Texas 77098
                      Attention: Kenneth R. Peak
                      Facsimile No.: 713-960-1065

     9.8  Governing Law. This Agreement shall be construed in accordance with
     the laws of the State of Texas.

     9.9  Amendment to Partnership Agreement. Cheniere LNG will not (and will
     cause its successors and assigns under the Partnership not to) approve or
     consent to any

                                       14

<PAGE>

     amendment to, or waiver under, the Partnership Agreement without the
     consent of Contango if such amendment would (i) convert Contango's interest
     into a general partner interest, (ii) modify the limited liability of
     Contango, (iii) increase the obligations of Contango under the Partnership
     Agreement, or (iv) materially and disproportionately adversely alter the
     interest of Contango in profits, losses or distributions.

     9.10 Exercise of Rights and Remedies. Except as otherwise provided herein,
     no delay of or omission in the exercise of any right, power or remedy
     accruing to the party as a result of any breach or default by the other
     party under this Agreement shall impair any such right, power or remedy,
     nor shall it be construed as a waiver of or acquiescence in any such breach
     or default, or of any similar breach or default occurring later; nor shall
     any waiver of any single breach or default be deemed a waiver of any other
     breach or default occurring before or after that waiver.

     9.11 No Strict Construction. Notwithstanding the fact that this Agreement
     has been drafted or prepared by one of the parties, both the Cheniere
     Entities and the Contango Entities confirm that both they and their
     respective counsel have reviewed, negotiated and adopted this Agreement as
     the joint agreement and understanding of the parties, and the language used
     in this Agreement shall be deemed to be the language chosen by the parties
     hereto to express their mutual intent, and no rule of strict construction
     shall be applied against any person.

     9.12 Time. Time is of the essence in this Agreement.


     9.13 Survival. The representations, warranties, covenants and agreements of
     parties made in this Agreement shall survive (and not be affected in any
     respect by) the Closing.

     9.14 Reformation and Severability. In case any provision of this Agreement
     shall be invalid, illegal or unenforceable, it shall, to the extent
     possible, be modified in such a manner as to be valid, legal and
     enforceable but so as to most nearly retain the intent of the parties, and
     if such modification is not possible, such provision shall be severed from
     this Agreement, and in either case the validity, legality and
     enforceability of the remaining provisions of this Agreement shall not in
     any way be affected or impaired thereby.

                            (Signature Page Follows)

                                       15

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

                                           CHENIERE ENERGY, INC.


                                           By: /s/ Charif Souki
                                               ---------------------------------
                                           Name:  Charif Souki
                                           Title: Chairman


                                           CHENIERE LNG, INC.


                                           By: /s/ Charif Souki
                                               ---------------------------------
                                           Name:  Charif Souki
                                           Title: Chairman


                                           CONTANGO SUNDANCE, INC.


                                           By: /s/ Kenneth R. Peak
                                               ---------------------------------
                                           Name:  Kenneth R. Peak
                                           Title: Chairman


                                           CONTANGO OIL & GAS


                                           By: /s/ Kenneth R. Peak
                                               ---------------------------------
                                           Name:  Kenneth R. Peak
                                           Title: Chairman