10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the transition period fromto

Commission File No. 333-138916

Sabine Pass LNG, L.P.

(Exact name of registrant as specified in its charter)

Delaware	20-0466069
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
700 Milam Street, Suite 1900 Houston, Texas	77002
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (713) 375-5000

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

The registrant meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and is therefore filing this Form 10-K with the reduced disclosure format.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  ¨   No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes  ¨   No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ¨	Accelerated filer                    ¨
Non-accelerated filer    x	Smaller reporting company   ¨
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ¨     No  x

The aggregate market value of the voting and non-voting common equity held by non-affiliates:    Not applicable

Documents incorporated by reference: None

SABINE PASS LNG, L.P.

TABLE OF CONTENTS

Part I
Items 1. and 2. Business and Properties	1
Items 1A. Risk Factors	5
Item 1B. Unresolved Staff Comments	15
Item 3. Legal Proceedings	15
Item 4. Mine Safety Disclosure	15
Part II
Item 5. Market for Registrant’s Common Equity, Related Partner Matters and Issuer Purchases of Equity Securities	16
Item 6. Selected Financial Data	16
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 7A. Quantitative and Qualitative Disclosures about Market Risk	21
Item 8. Financial Statements and Supplementary Data	23
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	44
Item 9 A. Controls and Procedures	44
Item 9B. Other Information	44
PART III
Item 10. Directors, Executive Officers of Our General Partner and Corporate Governance	45
Item 11. Executive Compensation	45
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters	45
Item 13. Certain Relationships and Related Transactions, and Director Independence	45
Item 14. Principal Accountant Fees and Services	45
PART IV
Item 15. Exhibits and Financial Statement Schedules	46
Signatures	49

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CAUTIONARY STATEMENT

REGARDING FORWARD-LOOKING STATEMENTS

This annual report contains certain statements that are, or may be deemed to be, “forward-looking statements.” All statements, other than statements of historical facts, included herein or incorporated herein by reference are “forward-looking statements.” Included among “forward-looking statements” are, among other things:

• statements regarding future levels of domestic and international natural gas production, supply or consumption or future levels of liquefied natural gas (“LNG”) imports into or exports from North America and other countries worldwide, regardless of the source of such information, or the transportation or demand for and prices related to natural gas, LNG or other hydrocarbon products;

• statements regarding any financing transactions or arrangements, or ability to enter into such transactions; 

• 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, liquefaction or storage capacities that are, or may become, subject to contracts;

• statements regarding counterparties to our terminal use agreements (“TUAs”) and other contracts;

• statements regarding our business strategy, our business and operation plans or any other plans, forecasts, projections, or objectives, including anticipated revenues and capital expenditures, any or all of which are subject to change;

• statements regarding legislative, governmental, regulatory, administrative or other public body actions, approvals, requirements, permits, applications, filings, investigations, proceedings or decisions; and

• any other statements that relate to non-historical or future information.

All of these types of statements, other than statements of historical fact, are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “should,” “expect,” “plan,” “project,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “pursue,” “target,” “continue,” the negative of such terms or other comparable terminology. The forward-looking statements contained in this annual report are largely based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe that such estimates are reasonable, they are inherently uncertain and involve a number of risks and uncertainties beyond our control. In addition, assumptions may prove to be inaccurate. We caution that the forward-looking statements contained in this annual report are not guarantees of future performance and that such statements may not be realized or the forward-looking statements or events may not occur. Actual results may differ materially from those anticipated or implied in forward-looking statements due to factors described in this annual report and in the other reports and other information that we file with the Securities and Exchange Commission (“SEC”). These forward-looking statements speak only as of the date made, and other than as required by law, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

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DEFINITIONS

As commonly used in the liquefied natural gas industry, to the extent applicable and as used in this annual report, the

following terms have the following meanings:

• Bcf/d means billion cubic feet per day;

• Bcfe means billion cubic feet equivalent;

• Henry Hub means the final settlement price (in USD per MMBtu) for the New York Mercantile Exchange’s Henry Hub natural gas futures contract for the month in which a relevant cargo’s delivery window is scheduled to begin;

• LNG means liquefied natural gas, a product of natural gas consisting primarily of methane (CH4) that is in liquid form at near atmospheric pressure;

• MMBtu means million British thermal units, an energy unit; and

• TUA means terminal use agreement.

PART I

ITEMS 1. and 2.        BUSINESS AND PROPERTIES

General

In 2003, we were formed by Cheniere Energy, Inc. (“Cheniere”) to own, develop and operate an LNG receiving and regasification terminal in western Cameron Parish, Louisiana, less than four miles from the Gulf Coast on the Sabine Pass deepwater ship channel (our “LNG terminal”). We are a Houston-based partnership formed with one general partner, Sabine Pass LNG-GP, LLC (“Sabine Pass GP”), and one limited partner, Sabine Pass LNG-LP, LLC (“Sabine Pass LNG LP”), both indirect subsidiaries of Cheniere. Cheniere has an 80.1% ownership in Cheniere Energy Partners LP Holdings, LLC, which in turn has a 55.9% ownership interest in Cheniere Energy Partners, L.P. (“Cheniere Partners”). Cheniere Partners is the 100% parent of Cheniere Energy Investments, LLC (“Cheniere Investments”), which in turn is the 100% parent of Sabine Pass GP and Sabine Pass LNG LP and, indirectly, us.

Unless the context requires otherwise, references to “Sabine Pass LNG,” “we,” “us,” and “our” refer to Sabine Pass LNG, L.P. and its wholly owned subsidiaries.

LNG is natural gas that, through a refrigeration process, has been cooled to a liquid state, which occupies a volume that is approximately 1/600th of its gaseous state. The liquefaction of natural gas into LNG allows it to be shipped economically from areas of the world where natural gas is abundant and inexpensive to produce to other areas where natural gas demand and infrastructure exist to justify economically the use of LNG. LNG is transported using large oceangoing LNG tankers specifically constructed for this purpose. LNG regasification facilities offload LNG from LNG tankers, store the LNG prior to processing, heat the LNG to return it to a gaseous state and deliver the resulting natural gas into pipelines for transportation to market.

Our Business Strategy

Our primary business objective is to generate stable cash flows by:

• operating the Sabine Pass LNG terminal safely, efficiently and reliably; and

• providing services to our long-term TUA customers to generate steady and reliable revenues and operating cash flows.

Our Business

We have constructed and are operating the regasification facilities at Sabine Pass LNG terminal located on the Sabine Pass deep water shipping channel less than four miles from the Gulf Coast. We have long-term leases for three tracts of land consisting of 883 acres. We are currently operating our LNG terminal that includes existing infrastructure of five LNG storage tanks with capacity of approximately 16.9 Bcfe, two docks that can accommodate vessels with nominal capacity of up to 266,000 cubic meters and vaporizers with operational regasification capacity of approximately 4.0 Bcf/d.

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Sabine Pass Liquefaction, LLC (“Sabine Pass Liquefaction”), a wholly owned subsidiary of Cheniere Partners, is developing liquefaction facilities adjacent to our existing regasification facilities in order to liquefy and export natural gas from the United States.  Cheniere Partners has reported that Sabine Pass Liquefaction has entered into six sale and purchase agreements with third-party customers for the export of natural gas. We have entered into a facilities sharing agreement with Sabine Pass Liquefaction to allow for the interconnection of the liquefaction facilities with our LNG terminal. We do not anticipate incurring any significant costs in connection with such interconnection. Although it is anticipated that our operating costs will increase once the liquefaction facilities commence operations as a result of greater utilization of our LNG terminal by Sabine Pass Liquefaction under its TUA, the increase in fees that Sabine Pass Liquefaction will be required to pay us under its TUA will more than cover our increased costs.

Customers

Approximately 2.0 Bcf/d of the regasification capacity at our LNG terminal has been reserved under two long-term third-party TUAs, under which our customers are required to pay fixed monthly fees, whether or not they use the LNG terminal. Capacity reservation fee TUA payments are made by our third-party TUA customers as follows:

• Total Gas & Power North America, Inc. (“Total”) has reserved approximately 1.0 Bcf/d of regasification capacity and is obligated to make monthly capacity payments to us aggregating approximately $125 million annually for 20 years that commenced April 1, 2009. Total, S.A. has guaranteed Total’s obligations under its TUA of up to $2.5 billion, subject to certain exceptions; and 

• Chevron U.S.A. Inc. (“Chevron”) has reserved approximately 1.0 Bcf/d of regasification capacity and is obligated to make monthly capacity payments to us aggregating approximately $125 million annually for 20 years that commenced July 1, 2009. Chevron Corporation has guaranteed Chevron’s obligations under its TUA up to 80% of the fees payable by Chevron.

The remaining approximately 2.0 Bcf/d of capacity has been reserved under a TUA by Sabine Pass Liquefaction. Sabine Pass Liquefaction is obligated to make monthly capacity payments to us aggregating approximately $250 million annually, continuing until at least 20 years after Sabine Pass Liquefaction delivers its first commercial cargo at Sabine Pass Liquefaction’s liquefaction facilities under construction, which Cheniere Partners has reported may occur as early as late 2015. We entered into a terminal use rights assignment and agreement (“TURA”) with Sabine Pass Liquefaction and Cheniere Investments, pursuant to which Cheniere Investments has the right to use Sabine Pass Liquefaction’s reserved capacity under the TUA during construction of Sabine Pass Liquefaction’s liquefaction facilities at our LNG terminal and has the obligation to make the monthly capacity payments required by the TUA to us. Cheniere Partners has guaranteed the obligations of Sabine Pass Liquefaction under its TUA and the obligations of Cheniere Investments under the TURA.

Under each of these TUAs, we are entitled to retain 2% of the LNG delivered to our LNG terminal.

Competition

We currently do not experience competition for our LNG terminal capacity because the entire approximately 4.0 Bcf/d of regasification capacity that is available at our LNG terminal has been fully reserved under three 20-year TUAs, under which each TUA customer is generally required to pay monthly fixed capacity reservation fees whether or not it uses any of its reserved capacity. If and when we have to replace any TUAs, we will compete with other then-existing LNG terminals for customers.

Governmental Regulation

Our LNG terminal is subject to extensive regulation under federal, state and local statutes, rules, regulations and laws. These laws require that we engage in consultations with appropriate federal and state agencies and that we obtain and maintain applicable permits and other authorizations. This regulatory requirement increases the cost of operating our LNG terminal, and failure to comply with such laws could result in substantial penalties.

Federal Energy Regulatory Commission (“FERC”)

In order to site and construct our LNG terminal, we received and are required to maintain authorization from the FERC under Section 3 of the Natural Gas Act of 1938, as amended (“NGA”). In addition, orders from the FERC authorizing construction of an LNG terminal are typically subject to specified conditions that must be satisfied throughout operation of our LNG terminal.

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Throughout the life of our LNG terminal, we will be subject to regular reporting requirements to the FERC and the U.S. Department of Transportation regarding the operation and maintenance of the facilities.

In 2005, the Energy Policy Act of 2005 (“EPAct”) was signed into law. The EPAct gave the FERC exclusive authority to approve or deny an application for the siting, construction, expansion or operation of an LNG terminal. The EPAct amended the NGA to prohibit market manipulation and increased civil and criminal penalties for any violations of the NGA and any rules, regulations or orders of the FERC, up to $1.0 million per day per violation. In accordance with the EPAct, the FERC issued a final rule making it unlawful for any entity, in connection with the purchase or sale of natural gas or transportation service subject to the FERC’s jurisdiction, to defraud, make an untrue statement or omit a material fact or engage in any practice, act or course of business that operates or would operate as a fraud.

Other Governmental Permits, Approvals and Authorizations

In addition to the FERC authorization under Section 3 of the NGA, the operation of our LNG terminal is also subject to additional federal permits, orders, approvals and consultations required by other federal agencies, including the U.S. Department of Energy, Advisory Council on Historic Preservation, U.S. Army Corps of Engineers, U.S. Department of Commerce, National Marine Fisheries Services, U.S. Department of the Interior, U.S. Fish and Wildlife Service, U.S. Environmental Protection Agency (“EPA”) and U.S. Department of Homeland Security.

Our LNG terminal is subject to U.S. Department of Transportation safety regulations and standards for the transportation and storage of LNG and regulations of the U.S. Coast Guard relating to maritime safety and facility security.

Commodity Futures Trading Commission

Congress adopted comprehensive financial reform legislation that establishes federal oversight and regulation of the over-the-counter derivatives market and entities, such as us, that participate in that market. This legislation, known as the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), is designed primarily to (1) regulate certain participants in the swaps markets, including entities falling within the categories of “Swap Dealer” and “Major Swap Participant,” (2) require clearing and exchange-trading of certain swaps that the Commodity Futures Trading Commission (the “CFTC”) designated by rule to be cleared, (3) increase swap market transparency through robust reporting and recordkeeping requirements, (4) reduce financial risks in the derivatives market by imposing margin or collateral requirements on both cleared and, in certain cases, uncleared swaps, and (5) enhance the CFTC’s rulemaking and enforcement authority, including the authority to establish position limits on certain swaps and futures products. As required by the Dodd-Frank Act, the CFTC, the SEC and other regulators have been promulgating rules and regulations implementing the swaps regulatory provisions of the Dodd-Frank Act, although neither the CFTC nor the SEC has yet adopted all of the rules required by the Dodd-Frank Act. As a result of the Dodd-Frank Act’s provisions, the CFTC, in order to regulate excessive speculation in commodities, must adopt rules imposing new position limits on futures and options contracts and economically equivalent physical commodity swaps, on swaps traded on registered swap trading platforms and on over-the-counter swaps that perform a significant price discovery function with respect to certain markets.

After a court vacated the final rules that the CFTC adopted imposing position limits on certain core futures and equivalent swaps contracts for physical commodities, including Henry Hub natural gas, the CFTC published in the Federal Register on December 12, 2013, proposed new position limits rules that would modify and expand the applicability of position limits on the amounts of core futures and equivalent swaps contracts of such types that market participants could hold, subject to exceptions for certain bona fide hedging transactions. An extended comment period on such proposed position limits rules has expired, but the CFTC has not yet acted to adopt the proposed rules.

Pursuant to rules adopted by the CFTC, six classes of over-the-counter (“OTC”) interest rate and credit default swaps must be cleared on a designated clearing organization and also must be executed on an exchange or swap execution facility. The CFTC has not yet proposed to designate any other classes of swaps, including swaps relating to physical commodities, for mandatory clearing and trade execution, but could do so in the future. Although we expect to qualify for the “end-user exception” from the mandatory clearing and exchange-trading requirements applicable to any swaps we enter into to hedge our commercial risks, the mandatory clearing and exchange-trading requirements may apply to other market participants, such as our counterparties (who may be registered as Swap Dealers), and the application of such rules may change the cost and availability of the swaps that we use for hedging. For uncleared swaps, the CFTC or federal banking regulators may require our counterparties to require us to enter into credit support documentation with them and/or require us to post initial and variation margin with respect to our uncleared swaps. On September 24, 2014, the banking regulators published in the Federal Register proposed joint rules to establish minimum

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margin and capital requirements for registered Swap Dealers, Major Swap Participants, security-based Swap Dealers, and major security-based swap participants regulated by the banking regulators, although those requirements would not require collection of initial or variation margin from non-financial end users. On October 3, 2014, the CFTC published in the Federal Register similar proposed rules for initial and variation margin requirements. The proposed CFTC rules establish initial and variation margin requirements for Swap Dealers and Major Swap Participants, but do not require these entities to collect margin from non-financial end users. However, the proposed rules are not yet final and therefore the application of those provisions to us is uncertain at this time. On January 12, 2015, President Obama signed into law legislation modifying the Dodd-Frank Act and clarifying that any rules for the collection of initial or variation margin for uncleared swaps shall not apply to non-financial end users that qualify for the end user exception to clearing. Other provisions of the Dodd-Frank Act may also cause our derivatives counterparties to spin off some or all of their derivatives activities to a separate entity, and such separate entity, who could be our counterparty in future swaps, may not be as creditworthy as the current counterparty. The Dodd-Frank Act’s swaps regulatory provisions and the related rules may also adversely affect our existing derivative contracts and restrict our ability to monetize such contracts, cause us to restructure certain contracts, reduce the availability of derivatives to protect against risks or to optimize assets, adversely affect our ability to execute our hedging strategies and impact the liquidity of certain swaps products, all of which could increase our business costs.

Under the Commodity Exchange Act, the CFTC is directed generally to prevent manipulation and fraud in two markets: (a) physical commodities traded in interstate commerce, including physical energy and other commodities, as well as (b) financial instruments, such as futures, options and swaps. Pursuant to the Dodd-Frank Act, the CFTC has adopted additional anti-manipulation, anti-fraud and anti-disruptive trading practices regulations that prohibit, among other things, fraud and price manipulation in the physical commodities, futures, options and swaps markets. Should we violate these laws and regulations, we could be subject to a CFTC enforcement action and material penalties, possibly resulting in changes in the rates we can charge.

Environmental Regulation

Our LNG terminal is subject to various federal, state and local laws and regulations relating to the protection of the environment and natural resources. These environmental laws and regulations may impose substantial penalties for noncompliance and substantial liabilities for pollution. Many of these laws and regulations restrict or prohibit the types, quantities and concentration of substances that can be released into the environment and can lead to substantial civil and criminal fines and penalties for non-compliance.

Clean Air Act (“CAA”)

Our LNG terminal is subject to the federal CAA and comparable state and local laws. We may be required to incur certain capital expenditures over the next several years for air pollution control equipment in connection with maintaining or obtaining permits and approvals addressing air emission-related issues. We do not believe, however, that our operations will be materially and adversely affected by any such requirements.

In 2009, the EPA promulgated and finalized the Mandatory Greenhouse Gas Reporting Rule for multiple sections of the economy. This rule requires mandatory reporting of greenhouse gas (“GHG”) emissions from stationary fuel combustion sources as well as all fugitive emissions throughout LNG terminals. From time to time, Congress has considered proposed legislation directed at reducing GHG emissions, and the EPA has defined GHG emissions thresholds for requiring certain permits for new and existing industrial sources. In addition, many states have already taken regulatory action to monitor and/or reduce emissions of GHGs, primarily through the development of GHG emission inventories or regional GHG cap and trade programs. It is not possible at this time to predict how future regulations or legislation may address GHG emissions and impact our business. However, future regulations and laws could result in increased compliance costs or additional operating restrictions and could have a material adverse effect on our business, financial position, results of operations and cash flows.

Coastal Zone Management Act (“CZMA”)

Our LNG terminal is subject to the review and possible requirements of the CZMA throughout the construction of facilities located within the coastal zone.  The CZMA is administered by the states (in Louisiana, by the Department of Natural Resources, and in Texas, by the General Land Office).  This program is implemented to ensure that impacts to coastal areas are consistent with the intent of the CZMA to manage the coastal areas.

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Clean Water Act (“CWA”)

Our LNG terminal is subject to the federal CWA and analogous state and local laws. The CWA imposes strict controls on the discharge of pollutants into the navigable waters of the United States, including discharges of wastewater and storm water runoff and fill/discharges into waters of the United States. Permits must be obtained prior to discharging pollutants into state and federal waters. The CWA is administered by the EPA, the United States Army Corps of Engineers and by the states (in Louisiana, by the Department of Environmental Quality).

Resource Conservation and Recovery Act (“RCRA”)

The federal RCRA and comparable state statutes govern the disposal of solid and hazardous wastes. In the event such wastes are generated in connection with our LNG terminal operations, we will be subject to regulatory requirements affecting the handling, transportation, treatment, storage and disposal of such wastes.

Endangered Species Act

Our LNG terminal may be restricted by requirements under the Endangered Species Act, which seeks to protect endangered or threatened animal, fish and plant species and designated habitats.

Employees

We have no employees. We have contracts with subsidiaries of Cheniere and Cheniere Partners for operations, maintenance and management services. As of January 31, 2015, Cheniere and its subsidiaries had 642 full-time employees, including 371 employees who directly supported our LNG terminal. See Note 8—Related Party Transactions in our Notes to Consolidated Financial Statements for a discussion of these arrangements.  

Available Information

Our principal executive offices are located at 700 Milam Street, Suite 1900, Houston, Texas 77002, and our telephone number is (713) 375-5000. We electronically file our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports with SEC. The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an internet site (www.sec.gov) that contains reports and other information regarding issuers, like us, that file electronically with the SEC.

ITEM 1A. RISK FACTORS

The following are some of the important factors that could affect our financial performance or could cause actual results to differ materially from estimates or expectations contained in our forward-looking statements. We may encounter risks in addition to those described below. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, may also impair or adversely affect our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.

The risk factors in this report are grouped into the following categories:

• Risks Relating to Our Financial Matters; and

• Risks Relating to Our Business.

Risks Relating to Our Financial Matters

We have incurred a significant amount of debt, which we will need to refinance, extend or otherwise satisfy in whole or in part at or prior to maturity.

As of December 31, 2014, we had $2.1 billion of total consolidated indebtedness outstanding (before debt discounts). We may not be able to access external financial resources sufficient to enable us to refinance or repay our maturing debt.

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Our substantial indebtedness and restrictions contained in existing or future debt agreements may not allow us the flexibility that we need to operate our business in an effective and efficient manner and may prevent us from taking advantage of strategic and financial opportunities that would benefit our business, including:

• limiting our ability to attract customers;

• limiting our ability to compete with other companies that are not as highly leveraged;

• limiting our flexibility in and ability to plan for or react to changing market conditions in our industry and to economic downturns, and making us more vulnerable than our less leveraged competitors to an industry or economic downturn;

• limiting our ability to use operating cash flow in other areas of our business or for distributions to our partners because we must dedicate a substantial portion of these funds to service debt, including indebtedness that we may incur in the future;

• limiting our ability to obtain additional financing to fund our capital expenditures, working capital, acquisitions, debt service requirements or liquidity needs for general business or other purposes; and

• resulting in a material adverse effect on our business, financial condition, operating results, liquidity and prospects if we are unable to service or refinance our indebtedness or obtain additional financing, as needed.

Our substantial indebtedness and the restrictive covenants contained in our existing or future debt agreements may not allow us the flexibility that we need to operate our business in an effective and efficient manner and may prevent us from taking advantage of strategic and financial opportunities that would benefit our business. If we are unsuccessful in operating our business or taking advantage of such opportunities, due to our substantial indebtedness or other factors, we may be unable to obtain, repay, refinance or extend indebtedness on commercially reasonable terms or at all.

To service our indebtedness, we require significant amounts of cash flow from operations.

We require significant amounts of cash flow from operations in order to make annual interest payments of approximately $152 million on the Senior Notes described below. Our ability to make payments on and to refinance our indebtedness, including the Senior Notes, and to fund our capital expenditures, will depend on our ability to generate cash in the future. Our business may not generate sufficient cash flow from operations, currently anticipated costs may increase or future borrowings may not be available to us, which could cause us to be unable to pay or refinance our indebtedness, including the Senior Notes, or to fund our other liquidity needs.

Our ability to generate cash is substantially dependent upon the performance by our three customers under their TUAs, and we could be materially and adversely affected if any customer fails to perform its contractual obligations for any reason.

Our future results and liquidity are dependent upon performance by Chevron and Total, each of which has entered into a TUA with us and agreed to pay us approximately $125 million annually, and with Sabine Pass Liquefaction, which is required to pay us approximately $250 million annually in fixed fees. We are dependent on each customer’s continued willingness and ability to perform its obligations under its TUA. We are also exposed to the credit risk of the guarantors of these customers’ obligations under their respective TUAs in the event that we must seek recourse under a guaranty. If any customer fails to perform its obligations under its TUA, our business, contracts, financial condition, operating results, cash flow, liquidity and prospects could be materially and adversely affected, even if we were ultimately successful in seeking damages from that customer or its guarantor for a breach of the TUA.

Sabine Pass Liquefaction continues to develop its business and has recently incurred significant indebtedness in connection with constructing the first four of six proposed liquefaction trains at our LNG terminal adjacent to our existing regasification facilities. Cheniere Partners has reported that it will be late 2015 at the earliest before commercial operations, and therefore cash flows under Sabine Pass Liquefaction’s LNG purchase and sale agreements, commence for the first liquefaction train. In the meantime, Cheniere Investments has obtained rights to utilize Sabine Pass Liquefaction’s TUA capacity during construction of the first four liquefaction trains at our LNG terminal, which Cheniere Investments has in turn contracted with Cheniere Marketing, LLC, a wholly owned subsidiary of Cheniere (“Cheniere Marketing”), to utilize. Cheniere Partners has guaranteed the obligations of Sabine Pass Liquefaction and Cheniere Investments, and Cheniere has guaranteed the obligations of Cheniere Marketing. However, neither Cheniere Investments nor Cheniere Marketing has a credit rating, neither has unconditional agreements or arrangements for any supplies of LNG or for the utilization of the reserved capacity, neither may be able to obtain such agreements or arrangements on economic terms, or at all, and neither may have the credit support and funding available to enter into such

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agreements or arrangements. These factors create financial obstacles and exacerbate the risk that neither Cheniere Investments nor Cheniere Marketing, and in turn, Sabine Pass Liquefaction, will be able to satisfy the payment obligations under Sabine Pass Liquefaction’s TUA, which could materially and adversely affect our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.

Each of our contracts is subject to termination under certain circumstances.

Each of our long-term TUAs contains various termination rights. For example, each customer may terminate its TUA if our LNG terminal experiences a force majeure delay for longer than 18 months, fails to redeliver a specified amount of natural gas in accordance with the customer’s redelivery nominations or fails to accept and unload a specified number of the customer’s proposed LNG cargoes. We may not be able to replace these TUAs on desirable terms, or at all, if they are terminated.

We may be restricted under the terms of the indentures governing the Senior Notes (the “Senior Notes Indentures”) from making distributions under certain circumstances, which may limit Sabine Pass Liquefaction’s ability to make payments under its TUA with us.

The Senior Notes Indentures restrict payments that we can make in certain events and limit the indebtedness that we can incur. We are permitted to pay distributions only after the following payments have been made:

• an operating account has been funded with amounts sufficient to cover the succeeding 45 days of operating and maintenance expenses, maintenance capital expenditures and obligations, if any, under an assumption agreement and a state tax sharing agreement;

• one-sixth of the amount of interest due on the Senior Notes on the next interest payment date (plus any shortfall from any such month subsequent to the preceding interest payment date) has been transferred to a debt payment account;

• outstanding principal on the Senior Notes then due and payable has been paid;

• taxes payable by us or the guarantors of the Senior Notes and permitted payments in respect of taxes have been paid; and

• the debt service reserve account has on deposit the amount required to make the next interest payment on the Senior Notes.

In addition, we will only be able to make distributions to our partners in the event that we could, among other things, incur at least $1.00 of additional indebtedness under the fixed charge coverage ratio test of 2:1 at the time of payment and after giving pro forma effect to the distribution. We are also prohibited under the Senior Notes Indentures from paying distributions upon the occurrence of any of the following events, among others:

• a default for 30 days in the payment of interest on the Senior Notes;

• a failure to pay any principal of the Senior Notes;

• a failure to comply with various covenants in the Senior Notes Indentures;

• a failure to observe any other agreement in the Senior Notes Indentures beyond any specified cure periods;

• a default under any mortgage, indenture or instrument governing any indebtedness for borrowed money by us in excess of $25.0 million if such default results from a failure to pay principal or interest on, or results in the acceleration of, such indebtedness;

• a final money judgment or decree (not covered by insurance) in excess of $25.0 million is not discharged or stayed within 60 days following entry;

• a failure of any material representation or warranty in the security documents entered into in connection with the Senior Notes Indentures to be correct;

• our LNG terminal project is abandoned; or

• certain events of bankruptcy or insolvency.

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Our inability to pay distributions or to incur additional indebtedness as a result of the foregoing restrictions in the Senior Notes Indentures may inhibit Sabine Pass Liquefaction’s ability to make payments under its TUA with us, which in turn could materially and adversely affect our business, financial condition, operating results, liquidity and prospects.

The Senior Notes Indentures may prevent us from engaging in certain beneficial transactions.

In addition to restrictions on our ability to make distributions or incur additional indebtedness, the Senior Notes Indentures also contains various other covenants that may prevent us from engaging in beneficial transactions, including limitations on the ability of us or certain of our subsidiaries to:

• make certain investments;

• purchase, redeem or retire equity interests;

• issue preferred stock;

• sell or transfer assets;

• incur liens;

• enter into transactions with affiliates;

• consolidate, merge, sell or lease all or substantially all of its assets; and

• enter into sale and leaseback transactions.

Our use of hedging arrangements may adversely affect our future results of operations or liquidity.

To reduce our exposure to fluctuations in the price, volume and timing risk associated with the purchase of natural gas, we use futures, swaps and option contracts traded or cleared on the Intercontinental Exchange and the New York Mercantile Exchange, or over-the-counter options and swaps with other natural gas merchants and financial institutions. Hedging arrangements would expose us to risk of financial loss in some circumstances, including when:

• expected supply is less than the amount hedged;

• the counterparty to the hedging contract defaults on its contractual obligations; or

• there is a change in the expected differential between the underlying price in the hedging agreement and actual prices received.

The use of derivatives also may require the posting of cash collateral with counterparties, which can impact working capital when commodity prices change.

The swaps regulatory provisions of the Dodd-Frank Act and the rules adopted thereunder and other regulations that may have an effect on our derivatives could have an adverse impact on our ability to hedge risks associated with our business and on our results of operations and cash flows.

The swaps regulatory provisions of the Dodd-Frank Act and the rules adopted thereunder by the CFTC and SEC may adversely affect our ability to manage certain of our risks on a cost effective basis. Such laws and regulations may also adversely affect our ability to execute our strategies with respect to hedging our exposure to variability in expected future cash flows attributable to the future sale of our LNG inventory and to price risk attributable to future purchases of natural gas to be utilized as fuel to operate our LNG terminal. As mandated by the Dodd-Frank Act, the CFTC has proposed rules setting limits on the positions in certain core futures and equivalent swaps contracts for or linked to certain physical commodities, including Henry Hub natural gas, held by market participants, with exceptions for certain bona fide hedging transactions. If the position limits in the proposed rules or other similar position limits were imposed, our ability to execute our hedging strategies described above could be compromised.

Under the swaps regulatory provisions of the Dodd-Frank Act, and the rules adopted thereunder, we could have to clear on a designated clearing organization any swaps into which we enter that fall within a class of swaps designated by the CFTC for mandatory clearing and we could have to execute trades in such swaps on certain markets. The CFTC has designated six classes of interest rate swaps and credit default swaps for mandatory clearing, but has not yet proposed rules designating any other classes

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of swaps, including physical commodity swaps, for mandatory clearing. Although we expect to qualify for the end-user exception from the mandatory clearing and trade execution requirements for our swaps entered into to hedge our commercial risks, if we failed to qualify for that exception as to any swap we enter into and had to clear that swap over a designated clearing organization, we may have to post margin with respect to such swap, our cost of entering into and maintaining such swap could increase and the flexibility we enjoy with respect to entering into uncleared OTC swaps could be diminished. In addition, our counterparties that are subject to the regulations imposing the Basel III capital requirements on them may increase the cost to us of entering into swaps with them or require us to post collateral with them in connection with such swaps in order to offset their increased capital costs or to reduce their capital costs to maintain those swaps on their balance sheets. Moreover, the application of the mandatory clearing and trade execution requirements to other market participants, such as Swap Dealers, may change the cost and availability of the swaps that we use for hedging. Although the CFTC and federal banking regulators have proposed rules to require certain types of market participants to collect and post initial and variation margin with respect to uncleared swaps and such rules currently do not require the collection of margin from non-financial end users, if we did not qualify as a non-financial end user as to any of our swaps or the final rules adopted by the CFTC and the federal banking regulators required that the counterparties to our uncleared swaps collect margin from us, our cost of entering into and maintaining swaps would be increased. Provisions of the Dodd-Frank Act may also cause our derivatives counterparties to spin off some or all of their derivatives activities to a separate entity, which could be our counterparty in future swaps and which entity may not be as creditworthy as the current counterparty.

The Dodd-Frank Act’s swaps regulatory provisions, the related rules described above and the record keeping, reporting and business conduct rules imposed by the Dodd-Frank Act on other swaps market participants, as well as the regulations imposing the Basel III capital requirements on certain swaps market participants, could significantly increase the cost of derivative contracts (including through requirements to post collateral which could adversely affect our available liquidity), materially alter the terms of derivative contracts, reduce the availability of derivatives to protect against certain risks that we encounter, reduce our ability to monetize or restructure our existing derivative contracts and to execute our hedging strategies, and increase our exposure to less creditworthy counterparties. If, as a result of the swaps regulatory regime discussed above, we were to reduce our use of swaps to hedge our risks, such as commodity price risks that we encounter in our operations, our results of operations and cash flows may become more volatile and could be otherwise adversely affected.

Risks Relating to Our Business

Operation of our LNG terminal involves significant risks.

As more fully discussed in these Risk Factors, our LNG terminal faces operational risks, including the following:

• the facilities’ performing below expected levels of efficiency;

• breakdown or failures of equipment;

• operational errors by vessel or tug operators;

• operational errors by us or any contracted facility operator;

• labor disputes; and

• weather-related interruptions of operations.

To maintain the cryogenic readiness of our LNG terminal, we may need to purchase and process LNG. Our TUA customers have the obligation to procure LNG if necessary for our LNG terminal to maintain its cryogenic state. If they fail to do so, we may need to procure such LNG.

We need to maintain the cryogenic readiness of our LNG terminal. Our customers have the obligation to maintain minimum inventory levels, and, under certain circumstances, to procure LNG to maintain the cryogenic readiness of the terminal. In the event that aggregate minimum inventory levels are not maintained, we have the right to procure a cryogenic readiness cargo to cure a minimum inventory condition, and to be reimbursed by each customer for their allocable share of the LNG acquisition costs. If we are not able to obtain financing on acceptable terms, we will need to maintain sufficient working capital for such a purchase until we receive reimbursement for the allocable costs of the LNG from our customers or sell the regasified LNG. We may also bear the commodity price and other risks of purchasing LNG, holding it in our inventory for a period of time and selling the regasified LNG.

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We may be required to purchase natural gas to provide fuel at our LNG terminal, which would increase operating costs and could have a material adverse effect on our results of operations.

Our TUAs provide for an in-kind deduction of 2% of the LNG delivered to our LNG terminal, which we use primarily as fuel for revaporization and self-generated power and to cover natural gas unavoidably lost at the facility. There is a risk that this 2% in-kind deduction will be insufficient for these needs and that we will have to purchase additional natural gas from third parties. We will bear the cost and risk of changing prices for any such fuel.

Hurricanes or other disasters could result in an interruption of our operations, which could adversely affect us.

In August and September of 2005, Hurricanes Katrina and Rita damaged coastal and inland areas located in Texas, Louisiana, Mississippi and Alabama, resulting in the temporary suspension of construction of the Sabine Pass LNG terminal. In September 2008, Hurricane Ike struck the Texas and Louisiana coast, and the Sabine Pass LNG terminal experienced minor damage.

Future storms and related storm activity and collateral effects, or other disasters such as explosions, fires, floods or accidents, could result in damage to, or interruption of operations at, the Sabine Pass LNG terminal or related infrastructure. If there are changes in the global climate, storm frequency and intensity may increase; should it result in rising seas, our coastal operations may be impacted.

Failure to obtain and maintain approvals and permits from governmental and regulatory agencies with respect to the operation of our LNG terminal could impede operations and could have a material adverse effect on us.

The operation of our LNG terminal is a highly regulated activity. The FERC’s approval under Section 3 of the NGA, as well as several other material governmental and regulatory approvals and permits, are required in order to operate an LNG facility. Although we have obtained all of the necessary authorizations to operate our LNG receiving terminal, such authorizations are subject to ongoing conditions imposed by regulatory agencies, and additional approval and permit requirements may be imposed. Failure to maintain any of these permits, approvals or authorizations could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects.

We are entirely dependent on subsidiaries of Cheniere and Cheniere Partners, including employees of Cheniere and its subsidiaries, for key personnel, and a loss of key personnel could have a material adverse effect on our business.

As of January 31, 2015, Cheniere and its subsidiaries had 642 full-time employees, including 371 employees who directly supported our LNG terminal operations. We have contracted with subsidiaries of Cheniere and Cheniere Partners to provide the personnel necessary for the operation, maintenance and management of our LNG terminal. We face competition for these highly skilled employees in the immediate vicinity of our LNG terminal and more generally from the Gulf Coast hydrocarbon processing and construction industries. A shortage in the labor pool of skilled workers or other general inflationary pressures or changes in applicable laws and regulations could make it more difficult to attract and retain personnel and could require an increase in the wage and benefits packages that are offered, thereby increasing our operating costs.

Our general partner’s executive officers are officers and employees of Cheniere and its affiliates. We do not maintain key person life insurance policies on any personnel, and our general partner does not have any employment contracts or other agreements with key personnel binding them to provide services for any particular term. The loss of the services of any of these individuals could have a material adverse effect on our business. In addition, our future success will depend in part on our general partner’s ability to engage, and Cheniere’s ability to attract and retain, additional qualified personnel.

We have numerous contractual and commercial relationships, and conflicts of interest, with Cheniere and its affiliates.

We have agreements to compensate and to reimburse expenses of affiliates of Cheniere. In addition, we have entered into a TUA with Sabine Pass Liquefaction, under which Sabine Pass Liquefaction will be able to derive economic benefits. All of these agreements involve conflicts of interest between us, on the one hand, and Cheniere and its other affiliates, on the other hand.

We are dependent on Cheniere and its affiliates to provide services to us. If Cheniere or its affiliates are unable or unwilling to perform according to the negotiated terms and timetable of their respective agreement for any reason or terminates their agreement, we would be required to engage a substitute service provider. This could result in a significant interference with operations and increased costs.

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We are subject to significant operating hazards and uninsured risks, one or more of which may create significant liabilities and losses for us.

The operation of our LNG terminal is subject to the inherent risks associated with these types of operations, including explosions, pollution, release of toxic substances, fires, hurricanes and adverse weather conditions, and other hazards, each of which could result in significant delays in commencement or interruptions of operations and/or in damage to or destruction of our facilities or damage to persons and property. In addition, our operations and the facilities and vessels of third parties on which our operations are dependent face possible risks associated with acts of aggression or terrorism.

We do not, nor do we intend to, maintain insurance against all of these risks and losses. We may not be able to maintain desired or required insurance in the future at rates that we consider reasonable. The occurrence of a significant event not fully insured or indemnified against could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects. 

Cyclical or other changes in the demand for and price of LNG and natural gas may adversely affect our LNG business and the performance of our customers and could have a material adverse effect on our business, contracts, financial condition, operating results, cash flows, liquidity and prospects.

Our LNG business and the development of domestic LNG facilities and projects generally is based on assumptions about the future availability and price of natural gas and LNG, and the prospects for international natural gas and LNG markets. Natural gas and LNG prices have been, and are likely to continue to be, volatile and subject to wide fluctuations in response to one or more of the following factors:

• additions to competitive regasification capacity in North America, Europe, Asia and other markets, which could divert LNG from our LNG terminal;

• competitive liquefaction capacity in North America, which could divert natural gas from Sabine Pass Liquefaction’s proposed liquefaction facilities;

• insufficient or oversupply of natural gas liquefaction or receiving capacity worldwide;

• insufficient LNG tanker capacity;

• weather conditions;

• reduced demand and lower prices for natural gas;

• increased natural gas production deliverable by pipelines, which could suppress demand for LNG;

• decreased oil and natural gas exploration activities, which may decrease the production of natural gas;

• cost improvements that allow competitors to offer LNG regasification services or provide liquefaction capabilities at reduced prices;

• changes in supplies of, and prices for, alternative energy sources such as coal, oil, nuclear, hydroelectric, wind and solar energy, which may reduce the demand for natural gas;

• changes in regulatory, tax or other governmental policies regarding imported or exported LNG, natural gas or alternative energy sources, which may reduce the demand for imported or exported LNG and/or natural gas;

• political conditions in natural gas producing regions;

• adverse relative demand for LNG compared to other markets, which may decrease LNG imports into or exports from North America; and

• cyclical trends in general business and economic conditions that cause changes in the demand for natural gas.

Adverse trends or developments affecting any of these factors could result in decreases in the price of LNG and natural gas, which could materially and adversely affect the performance of our customers, and could have a material adverse effect on our business, contracts, financial condition, operating results, cash flows, liquidity and prospects.

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Failure of imported or exported LNG to be a competitive source of energy could adversely affect our customers and could materially and adversely affect our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.

Our LNG terminal operations are dependent upon the ability of our TUA customers to import LNG supplies into the United States, which is primarily dependent upon LNG being a competitive source of energy in North America. In North America, due mainly to a historically abundant supply of natural gas and recent discoveries of substantial quantities of unconventional, or shale, natural gas, imported LNG has not developed into a significant energy source. The success of the regasification services component of our business plan is dependent, in part, on the extent to which LNG can, for significant periods and in significant volumes, be produced internationally and delivered to North America at a lower cost than the cost to produce some domestic supplies of natural gas, or other alternative energy sources. Through the use of improved exploration technologies, additional sources of natural gas have recently been and may continue to be discovered in North America, which could further increase the available supply of natural gas and could result in natural gas being available at a lower cost than imported LNG.

One of our TUA customers, Sabine Pass Liquefaction, will also be affected by the ability to export LNG at its proposed liquefaction facilities, which is primarily dependent upon LNG being a competitive source of energy internationally. The success of Sabine Pass Liquefaction’s business plan is dependent, in part, on the extent to which LNG can, for significant periods and in significant volumes, be supplied from North America and delivered to international markets at a lower cost than the cost of other alternative energy sources. Through the use of improved exploration technologies, additional sources of natural gas have recently been and may continue to be discovered outside North America, which could further increase the available supply of natural gas and could result in natural gas being available at a lower cost than LNG exported to these markets.

Political instability in foreign countries that import or export natural gas, or strained relations between such countries and the United States, may also impede the willingness or ability of LNG suppliers and merchants in such countries to import or export LNG from or to the United States. Furthermore, some foreign suppliers of LNG may have economic or other reasons to obtain their LNG from, or direct their LNG to, non-United States markets or from or to competitors’ LNG facilities in the United States. In addition to natural gas, LNG also competes with other sources of energy, including coal, oil, nuclear, hydroelectric, wind and solar energy, which can be or become available at a lower cost in certain markets.

As a result of these and other factors, LNG may not be a competitive source of energy in the United States or internationally. The failure of LNG to be a competitive supply alternative to local natural gas, oil and other alternative energy sources could adversely affect the ability of our customers to deliver LNG from the United States or to the United States on a commercial basis. Any significant impediment to the ability to deliver LNG to or from the United States generally, or to our LNG terminal or from our proposed liquefaction facilities specifically, could have a material adverse effect on our customers and on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.

Various economic and political factors could negatively affect the development of liquefaction facilities, which could adversely affect the performance of our TUA customers and could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.

Commercial development of liquefaction facilities takes a number of years, requires a substantial capital investment and may be delayed by factors such as:

• increased construction costs;

• economic downturns, increases in interest rates or other events that may affect the availability of sufficient financing for liquefaction projects on commercially reasonable terms;

• decreases in the price of LNG, which might decrease the expected returns relating to investments in liquefaction projects;

• the inability of project owners or operators to obtain governmental approvals to construct or operate liquefaction facilities;

• political unrest or local community resistance to the siting of liquefaction facilities due to safety, environmental or security concerns; and

• any significant explosion, spill or similar incident involving an LNG facility or LNG vessel.

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There may be shortages of LNG vessels worldwide, which could adversely affect the performance of our customers and could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.

The construction and delivery of LNG vessels require significant capital and long construction lead times, and the availability of the vessels could be delayed to the detriment of our LNG business and our customers because of:

• an inadequate number of shipyards constructing LNG vessels and a backlog of orders at these shipyards;

• political or economic disturbances in the countries where the vessels are being constructed;

• changes in governmental regulations or maritime self-regulatory organizations;

• work stoppages or other labor disturbances at the shipyards;

• bankruptcy or other financial crisis of shipbuilders;

• quality or engineering problems;

• weather interference or a catastrophic event, such as a major earthquake, tsunami or fire; and

• shortages of or delays in the receipt of necessary construction materials.

We face competition from competitors with far greater resources.

Many competing companies have secured access to, or are pursuing development or acquisition of, LNG facilities to serve the North American natural gas market. Our LNG regasification service competitors in North America include major energy companies. In addition, competitors have developed or reopened additional LNG terminals in Europe, Asia and other markets, which also compete with our LNG terminal. Almost all of these competitors have longer operating histories, more development experience, greater name recognition, larger staffs and substantially greater financial, technical and marketing resources and access to natural gas and LNG supplies than we and our affiliates do. The superior resources that these competitors have available for deployment could allow them to compete successfully against us, which could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects.

Terrorist attacks, including cyberterrorism, or military campaigns may adversely impact our business.

A terrorist, including cyberterrorist, or military incident involving an LNG facility, our infrastructure or an LNG vessel may result in temporary or permanent closure of existing LNG facilities, including our LNG terminal, which could increase our costs and decrease our cash flows, depending on the duration and timing of the closure. Our operations could also become subject to increased governmental scrutiny that may result in additional security measures at a significant incremental cost to us. In addition, the threat of terrorism and the impact of military campaigns may lead to continued volatility in prices for natural gas that could adversely affect our customers, including their ability to satisfy their obligations to us under their TUAs. Instability in the financial markets as a result of terrorism, including cyberterrorism, or war could also materially adversely affect our ability to raise capital. The continuation of these developments may subject our operations to increased risks, as well as increased costs, and, depending on their ultimate magnitude, could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.

Existing and future environmental and similar laws and governmental regulations could result in increased compliance costs or additional operating costs and restrictions.

Our business is and will be subject to extensive federal, state and local laws and regulations that regulate and restrict, among other things, discharges to air, land and water, with particular respect to the protection of the environment; the handling, storage and disposal of hazardous materials, hazardous waste, and petroleum products; and remediation associated with the release of hazardous substances. Many of these laws and regulations, such as the CAA, the Oil Pollution Act, the CWA and the RCRA, and analogous state laws and regulations, restrict or prohibit the types, quantities and concentration of substances that can be released into the environment in connection with the operation of our facilities, and require us to maintain permits and provide governmental authorities with access to our facilities for inspection and reports related to our compliance. Violation of these laws and regulations could lead to substantial liabilities, fines and penalties or to capital expenditures related to pollution control equipment that could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects. Federal and state laws impose liability, without regard to fault or the lawfulness of the original conduct, for the release of certain

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types or quantities of hazardous substances into the environment. As the owner and operator of our facilities, we could be liable for the costs of cleaning up hazardous substances released into the environment at or from our LNG terminal and for resulting damage to natural resources.

There are numerous regulatory approaches currently in effect or being considered to address greenhouse gases, including possible future United States treaty commitments, new federal or state legislation that may impose a carbon emissions tax or establish a cap-and-trade program, and regulation by the EPA. In addition, as we consume natural gas at our LNG terminal, a future carbon tax or other regulation may be imposed on us directly.

Other future legislation and regulations, such as those relating to the transportation and security of LNG imported to our LNG terminal through the Sabine Pass deepwater shipping channel less than four miles from the Gulf Coast, could cause additional expenditures, restrictions and delays in our business, the extent of which cannot be predicted and which may require us to limit substantially, delay or cease operations in some circumstances. Revised, reinterpreted or additional laws and regulations that result in increased compliance costs or additional operating costs and restrictions could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.

A major health and safety incident relating to our business could be costly in terms of potential liabilities and reputational damage.

Health and safety performance is critical to the success of all areas of our business. Any failure in health and safety performance may result in personal harm or injury, penalties for non-compliance with relevant regulatory requirements or litigation, and a failure that results in a significant health and safety incident is likely to be costly in terms of potential liabilities. Such a failure could generate public concern and have a corresponding impact on our reputation and our relationships with relevant regulatory agencies and local communities, which in turn could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.

We may experience increased labor costs, and the unavailability of skilled workers or our failure to attract and retain key personnel could adversely affect us.

We are dependent upon the available labor pool of skilled employees. We compete with other energy companies and other employers to attract and retain qualified personnel with the technical skills and experience required to operate our LNG terminal and to provide our customers with the highest quality service. Our affiliates who hire personnel on our behalf are also subject to the Fair Labor Standards Act, which governs such matters as minimum wage, overtime and other working conditions. A shortage in the labor pool of skilled workers or other general inflationary pressures or changes in applicable laws and regulations could make it more difficult for us to attract and retain personnel and could require an increase in the wage and benefits packages that we offer, thereby increasing our operating costs. For example, in the aftermaths of Hurricanes Katrina and Rita, Bechtel and certain subcontractors temporarily experienced a shortage of available skilled labor necessary to meet the requirements of our construction plan. As a result, we agreed to change orders with our construction contractor concerning additional activities and expenditures to mitigate the hurricanes’ effects on the construction of our LNG terminal. Any increase in our operating costs could materially and adversely affect our business, financial condition, operating results, liquidity and prospects.

Our lack of diversification could have an adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.

All of our anticipated revenue in 2015 will be dependent upon one facility, our LNG terminal located in southern Louisiana. Due to our lack of asset and geographic diversification, an adverse development at our LNG terminal, or in the LNG industry, would have a significantly greater impact on our financial condition and results of operations than if we maintained more diverse assets and operating areas.

We may incur impairments to long-lived assets.

We test our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Significant negative industry or economic trends, reduced estimates of future cash flows for our business or disruptions to our business could lead to an impairment charge of our long-lived assets. Our valuation methodology for assessing impairment requires management to make judgments and assumptions based on historical experience and to rely heavily on projections of future operating performance. Projections of future operating results and cash flows may

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vary significantly from results. In addition, if our analysis results in an impairment to our long-lived assets, we may be required to record a charge to earnings in our Consolidated Financial Statements during a period in which such impairment is determined to exist, which may negatively impact our results of operations.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 3. LEGAL PROCEEDINGS

We may in the future be involved as a party to various legal proceedings, which are incidental to the ordinary course of business. We regularly analyze current information and, as necessary, provide accruals for probable liabilities on the eventual disposition of these matters. In the opinion of management, as of December 31, 2014, there were no threatened or pending legal matters that would have a material impact on our consolidated results of operations, financial position or cash flows.

ITEM 4. MINE SAFETY DISCLOSURE

None.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED PARTNER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Not applicable.

ITEM 6. SELECTED FINANCIAL DATA

Selected financial data set forth below are derived from our audited consolidated financial statements for the periods indicated. The financial data should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and our Consolidated Financial Statements and the accompanying notes thereto included elsewhere in this report. 

	Year Ended December 31, 2014
	2014			2013			2012			2011			2010
	(in thousands)
Statement of Operations Data:
Revenues (including affiliates)	$	522,707		$	521,552		$	523,884		$	533,612		$	523,223
Expenses (including affiliates)	105,248			116,448			96,516			88,993			93,481
Income from operations	417,459			405,104			427,368			444,619			429,742
Other expense	(160,570		)	(160,811		)	(214,563		)	(175,705		)	(173,297		)
Net income	256,889			244,293			212,805			268,914			256,445
	December 31,
	2014			2013			2012			2011			2010
	(in thousands)
Balance Sheet Data:
Cash and cash equivalents	$	5,460		$	14,994		$	5,202		$	4,268		$	5,926
Restricted cash and cash equivalents (current)	14,959			14,959			17,386			13,732			13,732
Non-current restricted cash and cash equivalents	76,106			76,106			76,106			82,394			82,394
Property, plant and equipment, net	1,392,443			1,433,822			1,476,174			1,514,137			1,550,465
Total assets	1,530,624			1,596,210			1,621,596			1,652,513			1,695,305

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

The following discussion and analysis presents management’s view of our business, financial condition and overall performance and should be read in conjunction with our Consolidated Financial Statements and the accompanying notes in “Financial Statements and Supplementary Data.” This information is intended to provide investors with an understanding of our past performance, current financial condition and outlook for the future. Our discussion and analysis includes the following subjects:

• Overview of Business 

• Liquidity and Capital Resources 

• Contractual Obligations

• Results of Operations 

• Off-Balance Sheet Arrangements 

• Summary of Critical Accounting Estimates 

• Recent Accounting Standards

Overview of Business

We own, develop and operate an LNG receiving and regasification terminal in western Cameron Parish, Louisiana, less than four miles from the Gulf Coast on the Sabine Pass deepwater ship channel (our “LNG Terminal”). Our LNG terminal includes existing infrastructure of five LNG storage tanks with capacity of approximately 16.9 Bcfe, two docks that can accommodate vessels with nominal capacity of up to 266,000 cubic meters and vaporizers with regasification capacity of approximately 4.0

Bcf/d.

Unless the context requires otherwise, references to “Sabine Pass LNG,” “we,” “us,” and “our” refer to Sabine Pass LNG, L.P. and its wholly owned subsidiaries.

Liquidity and Capital Resources

Cash and Cash Equivalents

As of December 31, 2014, we had $5.5 million of cash and cash equivalents and $91.1 million of current and non-current restricted cash and cash equivalents, which is restricted to pay interest on the Senior Notes described below.

The foregoing funds and cash flows generated from operations are anticipated to be sufficient to fund our operating expenditures and interest requirements for at least the next twelve months.

TUA Revenues

Our LNG terminal has operational regasification capacity of approximately 4.0 Bcf/d and aggregate LNG storage capacity of approximately 16.9 Bcfe. Approximately 2.0 Bcf/d of the regasification capacity at our LNG terminal has been reserved under two long-term third-party TUAs, under which our customers are required to pay fixed monthly fees, whether or not they use the LNG terminal.  Each of Total Gas & Power North America, Inc. (“Total”) and Chevron U.S.A. Inc. (“Chevron”) has reserved approximately 1.0 Bcf/d of regasification capacity and is obligated to make monthly capacity payments to us aggregating approximately $125 million annually for 20 years that commenced in 2009. Total S.A. has guaranteed Total’s obligations under its TUA up to $2.5 billion, subject to certain exceptions, and Chevron Corporation has guaranteed Chevron’s obligations under its TUA up to 80% of the fees payable by Chevron.

The remaining approximately 2.0 Bcf/d of capacity has been reserved under a TUA by Sabine Pass Liquefaction, LLC (“Sabine Pass Liquefaction”), a wholly owned subsidiary of Cheniere Energy Partners, L.P. (“Cheniere Partners”), a publicly traded partnership which indirectly owns us. Sabine Pass Liquefaction is developing liquefaction facilities at our LNG terminal adjacent

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to our existing regasification facilities in order to liquefy and export natural gas from the United States.  Sabine Pass Liquefaction is obligated to make monthly capacity payments to us aggregating approximately $250 million annually, continuing until at least 20 years after Sabine Pass Liquefaction delivers its first commercial cargo at Sabine Pass Liquefaction’s liquefaction facilities under construction at our LNG terminal. We entered into a terminal use rights assignment and agreement (“TURA”) with Sabine Pass Liquefaction and Cheniere Energy Investments, LLC (“Cheniere Investments”), a wholly owned subsidiary of Cheniere Partners, pursuant to which Cheniere Investments has the right to use Sabine Pass Liquefaction’s reserved capacity under the TUA and has the obligation to make the monthly capacity payments required by the TUA to us. Cheniere Partners has guaranteed the obligations of Sabine Pass Liquefaction under its TUA and the obligations of Cheniere Investments under the TURA.

Under each of these TUAs, we are entitled to retain 2% of the LNG delivered to our LNG terminal.

Capital Resources

As of December 31, 2014, we had an aggregate principal amount of $1.7 billion, before discount, of the 7.50% Senior Secured Notes due 2016 (the “2016 Senior Notes”) and $0.4 billion of the 6.50% Senior Secured Notes due 2020 (the “2020 Senior Notes” and collectively with the 2016 Senior Notes, the “Senior Notes”). Borrowings under the 2016 Senior Notes and 2020 Senior Notes bear interest at a fixed rate of 7.50% and 6.50%, respectively. The terms of the 2016 Senior Notes and 2020 Senior Notes are substantially similar. Interest on the Senior Notes is payable semi-annually in arrears. Subject to permitted liens, the Senior Notes are secured on a pari passu first-priority basis by a security interest in all of our equity interests and substantially all of our operating assets.

We may redeem all or part of our 2016 Senior Notes at any time at a redemption price equal to 100% of the principal plus any accrued and unpaid interest plus the greater of:

•1.0% of the principal amount of the 2016 Senior Notes; or

• the excess of: a) the present value at such redemption date of (i) the redemption price of the 2016 Senior Notes plus (ii) all required interest payments due on the 2016 Senior Notes (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over b) the principal amount of the 2016 Senior Notes, if greater.

We may redeem all or part of the 2020 Senior Notes at any time on or after November 1, 2016, at fixed redemption prices specified in the indenture governing the 2020 Senior Notes, plus accrued and unpaid interest, if any, to the date of redemption. We may also redeem, at our option, all or part of the 2020 Senior Notes at any time prior to November 1, 2016, at a “make-whole” price set forth in the indenture governing the 2020 Senior Notes, plus accrued and unpaid interest, if any, to the date of redemption. At any time before November 1, 2015, we may redeem up to 35% of the aggregate principal amount of the 2020 Senior Notes at a redemption price of 106.5% of the principal amount of the 2020 Senior Notes to be redeemed, plus accrued and unpaid interest, if any, to the redemption date, in an amount not to exceed the net proceeds of one or more completed equity offerings as long as we redeem the 2020 Senior Notes within 180 days of the closing date for such equity offering and at least 65% of the aggregate principal amount of the 2020 Senior Notes originally issued remains outstanding after the redemption.

Pursuant to the indentures governing the Senior Notes (the “Senior Notes Indentures”), except for permitted tax distributions, we may not make distributions until certain conditions are satisfied, including: (i) there must be on deposit in an interest payment account an amount equal to one-sixth of the semi-annual interest payment multiplied by the number of elapsed months since the last semi-annual interest payment, and (ii) there must be on deposit in a permanent debt service reserve fund an amount equal to one semi-annual interest payment. Distributions are permitted only after satisfying the foregoing funding requirements, a fixed charge coverage ratio test of 2:1 and other conditions specified in the Sabine Pass LNG Indentures.

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Sources and Uses of Cash

The following table summarizes (in thousands) the sources and uses of our cash and cash equivalents for the years ended December 31, 2014, 2013 and 2012. The table presents capital expenditures on a cash basis; therefore, these amounts differ from the amounts of capital expenditures, including accruals, which are referred to elsewhere in this report. Additional discussion of these items follows the table.

	Year Ended December 31,
	2014			2013			2012
Sources of cash and cash equivalents
Operating cash flow	$	294,700		$	302,224		$	263,295
Capital contributions from Cheniere Partners	43,015			56,820			208,354
Proceeds from issuance of long-term debt	—			—			420,000
Uses of restricted cash and cash equivalents	—			—			6,288
Total sources of cash and cash equivalents	337,715			359,044			897,937
Uses of cash and cash equivalents
Distributions to limited partner	(346,901		)	(348,938		)	(333,453		)
Property, plant and equipment, net	(348		)	(116		)	(4,458		)
Repayment of long-term debt	—			—			(550,000		)
Debt issuance costs	—			(198		)	(9,092		)
Total uses of cash and cash equivalents	(347,249		)	(349,252		)	(897,003		)
Net increase (decrease) in cash and cash equivalents	(9,534		)	9,792			934
Cash and cash equivalents—beginning of period	14,994			5,202			4,268
Cash and cash equivalents—end of period	$	5,460		$	14,994		$	5,202

Operating Cash Flow and Capital Contributions from Cheniere Partners

Cash flow from operations was $294.7 million, $302.2 million and $263.3 million in the years ended December 31, 2014, 2013 and 2012, respectively. Operating cash flow related primarily to fixed monthly fees paid by our TUA customers. The decreased operating cash flow and the decreased capital contributions from Cheniere Partners primarily resulted from the purchase of an LNG cargo used to maintain cryogenic readiness of our LNG terminal in September 2014. Our TUA customers are obligated to fully reimburse us for their proportional share of this LNG cargo cost.

Distributions to Limited Partner

We made $346.9 million, $348.9 million and $333.5 million of distributions to our limited partner in the years ended December 31, 2014, 2013 and 2012, respectively. The decrease in distributions to our limited partner in the year ended December 31, 2014, primarily resulted from decreased operating cash flow as discussed above.

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Contractual Obligations

We are committed to make cash payments in the future pursuant to certain of our contracts. The following table summarizes certain contractual obligations in place as of December 31, 2014 (in thousands):

	Payments Due for Years Ended December 31,
	Total		2015		2016 - 2017		2018 - 2019		Thereafter
Operating lease obligations (1)	$	163,780	$	9,533	$	19,410	$	4,124	$	130,713
Long-term debt (2)	2,085,500		—		1,665,500		—		420,000
Interest payments (2)	398,666		152,213		169,103		54,600		22,750
Total (3)	$	2,647,946	$	161,746	$	1,854,013	$	58,724	$	573,463

(1) Operating lease obligations primarily relate to land site and tug leases for our LNG terminal. Minimum lease payments have not been reduced by a minimum sublease rental of $24.4 million due in the future under non-cancelable tug boat subleases, and have not been reduced by sublease payments of $33.8 million we will receive from Sabine Pass Liquefaction. A discussion of these obligations can be found in Note 9—Leases of our Notes to Consolidated Financial Statements.

(2) Based on the total debt balance, scheduled maturities and interest rates in effect at December 31, 2014.  See Note 7—Long-Term Debt of our Notes to Consolidated Financial Statements.

(3) Obligations arising from intercompany service agreements have not been included in this total. A discussion of these obligations can be found in Note 8—Related Party Transactions of our Notes to Consolidated Financial Statements.

Results of Operations

2014 vs. 2013

There were no significant changes in our revenues or operating costs and expenses in the year ended December 31, 2014, as compared to the respective periods in 2013. We do not expect significant changes in our revenues or operating costs and expenses until Sabine Pass Liquefaction begins commercial operations of its liquefaction facilities adjacent to our existing regasification facilities. Additional revenues will primarily consist of LNG loading and tug fees that will be partially offset by additional operating costs and expenses related to these activities.

2013 vs. 2012

Our consolidated net income increased $31.5 million, from $212.8 million in 2012 to $244.3 million in 2013. This primarily resulted from decreased loss on early extinguishment of debt and decreased interest expense, which was partially offset by increased operating and maintenance expense. Loss on early extinguishment of debt decreased from $42.6 million in 2012 to zero in 2013 primarily as a result of make-whole payments associated with the early repayments in full of the 2013 Notes in 2012. Interest expense decreased $10.5 million in 2013 as a result of the reduction of our indebtedness outstanding and a lower interest rate. During the fourth quarter of 2012, we repurchased $550.0 million of our outstanding 2013 Notes. Funds used for the repurchase included proceeds received from the issuance of $420.0 million of the 2020 Notes and from an equity contribution from Cheniere Partners. Operating and maintenance expense (including affiliate expense) increased $16.5 million, from $41.4 million in 2012 to $57.9 million in 2013. This increase primarily resulted from increased LNG terminal maintenance and repair costs, increased fuel costs and increased costs to manage the operation and maintenance of our LNG terminal under our long-term operation and maintenance agreement with a wholly owned subsidiary of Cheniere.

Off-Balance Sheet Arrangements

As of December 31, 2014, we had no “off-balance sheet arrangements” that may have a current or future material effect on our consolidated financial position or results of operations.

Summary of Critical Accounting Estimates

The preparation of Consolidated Financial Statements in conformity with generally accepted accounting principles in the United States (“GAAP”) requires management to make certain estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the accompanying notes. Management evaluates its estimates and related assumptions

20

regularly, including those related to the value of properties, plant and equipment, asset retirement obligations (“AROs”) and fair values. Changes in facts and circumstances or additional information may result in revised estimates, and actual results may differ from these estimates. Management considers the following to be its most critical accounting estimates that involve significant judgment.

Fair Value

When necessary or required by GAAP, we estimate fair value for long-lived assets for impairment testing, initial measurements of AROs and financial instruments that require fair-value disclosure, including cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, accounts payable and debt. When we are required to measure fair value and there is not a market-observable price for the asset or liability or for a similar asset or liability, we use the cost, income, or market valuation approaches depending on the quality of information available to support management’s assumptions. The cost approach is based on management’s best estimate of the current asset replacement cost. The income approach is based on management’s best assumptions regarding expectations of projected cash flows, and discounts the expected cash flows using a commensurate risk-adjusted discount rate. The market approach is based on management’s best assumptions regarding prices and other relevant information from market transactions involving comparable assets. Such evaluations involve significant judgment and the results are based on expected future events or conditions, such as sales prices, operating costs and the timing thereof, future net cash flows, economic and regulatory climates and other factors, most of which are often outside of management’s control. However, assumptions used reflect a market participant’s view of long-term prices, costs and other factors, and are consistent with assumptions used in our business plans and investment decisions.

Impairment of Long-Lived Assets

A long-lived asset is evaluated for potential impairment whenever events or changes in circumstances indicate that its carrying value may be greater than its future net undiscounted cash flows. Impairment, if any, is measured as the excess of an asset’s carrying amount over its estimated fair value. We use a variety of fair value measurement techniques when market information for the same or similar assets does not exist. Projections of future operating results and cash flows may vary significantly from results. Management reviews its estimates of cash flows on an ongoing basis using historical experience and other factors, including the current economic and commodity price environment.

Recent Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) amended its guidance on revenue recognition. The core principle of this amendment is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, with earlier adoption not permitted. This guidance can be adopted either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment as of the date of adoption. We are currently evaluating the impact of the provisions of this guidance on our consolidated financial position, results of operations and cash flows.

In August 2014, the FASB issued authoritative guidance that requires an entity’s management to evaluate, for each reporting period, whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued. Additional disclosures are required if management concludes that conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. This guidance is effective for annual reporting periods ending after December 15, 2016, and for annual periods and interim periods thereafter, with earlier adoption permitted. The adoption of this guidance is not expected to have an impact on our consolidated financial position, results of operations or cash flows.

ITEM 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Cash Investments

We have cash investments that we manage based on internal investment guidelines that emphasize liquidity and preservation of capital. Such cash investments are stated at historical cost, which approximates fair market value on our Consolidated Balance Sheets.

21

Marketing and Trading Commodity Price Risk

We have entered into certain instruments to hedge the exposure to variability in expected future cash flows attributable to the future sale of our LNG inventory (“LNG Inventory Derivatives”). We use one-day value at risk (“VaR”) with a 95% confidence interval and other methodologies for market risk measurement and control purposes of our LNG Inventory Derivatives. The VaR is calculated using the Monte Carlo simulation method. The VaR related to our LNG Inventory Derivatives was $5,000 as of December 31, 2014.

22

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

SABINE PASS LNG, L.P.

Management’s Report to the Partners of Sabine Pass LNG, L.P	24
Report of Independent Registered Public Accounting Firm—KPMG LLP	25
Report of Independent Registered Public Accounting Firm—Ernst & Young LLP	26
Consolidated Balance Sheets	27
Consolidated Statements of Income	28
Consolidated Statements of Partners’ Deficit	29
Consolidated Statements of Cash Flows	30
Notes to Consolidated Financial Statements	31
Supplemental Information to Consolidated Financial Statements—Quarterly Financial Data	43

23

MANAGEMENT’S REPORT TO THE PARTNERS OF SABINE PASS LNG, L.P.

Management’s Report on Internal Control Over Financial Reporting

As management, we are responsible for establishing and maintaining adequate internal control over financial reporting for Sabine Pass LNG, L.P. and its subsidiaries (“Sabine Pass LNG”).  In order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002, we have conducted an assessment, including testing using the criteria in Internal Control—Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).  Sabine Pass LNG’s system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and, even when determined to be effective, can only provide reasonable assurance with respect to financial statement preparation and presentation.

Based on our assessment, we have concluded that Sabine Pass LNG maintained effective internal control over financial reporting as of December 31, 2014, based on criteria in Internal Control—Integrated Framework (1992) issued by the COSO.

This annual report does not include an attestation report of Sabine Pass LNG’s registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by Sabine Pass LNG’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this annual report.

Management’s Certifications

The certifications of the Chief Executive Officer and Chief Financial Officer of Sabine Pass LNG’s general partner required by the Sarbanes-Oxley Act of 2002 have been included as Exhibits 31 and 32 in Sabine Pass LNG’s Form 10-K.

Sabine Pass LNG, L.P.
By:	Sabine Pass LNG-GP, LLC,
	Its general partner

By:	/s/ Charif Souki	By:	/s/ Michael J. Wortley
	Charif Souki		Michael J. Wortley
	Chief Executive Officer		Chief Financial Officer
	(Principal Executive Officer)		(Principal Financial Officer)

24

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors of Sabine Pass LNG-GP, LLC and

Partners of Sabine Pass LNG, L.P.:

We have audited the accompanying consolidated balance sheet of Sabine Pass LNG, L.P. and subsidiary (the Partnership) as of December 31, 2014, and the related consolidated statements of income, partners’ deficit, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Sabine Pass LNG, L.P. and subsidiary as of December 31, 2014, and the results of their operations and their cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/    KPMG LLP

KPMG LLP

Houston, Texas

February 19, 2015

25

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors of Sabine Pass LNG-GP, LLC and

Partners of Sabine Pass LNG, L.P.

We have audited the accompanying consolidated balance sheet of Sabine Pass LNG, L.P. and subsidiaries as of December 31, 2013, and the related consolidated statements of income, partners' deficit, and cash flows for each of the two years in the period ended December 31, 2013. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Sabine Pass LNG, L.P. and subsidiaries at December 31, 2013, and the consolidated results of their operations and their cash flows for each of the two years in the period ended December 31, 2013, in conformity with U.S. generally accepted accounting principles.

/s/    ERNST & YOUNG LLP

Ernst & Young LLP

Houston, Texas

February 21, 2014

26

SABINE PASS LNG, L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands)

	December 31,
	2014			2013
ASSETS
Current assets
Cash and cash equivalents	$	5,460		$	14,994
Restricted cash and cash equivalents	14,959			14,959
Accounts receivable—affiliate	1,055			2,615
Advances to affiliate	1,868			4,025
LNG inventory	1,987			10,430
Prepaid expenses and other	4,301			5,149
Total current assets	29,630			52,172
Non-current restricted cash and cash equivalents	76,106			76,106
Property, plant and equipment, net	1,392,443			1,433,822
Debt issuance costs, net	12,643			16,871
Other non-current assets	19,802			17,239
Total assets	$	1,530,624		$	1,596,210
LIABILITIES AND PARTNERS’ DEFICIT
Current liabilities
Accounts payable	$	408		$	1,420
Accrued liabilities	16,036			21,153
Due to affiliates	2,266			18,721
Deferred revenue	26,655			26,593
Deferred revenue—affiliate	21,839			21,786
Total current liabilities	67,204			89,673
Long-term debt, net of discount	2,076,502			2,071,807
Non-current deferred revenue	13,500			17,500
Non-current deferred revenue—affiliate	19,626			17,173
Other non-current liabilities	263			276
Commitments and contingencies
Partners’ deficit	(646,471		)	(600,219		)
Total liabilities and partners’ deficit	$	1,530,624		$	1,596,210

The accompanying notes are an integral part of these consolidated financial statements.

27

SABINE PASS LNG, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands)

	Year Ended December 31,
	2014			2013			2012
Revenues
Revenues	$	265,947		$	265,153		$	268,273
Revenues—affiliate	256,760			256,399			255,611
Total revenues	522,707			521,552			523,884
Operating costs and expenses
Operating and maintenance expense	31,306			32,724			25,399
Operating and maintenance expense, net—affiliate	16,830			25,172			16,032
Depreciation expense	42,465			42,444			42,431
General and administrative expense	2,148			2,844			1,864
General and administrative expense—affiliate	12,499			13,264			10,790
Total operating costs and expenses	105,248			116,448			96,516
Income from operations	417,459			405,104			427,368
Other income (expense)
Interest expense	(161,135		)	(161,041		)	(171,495		)
Loss on early extinguishment of debt	—			—			(42,587		)
Derivative gain (loss), net	529			182			(622		)
Other income	36			48			141
Total other expense	(160,570		)	(160,811		)	(214,563		)
Net income	$	256,889		$	244,293		$	212,805

The accompanying notes are an integral part of these consolidated financial statements.

28

SABINE PASS LNG, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF PARTNERS’ DEFICIT

(in thousands)

	General Partner Sabine Pass LNG-GP, LLC		Limited Partner Sabine Pass LNG-LP, LLC			Total Partners’ Deficit
Balance at December 31, 2011	$	—	$	(643,596	)	$	(643,596	)
Net income	—		212,805			212,805
Capital contributions from Cheniere Partners	—		211,850			211,850
Distributions to limited partner	—		(333,453		)	(333,453		)
Balance at December 31, 2012	—		(552,394		)	(552,394		)
Net income	—		244,293			244,293
Capital Contributions from Cheniere Partners	—		56,820			56,820
Distributions to limited partner	—		(348,938		)	(348,938		)
Balance at December 31, 2013	—		(600,219		)	(600,219		)
Net income	—		256,889			256,889
Capital contributions from Cheniere Partners	—		43,015			43,015
Non-cash contributions from limited partner	—		745			745
Distributions to limited partner	—		(346,901		)	(346,901		)
Balance at December 31, 2014	$	—	$	(646,471	)	$	(646,471	)

The accompanying notes are an integral part of these consolidated financial statements.

29

SABINE PASS LNG, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Year Ended December 31,
	2014			2013			2012
Cash flows from operating activities
Net income	$	256,889		$	244,293		212,805
Adjustments to reconcile net income to net cash provided by operating activities:
Use of (investment in) restricted cash and cash equivalents for certain operating activities	—			2,427			(3,654	)
Depreciation	42,465			42,444			42,431
Loss on early extinguishment of debt	—			—			1,470
Amortization of debt issuance costs and discount	8,922			8,904			9,057
Other, net	22			44			2,179
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities	(6,138		)	(751		)	2,296
Due to affiliates	(16,456		)	12,512			482
Deferred revenue	(3,938		)	(3,947		)	(4,089	)
Advances to affiliate	2,157			(2,983		)	(487	)
Accounts and interest receivable	37			(31		)	511
Accounts receivable—affiliate	1,561			(1,266		)	(1,035	)
Other, net	6,677			529			1,242
Other, net—affiliate	2,502			49			87
Net cash provided by operating activities	294,700			302,224			263,295
Cash flows from investing activities
Property, plant and equipment, net	(348		)	(116		)	(4,458	)
Net cash used in investing activities	(348		)	(116		)	(4,458	)
Cash flows from financing activities
Distributions to limited partner	(346,901		)	(348,938		)	(333,453	)
Capital contributions from Cheniere Partners	43,015			56,820			208,354
Repayment of long-term debt	—			—			(550,000	)
Proceeds from issuance of long-term debt	—			—			420,000
Debt issuance costs	—			(198		)	(9,092	)
Use of restricted cash and cash equivalents	—			—			6,288
Net cash used in financing activities	(303,886		)	(292,316		)	(257,903	)
Net increase (decrease) in cash and cash equivalents	(9,534		)	9,792			934
Cash and cash equivalents—beginning of period	14,994			5,202			4,268
Cash and cash equivalents—end of period	$	5,460		$	14,994		5,202

The accompanying notes are an integral part of these consolidated financial statements.

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SABINE PASS LNG, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—ORGANIZATION AND NATURE OF OPERATIONS

We are a Houston-based Delaware limited partnership formed by Cheniere Energy, Inc. (“Cheniere”) to own, develop and operate an LNG receiving and regasification terminal in western Cameron Parish, Louisiana, less than four miles from the Gulf Coast on the Sabine Pass deepwater ship channel (our “LNG terminal”). We were formed with one general partner, Sabine Pass LNG-GP, LLC (“Sabine Pass GP”), and one limited partner, Sabine Pass LNG-LP, LLC (“Sabine Pass LP”), both indirect subsidiaries of Cheniere. Cheniere has an 80.1% ownership in Cheniere Energy Partners LP Holdings, LLC, which in turn has a 55.9% ownership interest in Cheniere Energy Partners, L.P. (“Cheniere Partners”). Cheniere Partners is the 100% parent of Cheniere Energy Investments, LLC (“Cheniere Investments”), which in turn is the 100% parent of Sabine Pass GP and Sabine Pass LP and, indirectly, us.

Our LNG terminal includes existing infrastructure of five LNG storage tanks with capacity of approximately 16.9 Bcfe, two docks that can accommodate vessels with nominal capacity of up to 266,000 cubic meters and vaporizers with regasification capacity of approximately 4.0 Bcf/d.

Unless the context requires otherwise, references to “Sabine Pass LNG,” “we,” “us” and “our” refer to Sabine Pass LNG, L.P. and its wholly owned subsidiary.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Our Consolidated Financial Statements were prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). Our Consolidated Financial Statements include the accounts of Sabine Pass LNG and its wholly owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.

Certain reclassifications have been made to conform prior period information to the current presentation.  The reclassifications had no effect on our overall consolidated financial position, results of operations or cash flows.

Use of Estimates

The preparation of Consolidated Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the accompanying notes. Management evaluates its estimates and related assumptions regularly, including those related to the value of property, plant and equipment, collectability of accounts receivable, derivative instruments, asset retirement obligations (“AROs”) and fair value measurements. Changes in facts and circumstances or additional information may result in revised estimates, and actual results may differ from these estimates.

Fair Value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Hierarchy Levels 1, 2 and 3 are terms for the priority of inputs to valuation techniques used to measure fair value. Hierarchy Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Hierarchy Level 2 inputs are inputs other than quoted prices included within Level 1 that are directly or indirectly observable for the asset or liability. Hierarchy Level 3 inputs are inputs that are not observable in the market.

In determining fair value, we use observable market data when available, or models that incorporate observable market data. In addition to market information, we incorporate transaction-specific details that, in management’s judgment, market participants would take into account in measuring fair value. We maximize the use of observable inputs and minimize our use of unobservable inputs in arriving at fair value estimates.

Recurring fair-value measurements are performed for commodity derivatives as disclosed in Note 5—Derivative Instruments. The carrying amount of cash and cash equivalents, restricted cash and cash equivalents, accounts receivable and accounts payable reported on the Consolidated Balance Sheets approximates fair value. The fair value of debt is the estimated amount we would have to pay to repurchase our debt, including any premium or discount attributable to the difference between

31

SABINE PASS LNG, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

the stated interest rate and market interest rate at each balance sheet date. Debt fair values, as disclosed in Note 7—Long-Term Debt, are based on quoted market prices for identical instruments, if available, or based on valuations of similar debt instruments. Non-financial assets and liabilities initially measured at fair value include certain assets and liabilities acquired in a business combination, intangible assets and AROs.

Revenue Recognition

LNG regasification capacity reservation fees are recognized as revenue over the term of the TUAs. Advance capacity reservation fees are initially deferred and amortized over a 10-year period as a reduction of a customer’s regasification capacity reservation fees payable under its TUA.  For a discussion of revenue from related parties, please read Note 8—Related Party Transactions.  Under each of these TUAs, Sabine Pass LNG is entitled to retain 2% of LNG delivered for each customer’s account at our LNG terminal, which is recognized as revenue as we perform the services set forth in each customer’s TUA.

Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Accounting for LNG Activities

Generally, we begin capitalizing the costs of our LNG terminal projects once the individual project meets the following criteria: (i) regulatory approval has been received, (ii) financing for the project is available and (iii) management has committed to commence construction. Prior to meeting these criteria, most of the costs associated with a project are expensed as incurred. These costs primarily include professional fees associated with front-end engineering and design work, costs of securing necessary regulatory approvals and other preliminary investigation and development activities related to our LNG terminal projects.

Generally, costs that are capitalized prior to a project meeting the criteria otherwise necessary for capitalization include: land and lease option costs that are capitalized as property, plant and equipment and certain permits that are capitalized as intangible LNG assets. The costs of lease options are amortized over the life of the lease once obtained. If no lease is obtained, the costs are expensed.

We capitalize interest and other related debt costs during the construction period of our LNG terminal. Upon commencement of operations, capitalized interest, as a component of the total cost, will be amortized over the estimated useful life of the asset.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Expenditures for construction activities, major renewals and betterments that extend the useful life of an asset are capitalized, while expenditures for maintenance and repairs and general and administrative activities are charged to expense as incurred. Interest costs incurred on debt obtained for the construction of property, plant and equipment are capitalized as construction-in-process over the construction period or related debt term, whichever is shorter. We depreciate our property, plant and equipment using the straight-line depreciation method. Upon retirement or other disposition of property, plant and equipment, the cost and related accumulated depreciation are removed from the account, and the resulting gains or losses are recorded in other operating costs and expenses.

Management tests property, plant and equipment for impairment whenever events or changes in circumstances have indicated that the carrying amount of property, plant and equipment might not be recoverable. In performing this test, an undiscounted cash flow analysis is performed at the lowest level for which identifiable cash flows are independent of cash flows from other assets. If the sum of the undiscounted future net cash flows is less than the net book value of the property, an impairment loss is recognized for the excess, if any, of the property’s net book value over its estimated fair value. We have recorded no impairments related to property, plant and equipment for 2014, 2013 or 2012. 

Derivative Instruments

We use derivative instruments to hedge our exposure to cash-flow variability from commodity price risk.

Derivative instruments are recorded at fair value and included in our Consolidated Balance Sheets as assets or liabilities depending on the derivative position and the expected timing of settlement, unless they satisfy criteria, and we elect, the normal

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purchases and sales exception. When we have the contractual right and intend to net settle, derivative assets and liabilities are reported on a net basis.

Changes in the fair value of our derivative instruments are recorded in current earnings, unless we elect to apply hedge accounting and meet specified criteria, including completing contemporaneous hedge documentation. We did not have any derivative instruments designated as cash flow hedges as of December 31, 2014 and 2013.

See Note 5—Derivative Instruments of our Notes to Consolidated Financial Statements for additional details about our derivative instruments.

Concentration of Credit Risk

Financial instruments that potentially subject us to a concentration of credit risk consist principally of cash and cash equivalents and restricted cash. We maintain cash balances at financial institutions, which may at times be in excess of federally insured levels. We have not incurred losses related to these balances to date.

The use of derivative instruments exposes us to counterparty credit risk, or the risk that a counterparty will be unable to meet its commitments. Our commodity derivative transactions are executed through over-the-counter contracts which are subject to nominal credit risk as these transactions are settled on a daily margin basis with investment grade financial institutions. Collateral deposited for such contracts is recorded as an other current asset and not netted within the derivative fair value. We monitor counterparty creditworthiness on an ongoing basis; however, we cannot predict sudden changes in counterparties’ creditworthiness. In addition, even if such changes are not sudden, we may be limited in our ability to mitigate an increase in counterparty credit risk. Should one of these counterparties not perform, we may not realize the benefit of some of our derivative instruments.

We have entered into certain long-term TUAs with unaffiliated third parties for regasification capacity at our LNG terminal. We are dependent on the respective counterparties’ creditworthiness and their willingness to perform under their respective TUAs. We have mitigated this credit risk by securing TUAs for a significant portion of our regasification capacity with creditworthy third-party customers with a minimum Standard & Poor’s rating of AA.

Long-Term Debt

Our debt consists of long-term secured debt securities with banks and other lenders.  Debt issuances are placed directly by us or through securities dealers or underwriters and are held by institutional and retail investors.  

Debt is recorded on our balance sheet at par value adjusted for unamortized discount or premium. Discounts, premiums and costs directly related to the issuance of debt are amortized over the life of the debt and are recorded in interest expense, net using the effective interest method. Gains and losses on the extinguishment of debt are recorded in gains and losses on the extinguishment of debt on our Consolidated Statements of Income.

Debt issuance costs consist primarily of arrangement fees, professional fees, legal fees and printing costs. These costs are recorded as debt issuance costs on our Consolidated Balance Sheets and are being amortized to interest expense over the term of the related debt facility. Upon early retirement of debt or amendment to a debt agreement, certain fees are written off as loss on early extinguishment of debt.

Income Taxes

We are a disregarded entity for federal and state income tax purposes. Our taxable income or loss, which may vary substantially from the net income or loss reported on our Consolidated Statements of Operations, is able to be included in the federal income tax return of Cheniere Partners, a publicly traded partnership which indirectly owns us. Accordingly, no provision or liability for federal or state income taxes is included in the accompanying Consolidated Financial Statements.

At December 31, 2014, the tax basis of our assets and liabilities was $460.3 million less than the reported amounts of our assets and liabilities.

Pursuant to the indentures governing our long-term debt (the “Senior Notes Indentures”), we are permitted to make distributions (“Tax Distributions”) for any fiscal year or portion thereof in which we are a limited partnership, disregarded entity

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or other substantially similar pass-through entity for federal and state income tax purposes. The permitted Tax Distributions are equal to the tax that we would owe if we were a corporation subject to federal and state income tax that filed separate federal and state income tax returns, excluding the amounts covered by the State Tax Sharing Agreement discussed immediately below. The Tax Distributions are limited to the amount of federal and/or state income taxes paid by Cheniere to the appropriate taxing authorities and are payable by us within 30 days of the date that Cheniere is required to make federal or state income tax payments to the appropriate taxing authorities.

In November 2006, we and Cheniere entered into a state tax sharing agreement. Under this agreement, Cheniere has agreed to prepare and file all state and local tax returns which we and Cheniere are required to file on a combined basis and to timely pay the combined state and local tax liability. If Cheniere, in its sole discretion, demands payment, we will pay to Cheniere an amount equal to the state and local tax that we would be required to pay if our state and local tax liability were computed on a separate company basis. There have been no state and local taxes paid by Cheniere for which Cheniere could have demanded payment from us under this agreement; therefore, Cheniere has not demanded any such payments from us. The agreement is effective for tax returns due on or after January 1, 2008.

Asset Retirement Obligations

We recognize AROs for legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or normal use of the asset and for conditional AROs in which the timing or method of settlement are conditional on a future event that may or may not be within our control. The fair value of a liability for an ARO is recognized in the period in which it is incurred, if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset. This additional carrying amount is depreciated over the estimated useful life of the asset. Our recognition of AROs is described below.

Based on the real property lease agreements at our LNG terminal, at the expiration of the term of the leases, we are required to surrender the LNG terminal in good working order and repair, with normal wear and tear and casualty expected. Our property lease agreements at our LNG terminal have terms of up to 90 years including renewal options. We have determined that the cost to surrender our LNG terminal in good order and repair, with normal wear and tear and casualty expected, is zero. Therefore, we have not recorded an ARO associated with our LNG terminal.

NOTE 3—RESTRICTED CASH AND CASH EQUIVALENTS

Restricted cash and cash equivalents consist of funds that are contractually restricted as to usage or withdrawal, are controlled by a collateral trustee and have been presented separately from cash and cash equivalents on our Consolidated Balance Sheets.

We have consummated private offerings of an aggregate principal amount of $1,665.5 million, before discount, of 7.50% Senior Secured Notes due 2016 (the “2016 Senior Notes”) and $420.0 million of 6.50% Senior Secured Notes due 2020 (the “2020 Senior Notes”) See Note 7—Long-Term Debt. Collectively, the 2016 Senior Notes and the 2020 Senior Notes are referred to as the “Senior Notes.” Under the Senior Notes Indentures, except for permitted tax distributions, we may not make distributions until certain conditions are satisfied, including: (i) there must be on deposit in an interest payment account an amount equal to one-sixth of the semi-annual interest payment multiplied by the number of elapsed months since the last semi-annual interest payment, and (ii) there must be on deposit in a permanent debt service reserve fund an amount equal to one semi-annual interest payment. Distributions are permitted only after satisfying the foregoing funding requirements, a fixed charge coverage ratio test of 2:1 and other conditions specified in the Sabine Pass LNG Indentures.

As of both December 31, 2014 and 2013, we classified $15.0 million as current restricted cash and cash equivalents for the payment of current interest due. As of both December 31, 2014 and 2013, we classified the permanent debt service reserve fund of $76.1 million as non-current restricted cash and cash equivalents.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

NOTE 4—PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of LNG terminal costs and fixed assets, as follows (in thousands): 

	December 31,
	2014			2013
LNG terminal costs
LNG terminal	$	1,643,018		$	1,642,007
LNG terminal construction-in-process	27			9
LNG site and related costs, net	142			149
Accumulated depreciation	(250,954		)	(208,729		)
Total LNG terminal costs, net	1,392,233			1,433,436
Fixed assets
Machinery and equipment	1,169			1,189
Computer and office equipment	424			424
Vehicles	654			599
Other	697			697
Accumulated depreciation	(2,734		)	(2,523		)
Total fixed assets, net	210			386
Property, plant and equipment, net	$	1,392,443		$	1,433,822

Our LNG terminal is depreciated using the straight-line depreciation method applied to groups of LNG terminal assets with varying useful lives. The identifiable components of our LNG terminal with similar estimated useful lives have a depreciable range between 15 and 50 years, as follows:

Components	Useful life (yrs)
LNG storage tanks	50
Marine berth, electrical, facility and roads	35
Regasification processing equipment (recondensers, vaporization and vents)	30
Sendout pumps	20
Others	15-30

NOTE 5—DERIVATIVE INSTRUMENTS

We have entered into certain derivative instruments to hedge the exposure to variability in expected future cash flows attributable to the future sale of our LNG inventory (“LNG Inventory Derivatives”) and to hedge the exposure to price risk attributable to future purchases of natural gas to be utilized as fuel to operate the Sabine Pass LNG terminal (“Fuel Derivatives”).

The following table (in thousands) shows the fair value of our derivative assets and liabilities that are required to be measured at fair value on a recurring basis as of December 31, 2014 and 2013, which are classified as prepaid expenses and other in our Consolidated Balance Sheets.

	Fair Value Measurements as of
	December 31, 2014								December 31, 2013
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
LNG Inventory Derivatives asset	$	—	$	145	$	—	$	145	$	—	$	—	$	—	$	—
Fuel Derivatives asset	—		—		—		—		—		27		—		27

The estimated fair values of our LNG Inventory Derivatives and Fuel Derivatives are the amounts at which the instruments could be exchanged currently between willing parties. We value these derivatives using observable commodity price curves and other relevant data. Derivative assets and liabilities arising from our derivative contracts with the same counterparty are reported on a net basis, as all counterparty derivative contracts provide for net settlement.

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We recognize all derivative instruments that qualify for derivative accounting treatment, including our LNG Inventory Derivatives and Fuel Derivatives, as either assets or liabilities and measure those instruments at fair value unless they qualify for, and we elect, the normal purchase normal sale exception. For those instruments accounted for as derivatives, including all of our LNG Inventory Derivatives as of December 31, 2014, changes in fair value are reported in earnings.  For transactions in which we have elected the normal purchase normal sale exception, including all of our Fuel Derivatives as of December 31, 2014, gains and losses are not reflected on our Consolidated Statements of Income until the period of delivery.

The use of derivative instruments exposes us to counterparty credit risk, or the risk that a counterparty will be unable to meet its commitments in instances where our Fuel Derivatives or our LNG Inventory Derivatives are in an asset position. Except for the Fuel Derivatives with our affiliate described below, our commodity derivative transactions are executed through over-the-counter contracts which are subject to nominal credit risk as these transactions are settled on a daily margin basis with investment grade financial institutions. We are required by these financial institutions to use margin deposits as credit support for these commodity derivative activities. We had a collateral call of $0.1 million and a collateral deposit of $0.7 million for such contracts, which have not been reflected in the derivative fair value tables, but are included in the other current assets balance as of December 31, 2014 and 2013, respectively.

During the second quarter of 2013, we began to enter into forward contracts under an International Swaps and Derivatives Association master agreement with Cheniere Marketing, LLC (“Cheniere Marketing”), a wholly owned subsidiary of Cheniere, to hedge the exposure to price risk attributable to future purchases of natural gas to be utilized as fuel to operate our terminal. We elected to account for these physical hedges of future fuel purchases as normal purchase normal sale transactions, exempt from fair value accounting. We had not posted collateral with Cheniere Marketing for such forward contracts as of December 31, 2014.

The following table (in thousands) shows the fair value and location of our LNG Inventory Derivatives and Fuel Derivatives on our Consolidated Balance Sheets:

		Fair Value Measurements as of
	Balance Sheet Location	December 31, 2014		December 31, 2013
LNG Inventory Derivatives asset	Prepaid expenses and other	$	145	$	—
Fuel Derivatives asset	Prepaid expenses and other	—		27

The following table (in thousands) shows the changes in the fair value and settlements of our LNG Inventory Derivatives and Fuel Derivatives recorded in derivative gain (loss), net on our Consolidated Statements of Income during the years ended December 31, 2014, 2013 and 2012:

	Year Ended December 31,
	2014		2013		2012
LNG Inventory Derivatives gain	$	247	$	—	$	—
Fuel Derivatives gain (loss) (1)	281		182		(622		)

(1) Excludes settlements of our Fuel Derivatives with Cheniere Marketing for which we have elected the normal purchase normal sale exception from derivative accounting and have recorded as operating and maintenance expense.

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Balance Sheet Presentation

Our LNG Inventory Derivatives and Fuel Derivatives are presented on a net basis on our Consolidated Balance Sheets as described above. The following table (in thousands) shows the fair value of our LNG Inventory Derivatives and Fuel Derivatives outstanding on a gross and net basis:

	Gross Amounts Recognized		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets
Offsetting Derivative Assets (Liabilities)							Derivative Instrument		Cash Collateral Received (Paid)		Net Amount
As of December 31, 2014:
LNG Inventory Derivatives	$	145	$	132	$	13	$	—	$	—	$	13
As of December 31, 2013:
Fuel Derivatives	27		—		27		—		—		27

NOTE 6—ACCRUED LIABILITIES

As of December 31, 2014 and 2013, accrued liabilities consisted of the following (in thousands): 

	December 31,
	2014		2013
Interest expense and related debt fees	$	14,959	$	14,959
LNG terminal costs	1,077		1,612
Other	—		4,582
Total accrued liabilities	$	16,036	$	21,153

NOTE 7—LONG-TERM DEBT

As of December 31, 2014 and 2013, our long-term debt consisted of the following (in thousands):

	December 31,
	2014			2013
Long-term debt
2016 Senior Notes	$	1,665,500		$	1,665,500
2020 Senior Notes	420,000			420,000
Total long-term debt	2,085,500			2,085,500
Long-term debt discount
2016 Senior Notes	(8,998		)	(13,693		)
Total long-term debt, net	$	2,076,502		$	2,071,807

Below is a schedule of future principal payments that we are obligated to make on our outstanding debt at December 31, 2014 (in thousands): 

	Payments Due for the Years Ended December 31,
	Total		2015		2016 to 2017		2018 to 2019		Thereafter
Debt:
2016 Notes	$	1,665,500	$	—	$	1,665,500	$	—	$	—
2020 Notes	420,000		—		—		—		420,000
Debt	$	2,085,500	$	—	$	1,665,500	$	—	$	420,000

Senior Notes

As of both December 31, 2014 and 2013, we had an aggregate principal amount of $1,665.5 million, before discount, of the 2016 Senior Notes and $420.0 million of the 2020 Senior Notes outstanding. Borrowings under the 2016 Senior Notes and 2020 Senior Notes bear interest at a fixed rate of 7.50% and 6.50%, respectively. The terms of the 2016 Senior Notes and the 2020 Senior Notes are substantially similar. Interest on the Senior Notes is payable semi-annually in arrears. Subject to permitted

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liens, the Senior Notes are secured on a first-priority basis by a security interest in all of our equity interests and substantially all of our operating assets.

We may redeem all or part of our 2016 Senior Notes at any time, and from time to time, at a redemption price equal to 100% of the principal plus any accrued and unpaid interest plus the greater of:

• 1.0%of the principal amount of the 2016 Senior Notes; or

• the excess of: a) the present value at such redemption date of (i) the redemption price of the 2016 Senior Notes plus (ii) all required interest payments due on the 2016 Senior Notes (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over b) the principal amount of the 2016 Senior Notes, if greater.

We may redeem all or part of our 2020Senior Notes at any time on or after November 1, 2016, at fixed redemption prices specified in the indenture governing the 2020Senior Notes, plus accrued and unpaid interest, if any, to the date of redemption. We may also, at our option, redeem all or part of the 2020Senior Notes at any time prior to November 1, 2016, at a “make-whole” price set forth in the indenture governing the 2020Senior Notes, plus accrued and unpaid interest, if any, to the date of redemption. At any time before November 1, 2015, we may redeem up to 35% of the aggregate principal amount of the 2020Senior Notes at a redemption price of 106.5% of the principal amount of the 2020Senior Notes to be redeemed, plus accrued and unpaid interest, if any, to the redemption date, in an amount not to exceed the net proceeds of one or more completed equity offerings as long as we redeem the 2020Senior Notes within 180 days of the closing date for such equity offering and at least 65% of the aggregate principal amount of the 2020 Senior Notes originally issued remains outstanding after the redemption.

Under the Sabine Pass LNG Indentures, except for permitted tax distributions, we may not make distributions until certain conditions are satisfied as described in Note 3—Restricted Cash and Cash Equivalents. During the years ended December 31, 2014, 2013 and 2012 we made distributions of $346.9 million, $348.9 million and $333.5 million, respectively, after satisfying all the applicable conditions in the indentures.

Fair Value Disclosures

The following table (in thousands) shows the carrying amount and estimated fair value of our long-term debt:

	December 31, 2014				December 31, 2013
	Carrying Amount		Estimated Fair Value (1)		Carrying Amount		Estimated Fair Value (1)
2016 Senior Notes, net of discount	$	1,656,502	$	1,718,621	$	1,651,807	$	1,868,607
2020 Senior Notes	420,000		428,400		420,000		432,600

(1) The Level 2 estimated fair value was based on quotations obtained from broker-dealers who make markets in these and similar instruments based on the closing trading prices on December 31, 2014 and 2013, as applicable.

NOTE 8—RELATED PARTY TRANSACTIONS

Terminal Use Agreement

Sabine Pass Liquefaction, LLC (“Sabine Pass Liquefaction”), a wholly owned subsidiary of Cheniere Partners, obtained approximately 2.0 Bcf/d of regasification capacity under a TUA with us as a result of an assignment in July 2012 by Cheniere Investments, a wholly owned subsidiary of Cheniere Partners, of its rights, title and interest under its TUA with us. Sabine Pass Liquefaction is obligated to make monthly capacity payments to us aggregating approximately $250 million per year, continuing until at least 20 years after Sabine Pass Liquefaction delivers its first commercial cargo at Sabine Pass Liquefaction’s facilities under construction. We entered into a terminal use rights assignment and agreement (“TURA”) with Sabine Pass Liquefaction and Cheniere Investments pursuant to which Cheniere Investments has the right to use Sabine Pass Liquefaction’s reserved capacity under the TUA and has the obligation to make the monthly capacity payments required by the TUA to us. Cheniere Investments’ right to use capacity at our LNG terminal will be reduced as each of Trains 1 through 4 reaches commercial operations. The percentage of the monthly capacity payments payable by Cheniere Investments will be reduced from 100% to zero (unless Cheniere Investments utilizes terminal use capacity after Train 4 reaches commercial operations), and the percentage of the monthly capacity payments payable by Sabine Pass Liquefaction will increase by the amount that Cheniere Investments’ percentage decreases.

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Cheniere Partners has guaranteed Sabine Pass Liquefaction’s obligations under the TUA and the obligations of Cheniere Investments under the TURA.

Services Agreements

We have entered into a long-term operation and maintenance agreement (the “O&M Agreement”) with Cheniere Investments pursuant to which we receive all necessary services required to operate and maintain our LNG receiving terminal. Cheniere Investments provides the services required under the O&M Agreement pursuant to a secondment agreement with a wholly owned subsidiary of Cheniere. We are required to pay a fixed monthly fee of $130,000 (indexed for inflation) under the O&M Agreement, and the counterparty is entitled to a bonus equal to 50% of the salary component of labor costs in certain circumstances to be agreed upon between us and the counterparty at the beginning of each operating year. In addition, we are required to reimburse the counterparty for its operating expenses, which consist primarily of labor expenses. Cheniere Investments provides the services required under the Sabine Pass LNG O&M Agreement pursuant to a secondment agreement with a wholly owned subsidiary of Cheniere.

We have entered into a long-term management services agreement (the “MSA”) with Cheniere LNG Terminals, LLC (“Cheniere Terminals”), a wholly owned subsidiary of Cheniere, pursuant to which Cheniere Terminals manages the operation of our LNG receiving terminal, excluding those matters provided for under the O&M Agreement. We are required to pay Cheniere Terminals a monthly fixed fee of $520,000 (indexed for inflation) under the MSA.

As of December 31, 2014 and 2013, we had $1.9 million and $4.0 million, respectively, of advances to affiliates under the foregoing services agreements. During the years ended December 31, 2014, 2013 and 2012, we recorded general and administrative expense—affiliate of $12.5 million, $13.3 million and $10.8 million, respectively, and we recorded operating and maintenance expense—affiliate of $17.3 million, $25.2 million and $16.0 million respectively, under the foregoing services agreements.

Agreement to Fund Our Cooperative Endeavor Agreements (“CEAs”)

In July 2007, we executed CEAs with various Cameron Parish, Louisiana taxing authorities that allow them to collect certain annual property tax payments in 2007 through 2016. This 10-year initiative represents an aggregate commitment of up to $25.0 million, and we will make resources available to the Cameron Parish taxing authorities on an accelerated basis in order to aid in their reconstruction efforts following Hurricane Rita. In exchange for our advance payments of annual ad valorem taxes, Cameron Parish will grant us a dollar for dollar credit against future ad valorem taxes to be levied against our LNG terminal starting in 2019. In September 2007, we entered into an agreement with Cheniere Marketing, pursuant to which Cheniere Marketing would pay us additional TUA revenues equal to any and all amounts payable under the CEAs in exchange for a similar amount of credits against future TUA payments it would owe us under its TUA starting in 2019. In June 2010, Cheniere Marketing assigned its TUA to Cheniere Investments and concurrently entered into a variable capacity rights agreement (“VCRA”), allowing Cheniere Marketing to utilize Cheniere Investments’ capacity under the TUA after the assignment. In July 2012, Cheniere Investments entered into an amended and restated VCRA with Cheniere Marketing in order for Cheniere Investments to utilize during construction of Sabine Pass Liquefaction’s liquefaction project the capacity rights granted under the TURA. Cheniere Marketing will continue to fund the CEAs during the term of the amended and restated VCRA and, in exchange, Cheniere Marketing will receive the benefit of any future credits.

These advance tax payments were recorded to other non-current assets, and payments from Cheniere Marketing that we utilized to make the ad valorem tax payments were recorded as deferred revenue—affiliate. As of December 31, 2014 and 2013, we had $19.6 million and $17.2 million, respectively, of other non-current assets resulting from ad valorem tax payments and non-current deferred revenue—affiliate resulting from these payments received from Cheniere Marketing.

Contracts for Sale and Purchase of Natural Gas and LNG

We are able to sell and purchase natural gas and LNG under agreements with Cheniere Marketing. Under these agreements, we purchase natural gas or LNG from Cheniere Marketing at a sales price equal to the actual purchase cost paid by Cheniere Marketing to suppliers of the natural gas or LNG, plus any third-party costs incurred by Cheniere Marketing in respect of the receipt, purchase and delivery of the natural gas or LNG to our LNG terminal. As a result, we record the purchases of natural gas and LNG from Cheniere Marketing to be utilized as fuel to operate our LNG terminal as operating and maintenance expense. We recorded $3.3 million, $3.3 million and $2.8 million of natural gas purchased from Cheniere Marketing under these agreements as operating and maintenance expense during the years ended December 31, 2014, 2013 and 2012, respectively. We recorded

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revenues of $0.7 million, $14.7 million and $2.8 million for natural gas sold to Cheniere Marketing under these agreements during the years ended December 31, 2014, 2013 and 2012, respectively.

LNG Terminal Export Agreement

In January 2010, we and Cheniere Marketing entered into an LNG Terminal Export Agreement that provides Cheniere Marketing the ability to export LNG from our LNG terminal.  We recorded revenues—affiliate of zero, zero, and $0.3 million pursuant to this agreement in the years ended December 31, 2014, 2013 and 2012, respectively.

Pipeline Compressor Agreement

In August 2010, we entered into an agreement with Cheniere Investments, under which Cheniere Investments reimburses us for a portion of the costs of installing, operating and maintaining pipeline compression equipment at our LNG terminal. During the years ended December 31, 2014, 2013 and 2012, we recorded revenues-affiliate from Cheniere Investments of zero, $0.6 million and $0.1 million, respectively.

Tug Boat Lease Sharing Agreement

In connection with our tug boat lease, Sabine Pass Tug Services, LLC (“Tug Services”), our wholly owned subsidiary, entered into a tug sharing agreement with a wholly owned subsidiary of Cheniere to provide its LNG cargo vessels with tug boat and marine services at our LNG terminal. Tug Services recorded revenues—affiliate of $2.8 million pursuant to this agreement in each of the years ended December 31, 2014, 2013 and 2012.

LNG Site Sublease Agreement

In June 2012, we entered into an agreement with Sabine Pass Liquefaction to sublease a portion of our terminal site for its liquefaction project. The annual sublease payment is $0.5 million. The initial term of the sublease expires on December 31, 2034, with options to renew for five10-year extensions with similar terms as the initial term. The annual sublease payment will be adjusted for inflation every five years based on a consumer price index, as defined in the sublease agreement. We recognized $0.5 million, $0.5 million and $0.3 million of sublease revenue from Sabine Pass Liquefaction as a credit to operating and maintenance expense—affiliate on our Consolidated Statements of Income for each of the years ended December 31, 2014, 2013 and 2012.

Cooperation Agreement

We have entered into an agreement with Sabine Pass Liquefaction to allow Sabine Pass Liquefaction certain rights to access the property and facilities that we own for the purpose of constructing, modifying and operating Sabine Pass Liquefaction’s facilities under construction. In consideration for the access we have given, Sabine Pass Liquefaction has agreed to transfer title to us of certain facilities, equipment and modifications. The term of this agreement is consistent with our TUA described above. As of December 31, 2014, Sabine Pass Liquefaction has conveyed $0.7 million of assets to us under this agreement.

NOTE 9—LEASES

During the years ended December 31, 2014, 2013 and 2012, we recognized rental expense for all operating leases of $9.2 million, $8.8 million and $9.4 million, respectively.

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SABINE PASS LNG, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Future annual minimum lease payments, excluding inflationary adjustments, are as follows (in thousands): 

Year ending December 31,	Lease Payments (2) (3)
2015	$	9,533
2016	9,645
2017	9,764
2018	2,397
2019	1,727
Thereafter (1)	130,714
Total minimum payments required	$	163,780

(1) Includes certain lease option renewals as they are reasonably assured.

(2) Lease payments for our land leases represent our land lease payment obligations and do not take into account the $33.8 million sublease payments we will receive from Sabine Pass Liquefaction, as discussed in Note 8—Related Party Transactions.

(3) Lease payments for our tug boat lease represent our lease payment obligation and do not take into account the $24.4 million sublease payments we will receive from our customers that effectively offset these lease payment obligations, as discussed below.

Land Leases

In January 2005, we exercised our options and entered into three land leases for the site of our LNG terminal. The leases have an initial term of 30 years, with options to renew for six10-year extensions with similar terms as the initial term. In February 2005, two of the three leases were amended, thereby increasing the total acreage under lease to 853 acres.  In July 2012, we entered into an additional land lease, thereby increasing the total acreage under lease to 883 acres. The annual lease payments are adjusted for inflation every 5 years based on a consumer price index, as defined in the lease agreements. We recognized $1.8 million, $1.8 million and $1.5 million of site lease expense on our Consolidated Statements of Operations in 2014, 2013 and 2012, respectively,

Tug Boat Lease

In the second quarter of 2009, we acquired a lease (the “Tug Agreement”) for the use of tug boats and marine services at our LNG terminal as a result of our purchase of Sabine Pass Tug Services, LLC.  The term of the Tug Agreement commenced in January 2008 for a period of 10 years, with an option to renew two additional, consecutive terms of 5 years each.  We have determined that the Tug Agreement contains a lease for the tugs specified in the Tug Agreement.  In addition, we have concluded that the tug lease contained in the Tug Agreement is an operating lease, and as such, the equipment component of the Tug Agreement will be charged to expense over the term of the Tug Agreement as it becomes payable.

In connection with this lease acquisition, Sabine Pass Tug Services, LLC entered into a tug sharing agreement (the “Tug Sharing Agreement”) with Chevron, Total and a wholly owned subsidiary of Cheniere to provide their LNG cargo vessels with tug boat and marine services at our LNG terminal and effectively offset the cost of the Tug Agreement. The Tug Sharing Agreement provides for each of our customers to pay Sabine Pass Tug Services, LLC an annual service fee that we record as revenue and revenue—affiliate.

NOTE 10—COMMITMENTS AND CONTINGENCIES

LNG TUA Commitments

We have entered into TUAs with Total, Chevron and Sabine Pass Liquefaction to provide berthing for LNG vessels and for the unloading, storage and regasification of LNG at our LNG terminal. See Note 8—Related Party Transactions for information regarding such agreements.

Services Agreements

We have entered into certain services agreements with affiliates. See Note 8—Related Party Transactions for information regarding such agreements.

41

SABINE PASS LNG, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Other Commitments

State Tax Sharing Agreement

In November 2006, we and Cheniere entered into a state tax sharing agreement. Under this agreement, Cheniere has agreed to prepare and file all state and local tax returns which we and Cheniere are required to file on a combined basis and to timely pay the combined state and local tax liability. If Cheniere, in its sole discretion, demands payment, we will pay to Cheniere an amount equal to the state and local tax that we would be required to pay if our state and local tax liability were computed on a separate company basis. There have been no state and local taxes paid by Cheniere for which Cheniere could have demanded payment from us under this agreement; therefore, Cheniere has not demanded any such payments from us. The agreement is effective for tax returns due on or after January 1, 2008.

Cooperative Endeavor Agreements

In July 2007, we executed CEAs with various Cameron Parish, Louisiana taxing authorities. See Note 8—Related Party Transactions for information regarding such agreements.

Legal Proceedings

We may in the future be involved as a party to various legal proceedings, which are incidental to the ordinary course of business. We regularly analyze current information and, as necessary, provide accruals for probable liabilities on the eventual disposition of these matters. In the opinion of management, as of December 31, 2014, there were no threatened or pending legal matters that would have a material impact on our consolidated results of operations, financial position or cash flows.

NOTE 11—SUPPLEMENTAL CASH FLOW INFORMATION

The following table provides supplemental disclosure of cash flow information (in thousands):

	Year Ended December 31,
	2014		2013		2012
Cash paid during the year for interest, net of amounts capitalized	$	152,213	$	153,350	$	159,998

42

SABINE PASS LNG, L.P. AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION TO CONSOLIDATED FINANCIAL STATEMENTS

QUARTERLY FINANCIAL DATA

(unaudited)

Quarterly Financial Data—(in thousands)

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Year ended December 31, 2014:
Revenues	$	130,734	$	131,040	$	131,001	$	129,932
Income from operations	104,295		105,890		104,295		102,979
Net income	64,271		65,690		64,070		62,858
Year ended December 31, 2013:
Revenues	$	129,880	$	130,413	$	130,919	$	130,340
Income from operations	101,576		99,210		102,203		102,115
Net income	61,854		58,556		61,812		62,071

43

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our general partner’s principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Based on their evaluation as of the end of the fiscal year ended December 31, 2014, our general partner’s principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are effective to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act are (i) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

During the most recent fiscal quarter, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

Our Management’s Report on Internal Control Over Financial Reporting is included in our Consolidated Financial Statements on page 24 and is incorporated herein by reference.

ITEM 9B. OTHER INFORMATION

Compliance Disclosure

Pursuant to Section 13(r) of the Exchange Act, if during the fiscal year ended December 31, 2014, we or any of our affiliates had engaged in certain transactions with Iran or with persons or entities designated under certain executive orders, we would be required to disclose information regarding such transactions in our Annual Report on Form 10-K as required under Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 (“ITRA”). During the fiscal year ended December 31, 2014, we did not engage in any transactions with Iran or with persons or entities related to Iran.

Blackstone CQP Holdco LP, an affiliate of The Blackstone Group L.P. (“Blackstone Group”), is a holder of approximately 29% of the outstanding equity interests of Cheniere Partners and has three representatives on the Board of Directors of Cheniere Partners’ general partner. Accordingly, Blackstone Group may be deemed an “affiliate” of Cheniere Partners, as that term is defined in Exchange Act Rule 12b-2. We have received notice from Blackstone that it may include in its Annual Report on Form 10-K for the fiscal year ended December 31, 2014 disclosures pursuant to ITRA regarding one of its portfolio companies that may be deemed to be an affiliate of Blackstone Group. Because of the broad definition of “affiliate” in Exchange Act Rule 12b-2, this portfolio company of Blackstone Group, through Blackstone Group’s ownership of Cheniere Partners, may also be deemed to be an affiliate of ours.

We have received notice from Blackstone Group that Travelport Limited (“Travelport”) has engaged in the following activities: as part of its global business in the travel industry, Travelport provides certain passenger travel-related GDS and airline IT services to Iran Air and airline IT services to Iran Air Tours. The gross revenues and net profits attributable to such activities by Travelport during the fiscal year ended December 31, 2014 have not been reported by Travelport. Blackstone Group has informed us that Travelport intends to continue these business activities with Iran Air and Iran Air Tours as such activities are either exempt from applicable sanctions prohibitions or specifically licensed by the Office of Foreign Assets Control.

44

In our Form 10-Q reports for the quarterly periods ended on March 31, 2014, June 30, 2014 and September 30, 2014, we disclosed, under “Item 5. Other Information—Compliance Disclosure” in each such report, as amended, activities as required by Section 13(r) of the Exchange Act as transactions or dealings with the government of Iran that have not been specifically authorized by a U.S. federal department or agency. Such disclosures are incorporated herein by reference.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS OF OUR GENERAL PARTNER AND CORPORATE GOVERNANCE

Omitted pursuant to Instruction I of Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

Omitted pursuant to Instruction I of Form 10-K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT, AND RELATED UNITHOLDER MATTERS

Omitted pursuant to Instruction I of Form 10-K.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Omitted pursuant to Instruction I of Form 10-K.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

KPMG LLP served as our independent auditor for the fiscal year ended December 31, 2014 and Ernst & Young LLP served as our independent auditor for the fiscal year ended December 31, 2013. The following table (in thousands) sets forth the fees paid to the respective independent auditors for professional services rendered for 2014 and 2013: 

	Fiscal 2014		Fiscal 2013
Audit Fees	$	705	$	979

Audit Fees—Audit fees for 2014 and 2013 include attestation services and review of documents filed with the SEC in addition to audit, review and all other services performed to comply with generally accepted auditing standards.

There were no audit-related, tax or other fees in 2014 and 2013.

Auditor Pre-Approval Policy

Our general partner is not a public company and it is not listed on any stock exchange. As a result, it is not required to, and does not, have an independent audit committee, a financial expert or a majority of independent directors. The board of directors of our general partner has approved all audit and non-audit services to be provided by the independent accountants and the fees for such services during the fiscal years ended December 31, 2014 and 2013.

45

PART IV

ITEM 15.     EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Financial Statements and Exhibits

(1) Financial Statements—Sabine Pass LNG, L.P.: 

Management’s Report to the Partners of Sabine Pass LNG, L.P.	24
Report of Independent Registered Public Accounting Firm—KPMG LLP	25
Report of Independent Registered Public Accounting Firm—Ernst & Young LLP	26
Consolidated Balance Sheets	27
Consolidated Statements of Income	28
Consolidated Statements of Partners’ Deficit	29
Consolidated Statements of Cash Flows	30
Notes to Consolidated Financial Statements	31
Supplemental Information to Financial Statements—Quarterly Financial Data	43

(2) Financial Statement Schedules:

All financial statement schedules have been omitted because they are not required, are not applicable, or the required information has been included elsewhere within this Form 10-K.

(3) Exhibits:

Certain of the agreements filed as exhibits to this Form 10-K contain representations, warranties, covenants and conditions by the parties to the agreements that have been made solely for the benefit of the parties to the agreement. These representations, warranties, covenants and conditions:

• should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

• may have been qualified by disclosures that were made to the other parties in connection with the    negotiation of the agreements, which disclosures are not necessarily reflected in the agreements;

• may apply standards of materiality that differ from those of a reasonable investor; and

• were made only as of specified dates contained in the agreements and are subject to subsequent developments and changed circumstances.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. These agreements are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. Investors should not rely on them as statements of fact.

Exhibit No.	Description
3.1	Certificate of Limited Partnership of Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 3.1 to Sabine Pass LNG L.P.’s Registration Statement on Form S-4 (SEC File No. 333-138916), filed on November 22, 2006)
3.2	Sixth Amended and Restated Agreement of Limited Partnership of Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 3.1 to Sabine Pass LNG L.P.’s Quarterly Report on Form 10-Q (SEC File No. 333-138916), filed on August 6, 2010)
4.1	Form of general partner interest certificate (Incorporated by reference to Exhibit 4.5 to Sabine Pass LNG L.P.’s Registration Statement on Form S-4 (SEC File No. 333-138916), filed on November 22, 2006)
4.2	Form of limited partner interest certificate (Incorporated by reference to Exhibit 4.6 to Sabine Pass LNG L.P.’s Registration Statement on Form S-4 (SEC File No. 333-138916), filed on November 22, 2006)

46

Exhibit No.	Description
4.3	Indenture, dated as of November 9, 2006, between Sabine Pass LNG, L.P., as issuer, and The Bank of New York, as trustee (Incorporated by reference to Exhibit 4.1 to Cheniere Energy, Inc.’s Current Report on Form 8-K (SEC File No. 001-16383), filed on November 16, 2006)
4.4	Form of 7.50% Senior Secured Note due 2016 (Included as Exhibit A1 to Exhibit 4.3 above)
4.5	Indenture, dated as of October 16, 2012, by and among Sabine Pass LNG, L.P., the guarantors that may become party thereto from time to time and The Bank of New York Mellon, as trustee (Incorporated by reference to Exhibit 4.1 to Sabine Pass LNG, L.P.’s Current Report on Form 8-K (SEC File No. 333-138916), filed on October 19, 2012)
4.6	Form of 6.5% Senior Secured Note due 2020 (Included as Exhibit A1 to Exhibit 4.5 above)
10.1	LNG Terminal Use Agreement, dated September 2, 2004, by and between Total LNG USA, Inc. and Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 10.1 to Cheniere Energy, Inc.’s Quarterly Report on Form 10-Q (SEC File No. 001-16383), filed on November 15, 2004)
10.2	Omnibus Agreement, dated September 2, 2004, by and between Total LNG USA, Inc. and Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 10.2 to Cheniere Energy, Inc.’s Quarterly Report on Form 10-Q (SEC File No. 001-16383), filed on November 15, 2004)
10.3	Parent Guarantee, dated as of November 5, 2004, by Total S.A. in favor of Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 10.3 to Cheniere Energy, Inc.’s Quarterly Report on Form 10-Q (SEC File No. 001-16383), filed on November 15, 2004)
10.4	Amendment of LNG Terminal Use Agreement, dated January 24, 2005, by and between Total LNG USA, Inc. and Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 10.40 to Cheniere Energy, Inc.’s Annual Report on Form 10-K (SEC File No. 001-16383), filed on March 10, 2005)
10.5	Amendment of LNG Terminal Use Agreement, dated June 15, 2010, by and between Total Gas & Power North America, Inc. and Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 10.2 to Cheniere Energy, Inc.’s Quarterly Report on Form 10-Q (SEC File No. 001-16383), filed on August 6, 2010)
10.6	Letter Agreement, dated September 11, 2012, between Total Gas & Power North America, Inc. and Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 10.1 to Cheniere Energy Partners, L.P.’s Quarterly Report on Form 10-Q (SEC File No. 001-33366), filed on November 2, 2012)
10.7	LNG Terminal Use Agreement, dated November 8, 2004, between Chevron U.S.A. Inc. and Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 10.4 to Cheniere Energy, Inc.’s Quarterly Report on Form 10-Q (SEC File No. 001-16383), filed on November 15, 2004)
10.8	Omnibus Agreement, dated November 8, 2004, between Chevron U.S.A., Inc. and Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 10.5 to Cheniere Energy, Inc.’s Quarterly Report on Form 10-Q (SEC File No. 001-16383), filed on November 15, 2004)
10.9	Amendment to LNG Terminal Use Agreement, dated December 1, 2005, by and between Chevron U.S.A. Inc. and Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 10.28 to Sabine Pass LNG, L.P.’s Registration Statement on Form S-4 (SEC File No. 333-138916), filed on November 22, 2006)
10.10	Guaranty Agreement, dated as of December 15, 2004, from ChevronTexaco Corporation to Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 10.12 to Sabine Pass LNG, L.P.’s Registration Statement on Form S-4 (SEC File No. 333-138916), filed on November 22, 2006)
10.11	Amendment of LNG Terminal Use Agreement, dated June 16, 2010, by and between Chevron U.S.A. Inc. and Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 10.3 to Cheniere Energy, Inc.’s Quarterly Report on Form 10-Q (SEC File No. 001-16383), filed on August 6, 2010)
10.12	Second Amended and Restated Terminal Use Agreement, dated as of July 31, 2012, between Sabine Pass LNG, L.P. and Sabine Pass Liquefaction, LLC (Incorporated by reference to Exhibit 10.1 to Sabine Pass LNG, L.P.’s Current Report on Form 8-K (SEC File No. 333-138916), filed on August 6, 2012)
10.13	Guarantee Agreement, dated as of July 31, 2012, by Cheniere Energy Partners, L.P. in favor of Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 10.1 to Sabine Pass LNG, L.P.’s Current Report on Form 8-K (SEC File No. 333-138916), filed on August 6, 2012)
10.14	Letter Agreement, dated May 28, 2013, by and between Sabine Pass Liquefaction, LLC and Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 10.1 to Sabine Pass LNG, L.P.’s Quarterly Report on Form 10-Q (SEC File No. 333-138916), filed on August 2, 2013)
10.15	Collateral Trust Agreement, dated November 9, 2006, by and among Sabine Pass LNG, L.P., The Bank of New York, as collateral trustee, Sabine Pass LNG-GP, Inc. and Sabine Pass LNG-LP, LLC (Incorporated by reference to Exhibit 10.1 to Cheniere Energy, Inc.’s Current Report on Form 8-K (SEC File No. 001-16383), filed on November 16, 2006)

47

Exhibit No.	Description
10.16	Amended and Restated Parity Lien Security Agreement, dated November 9, 2006, by and between Sabine Pass LNG, L.P. and The Bank of New York, as collateral trustee (Incorporated by reference to Exhibit 10.2 to Cheniere Energy, Inc.’s Current Report on Form 8-K (SEC File No. 001-16383), filed on November 16, 2006)
10.17	Third Amended and Restated Multiple Indebtedness Mortgage, Assignment of Rents and Leases and Security Agreement, dated November 9, 2006, between Sabine Pass LNG, L.P. and The Bank of New York, as collateral trustee (Incorporated by reference to Exhibit 10.3 to Cheniere Energy, Inc.’s Current Report on Form 8-K (SEC File No. 001-16383), filed on November 16, 2006)
10.18	Amended and Restated Parity Lien Pledge Agreement, dated November 9, 2006, by and among Sabine Pass LNG, L.P., Sabine Pass LNG-GP, Inc., Sabine Pass LNG-LP, LLC and The Bank of New York, as collateral trustee (Incorporated by reference to Exhibit 10.4 to Cheniere Energy, Inc.’s Current Report on Form 8-K (SEC File No. 001-16383), filed on November 16, 2006)
10.19	Security Deposit Agreement, dated November 9, 2006, by and among Sabine Pass LNG, L.P., The Bank of New York, as collateral trustee, and The Bank of New York, as depositary agent (Incorporated by reference to Exhibit 10.5 to Cheniere Energy, Inc.’s Current Report on Form 8-K (SEC File No. 001-16383), filed on November 16, 2006)
10.20	Additional Secured Debt Designation, dated September 15, 2008, executed by Sabine Pass LNG, L.P. and acknowledged by The Bank of New York Mellon, as collateral trustee (Incorporated by reference to Exhibit 10.1 to the Sabine Pass LNG, L.P.’s Current Report on Form 8-K (SEC File No. 333-138916), filed on September 15, 2008)
10.21	Cooperative Endeavor Agreement & Payment in Lieu of Tax Agreement, dated October 23, 2007 (amending the Amended and Restated Terminal Use Agreement, dated November 9, 2006, by and between Cheniere Marketing, Inc. and Sabine Pass LNG, L.P.) (Incorporated by reference to Exhibit 10.7 to Cheniere Energy, Inc.’s Quarterly Report on Form 10-Q (SEC File No. 001-16383), filed on November 6, 2007)
10.22	LNG Lease Agreement, dated June 24, 2008, between Cheniere Marketing, Inc. and Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 10.7 to Cheniere Energy, Inc.’s Quarterly Report on Form 10-Q (SEC File No. 001-16383), filed on August 11, 2008)
10.23	Amended and Restated Operation and Maintenance Agreement (Sabine Pass LNG Facilities), dated as of August 9, 2012, by and among Cheniere LNG O&M Services, LLC, Cheniere Energy Partners GP, LLC and Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 10.5 to Cheniere Energy Partners, L.P.’s Quarterly Report on Form 10-Q (SEC File No. 001-33366), filed on November 2, 2012)
10.24	Amended and Restated Management Services Agreement, dated as of August 9, 2012, by and between Cheniere LNG Terminals, LLC and Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 10.6 to Cheniere Energy Partners, L.P.’s Quarterly Report on Form 10-Q (SEC File No. 001-33366), filed on November 2, 2012)
10.25	Assignment and Assumption Agreement (Sabine Pass LNG O&M Agreement), dated as of November 20, 2013, by and between Cheniere Energy Partners GP, LLC and Cheniere Energy Investments, LLC (Incorporated by reference to Exhibit 10.75 to Cheniere Energy Partners LP Holdings, LLC’s Registration Statement on Form S-1 (SEC File No. 333-191298), filed on December 2, 2013)
21.1*	List of subsidiaries of Sabine Pass LNG, L.P.
31.1*	Certification by Chief Executive Officer required by Rule 13a-14(a) and Rule 15d-14(a) under the Exchange Act
31.2*	Certification by Chief Financial Officer required by Rule 13a-14(a) and Rule 15d-14(a) under the Exchange Act
32.1**	Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**	Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*	XBRL Instance Document
101.SHC*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

*	Filed herewith
**	Furnished herewith

48

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SABINE PASS LNG, L.P.
By:	Sabine Pass LNG-GP, LLC,
	Its general partner
By:	/s/    Charif Souki
	Charif Souki Chief Executive Officer
Date:	February 19, 2015

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the general partner of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/    Charif Souki	Chief Executive Officer and Manager  (Principal Executive Officer)	February 19, 2015
Charif Souki
/s/    R. Keith Teague	President (Principal Operating Officer)	February 19, 2015
R. Keith Teague
/s/    Michael J. Wortley	Chief Financial Officer (Principal Financial Officer)	February 19, 2015
Michael J. Wortley
/s/    Leonard Travis	Chief Accounting Officer (Principal Accounting Officer)	February 19, 2015
Leonard Travis
/s/    Victor A. Duva	Manager	February 19, 2015
Victor A. Duva

49

EX-21.1

EXHIBIT 21.1

List of Subsidiaries or Other Related Entities of the Company

NameWhere Incorporated

Sabine Pass Tug Services, LLC                     Delaware

EX-31.1

Exhibit 31.1

CERTIFICATION BY CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(a) AND 15d-14(a) UNDER THE EXCHANGE ACT

I, Charif Souki, certify that:

1. I have reviewed this annual report on Form 10-K of Sabine Pass LNG, L.P.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 19, 2015

/s/ Charif Souki

Charif Souki

Chief Executive Officer of

Sabine Pass LNG-GP, LLC, the general partner of

Sabine Pass LNG, L.P.

EX-31.2

Exhibit 31.2

CERTIFICATION BY CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(a) AND 15d-14(a) UNDER THE EXCHANGE ACT

I, Michael J. Wortley, certify that:

1. I have reviewed this annual report on Form 10-K of Sabine Pass LNG, L.P.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 19, 2015

/s/ Michael J. Wortley

Michael J. Wortley

Chief Financial Officer of

Sabine Pass LNG-GP, LLC, the general partner of

Sabine Pass LNG, L.P.

EX-32.1

Exhibit 32.1

CERTIFICATION BY CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Sabine Pass LNG, L.P. (the “Partnership”) on Form 10-K for the year ended December 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Charif Souki, Chief Executive Officer of Sabine Pass LNG-GP, LLC, the general partner of the Partnership, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

Date: February 19, 2015

/s/ Charif Souki

Charif Souki

Chief Executive Officer of

Sabine Pass LNG-GP, LLC, the general partner of

Sabine Pass LNG, L.P.

EX-32.2

Exhibit 32.2

CERTIFICATION BY CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Sabine Pass LNG, L.P. (the “Partnership”) on Form 10-K for the year ended December 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael J. Wortley, Chief Financial Officer of Sabine Pass LNG-GP, LLC, the general partner of the Partnership, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

Date: February 19, 2015

/s/ Michael J. Wortley

Michael J. Wortley

Chief Financial Officer of

Sabine Pass LNG-GP, LLC, the general partner of

Sabine Pass LNG, L.P.

XML

Related Party Transactions - Terminal Use Agreement (Details) (Sabine Pass Liquefaction [Member], LNG Terminal Capacity Agreements [Member], USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014
Related Party Transaction [Line Items]
Regasification capacity, in Bcf/d	2.0
Related Party Transaction, Committed Annual Fee	$ 250
Related Party Agreement Term	20 years
Maximum [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Percentage Of Committed Monthly Payment	100.00%
Minimum [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Percentage Of Committed Monthly Payment	0.00%

XML

Quarterly Financial Data (unaudited) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Quarterly Financial Information Disclosure [Abstract]
Revenues	$ 129,932	$ 131,001	$ 131,040	$ 130,734	$ 130,340	$ 130,919	$ 130,413	$ 129,880	$ 522,707	$ 521,552	$ 523,884
Income from operations	102,979	104,295	105,890	104,295	102,115	102,203	99,210	101,576	417,459	405,104	427,368
Net income	$ 62,858	$ 64,070	$ 65,690	$ 64,271	$ 62,071	$ 61,812	$ 58,556	$ 61,854	$ 256,889	$ 244,293	$ 212,805

XML

Commitments and Contingencies Disclosure (Details) (USD $)	12 Months Ended
	Dec. 31, 2014
Commitments and Contingencies [Line Items]
Loss Contingency, Pending Claims, Number	0
Tax Sharing Agreement [Member] | Cheniere Energy, Inc. [Member]
Commitments and Contingencies [Line Items]
Income Taxes Paid, Net	$ 0

XML

Derivative Instruments - Derivatives Gross Presentation on Consolidated Balance Sheets (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
LNG Inventory Derivatives [Member]
Derivative [Line Items]
Derivative Asset, Gross Amounts Recognized	$ 145
Derivative Asset, Gross Amounts Offset in our Balance Sheets	132
Net Amounts Presented in our Balance Sheets	13
Derivative Asset, Gross Amount Not Offset in our Balance Sheets - Derivative Instrument	0
Gross Amount Not Offset in our Balance Sheets - Cash Collateral Received (Paid)	0
Derivative Asset, Net Amount	13
Fuel Derivatives [Member]
Derivative [Line Items]
Derivative Asset, Gross Amounts Recognized		27
Derivative Asset, Gross Amounts Offset in our Balance Sheets		0
Net Amounts Presented in our Balance Sheets		27
Derivative Asset, Gross Amount Not Offset in our Balance Sheets - Derivative Instrument		0
Gross Amount Not Offset in our Balance Sheets - Cash Collateral Received (Paid)		0
Derivative Asset, Net Amount		$ 27

XML

Quarterly Financial Data (unaudited) (Tables)

12 Months Ended

Dec. 31, 2014

Quarterly Financial Information Disclosure [Abstract]

Schedule of Quarterly Financial Information

Quarterly Financial Data—(in thousands)

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Year ended December 31, 2014:
Revenues	$	130,734	$	131,040	$	131,001	$	129,932
Income from operations	104,295		105,890		104,295		102,979
Net income	64,271		65,690		64,070		62,858
Year ended December 31, 2013:
Revenues	$	129,880	$	130,413	$	130,919	$	130,340
Income from operations	101,576		99,210		102,203		102,115
Net income	61,854		58,556		61,812		62,071

XML

Related Party Transactions - Contracts for Sale and Purchase of Natural Gas and LNG (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Related Party Transaction [Line Items]
Revenues—affiliate	$ 256,760,000	$ 256,399,000	$ 255,611,000
Cheniere Marketing, LLC [Member] | Contracts for Sale and Purchase of Natural Gas [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Purchases from Related Party	3,300,000	3,300,000	2,800,000
Revenues—affiliate	$ 700,000	$ 14,700,000	$ 2,800,000

XML

Long-Term Debt - Narrative (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Debt Instrument [Line Items]
Distributions to limited partner	$ 346,901,000	$ 348,938,000	$ 333,453,000
2016 Senior Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount	1,665,500,000
Debt Instrument, Interest Rate, Stated Percentage	7.50%
Debt Instrument, Redemption Price, Percentage	100.00%
Percentage of debt principal additional for redemption	1.00%
Discount rate over Treasury Rate to calculate fair value ratio of redemption price	0.50%
2020 Senior Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 420,000,000
Debt Instrument, Interest Rate, Stated Percentage	6.50%
Debt redemption period from equity offering closing date	180 days
Minimum [Member] | 2020 Senior Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Original Principal Remaining Requirement of Redemption, Percentage	65.00%
Debt Instrument, Redemption, Period One [Member] | 2020 Senior Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Redemption Price, Percentage	106.50%
Debt Instrument, Redemption, Period One [Member] | Maximum [Member] | 2020 Senior Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Redemption Price, Percentage of Principal Amount Redeemed	35.00%

XML

Supplemental Cash Flow Information (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Supplemental Cash Flow Information [Abstract]
Cash paid during the year for interest, net of amounts capitalized	$ 152,213	$ 153,350	$ 159,998

XML

Property Plant and Equipment (Notes)

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of LNG terminal costs and fixed assets, as follows (in thousands): 

	December 31,
	2014			2013
LNG terminal costs
LNG terminal	$	1,643,018		$	1,642,007
LNG terminal construction-in-process	27			9
LNG site and related costs, net	142			149
Accumulated depreciation	(250,954		)	(208,729		)
Total LNG terminal costs, net	1,392,233			1,433,436
Fixed assets
Machinery and equipment	1,169			1,189
Computer and office equipment	424			424
Vehicles	654			599
Other	697			697
Accumulated depreciation	(2,734		)	(2,523		)
Total fixed assets, net	210			386
Property, plant and equipment, net	$	1,392,443		$	1,433,822

Our LNG terminal is depreciated using the straight-line depreciation method applied to groups of LNG terminal assets with varying useful lives. The identifiable components of our LNG terminal with similar estimated useful lives have a depreciable range between 15 and 50 years, as follows:

Components	Useful life (yrs)
LNG storage tanks	50
Marine berth, electrical, facility and roads	35
Regasification processing equipment (recondensers, vaporization and vents)	30
Sendout pumps	20
Others	15-30

XML

Related Party Transactions - Other Agreements (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Related Party Transaction [Line Items]
Revenues—affiliate	$ 256,760,000	$ 256,399,000	$ 255,611,000
Operating and maintenance expense, net—affiliate	16,830,000	25,172,000	16,032,000
Cheniere Marketing, LLC [Member] | LNG Terminal Export Agreement [Member]
Related Party Transaction [Line Items]
Revenues—affiliate	0	0	300,000
Cheniere Energy Investments, LLC [Member] | Pipeline Compressor Agreement [Member]
Related Party Transaction [Line Items]
Revenues—affiliate	0	600,000	100,000
Sabine Pass Liquefaction [Member]
Related Party Transaction [Line Items]
Property, Plant and Equipment, Transfers and Changes	700,000
Sabine Pass Liquefaction [Member] | LNG Site Sublease Agreement [Member]
Related Party Transaction [Line Items]
Annual sublease income	500,000
Number Of Available Lease Extensions	5
Lessee Leasing Arrangements, Operating Leases, Renewal Term	10 years
Review Period for Inflation Adjustment	5 years
Operating and maintenance expense, net—affiliate	500,000	500,000	300,000
Sabine Pass Tug Services, LLC [Member] | Wholly owned subsidiary of Cheniere [Member] | Tug Boat Lease Sharing Agreement [Member]
Related Party Transaction [Line Items]
Revenues—affiliate	$ 2,800,000	$ 2,800,000	$ 2,800,000

XML

Property Plant and Equipment (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Property, Plant and Equipment [Line Items]
Property, plant and equipment, net	1,392,443	$ 1,433,822
LNG terminal costs [Member]
Property, Plant and Equipment [Line Items]
Accumulated depreciation	(250,954)	(208,729)
Property, plant and equipment, net	1,392,233	1,433,436
LNG terminal costs [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	15 years
LNG terminal costs [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	50 years
LNG terminal [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	1,643,018	1,642,007
LNG terminal construction-in-process [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	27	9
LNG site and related costs, net [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	142	149
Fixed assets [Member]
Property, Plant and Equipment [Line Items]
Accumulated depreciation	(2,734)	(2,523)
Property, plant and equipment, net	210	386
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	1,169	1,189
Computer and Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	424	424
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	654	599
Other [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	697	$ 697
LNG storage tanks [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	50 years
Marine berth, electrical, facility and roads [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	35 years
Regasification processing equipment (recondensers, vaporization, and vents) [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	30 years
Sendout pumps [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	20 years
Other [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	15 years
Other [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	30 years

XML

Restricted Cash and Cash Equivalents (Details) (USD $)	12 Months Ended
	Dec. 31, 2014 Rate	Dec. 31, 2013
Restricted Cash and Cash Equivalents Items [Line Items]
Long-term Debt, Gross	2,085,500,000	$ 2,085,500,000
Current restricted cash and cash equivalents	14,959,000	14,959,000
Non-current restricted cash and cash equivalents	76,106,000	76,106,000
Senior Notes [Member]
Restricted Cash and Cash Equivalents Items [Line Items]
Debt instrument fixed charge coverage ratio	2
2016 Senior Notes [Member]
Restricted Cash and Cash Equivalents Items [Line Items]
Long-term Debt, Gross	1,665,500,000	1,665,500,000
Debt Instrument, Interest Rate, Stated Percentage	7.50%
2020 Senior Notes [Member]
Restricted Cash and Cash Equivalents Items [Line Items]
Long-term Debt, Gross	420,000,000	$ 420,000,000
Debt Instrument, Interest Rate, Stated Percentage	6.50%

XML

Leases - Narrative (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014 lease item acre	Dec. 31, 2013	Dec. 31, 2012	Feb. 28, 2005 acre
Operating Leased Assets [Line Items]
Operating Leases, Rent Expense	$ 9.2	$ 8.8	$ 9.4
Land [Member]
Operating Leased Assets [Line Items]
Number of Leases	3
Lessee Leasing Arrangements, Operating Leases, Term of Contract	30 years
Number Of Available Lease Extensions	6
Lessee Leasing Arrangements, Operating Leases, Renewal Term	10 years
Number of Amended Land Leases	2
Acreage under lease	883			853
Review Period for Inflation Adjustment	5 years
Operating Leases, Rent Expense, Net	$ 1.8	$ 1.8	$ 1.5
Tug Boat [Member]
Operating Leased Assets [Line Items]
Lessee Leasing Arrangements, Operating Leases, Term of Contract	10 years
Number Of Available Lease Extensions	2
Lessee Leasing Arrangements, Operating Leases, Renewal Term	5 years

XML

Derivative Instruments - Fair Value of Derivative Assets and Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
LNG Inventory Derivatives [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives Assets, at Fair Value, Net	$ 145	$ 0
LNG Inventory Derivatives [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives Assets, at Fair Value, Net	0	0
LNG Inventory Derivatives [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives Assets, at Fair Value, Net	145	0
LNG Inventory Derivatives [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives Assets, at Fair Value, Net	0	0
Fuel Derivatives [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives Assets, at Fair Value, Net	0	27
Fuel Derivatives [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives Assets, at Fair Value, Net	0	0
Fuel Derivatives [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives Assets, at Fair Value, Net	0	27
Fuel Derivatives [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives Assets, at Fair Value, Net	$ 0	$ 0

XML

Derivative Instruments - Fair Value by Balance Sheet Location (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
LNG Inventory Derivatives [Member]
Derivatives, Fair Value [Line Items]
Derivative, Collateral Deposit (Call), Right to Reclaim Cash	$ 0
LNG Inventory Derivatives [Member] | Prepaid Expenses And Other Current Assets [Member]
Derivatives, Fair Value [Line Items]
Derivatives Asset (Liability), at Fair Value, Net	145	0
Fuel Derivatives [Member]
Derivatives, Fair Value [Line Items]
Derivative, Collateral Deposit (Call), Right to Reclaim Cash		0
Fuel Derivatives [Member] | Prepaid Expenses And Other Current Assets [Member]
Derivatives, Fair Value [Line Items]
Derivative, Collateral Deposit (Call), Right to Reclaim Cash	(100)	700
Derivatives Asset (Liability), at Fair Value, Net	$ 0	$ 27

XML

Restricted Cash and Cash Equivalents (Notes)

12 Months Ended

Dec. 31, 2014

Cash and Cash Equivalents [Abstract]

Restricted Cash and Cash Equivalents

RESTRICTED CASH AND CASH EQUIVALENTS

Restricted cash and cash equivalents consist of funds that are contractually restricted as to usage or withdrawal, are controlled by a collateral trustee and have been presented separately from cash and cash equivalents on our Consolidated Balance Sheets.

We have consummated private offerings of an aggregate principal amount of $1,665.5 million, before discount, of 7.50% Senior Secured Notes due 2016 (the “2016 Senior Notes”) and $420.0 million of 6.50% Senior Secured Notes due 2020 (the “2020 Senior Notes”) See Note 7—Long-Term Debt. Collectively, the 2016 Senior Notes and the 2020 Senior Notes are referred to as the “Senior Notes.” Under the Senior Notes Indentures, except for permitted tax distributions, we may not make distributions until certain conditions are satisfied, including: (i) there must be on deposit in an interest payment account an amount equal to one-sixth of the semi-annual interest payment multiplied by the number of elapsed months since the last semi-annual interest payment, and (ii) there must be on deposit in a permanent debt service reserve fund an amount equal to one semi-annual interest payment. Distributions are permitted only after satisfying the foregoing funding requirements, a fixed charge coverage ratio test of 2:1 and other conditions specified in the Sabine Pass LNG Indentures.

As of both December 31, 2014 and 2013, we classified $15.0 million as current restricted cash and cash equivalents for the payment of current interest due. As of both December 31, 2014 and 2013, we classified the permanent debt service reserve fund of $76.1 million as non-current restricted cash and cash equivalents.

XML

Derivative Instruments - Derivative Instruments, Gain (Loss) (Details) (Derivative gain (loss), net [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
LNG Inventory Derivatives [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative, Gain (Loss) on Derivative, Net	$ 247		$ 0		$ 0
Fuel Derivatives [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative, Gain (Loss) on Derivative, Net	$ 281	[1]	$ 182	[1]	$ (622)	[1]

[1] Excludes settlements of our Fuel Derivatives with Cheniere Marketing for which we have elected the normal purchase normal sale exception from derivative accounting and have recorded as operating and maintenance expense.

XML

Related Party Transactions - Services Agreements (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Related Party Transaction [Line Items]
Advances to affiliate	$ 1,868,000	$ 4,025,000
General and administrative expense—affiliate	12,499,000	13,264,000	10,790,000
Operating and maintenance expense, net—affiliate	16,830,000	25,172,000	16,032,000
Service Agreements [Member]
Related Party Transaction [Line Items]
Advances to affiliate	1,868,000	4,025,000
General and administrative expense—affiliate	12,500,000	13,300,000	10,800,000
Operating and maintenance expense, net—affiliate	17,300,000	25,200,000	16,000,000
Cheniere Energy Investments, LLC [Member] | Operation and Maintenance Agreement [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Committed Monthly Fee	130,000
Related Party Transaction, Bonus Percentage Entitled Upon Meeting Certain Criteria	50.00%
Cheniere LNG Terminals, LLC [Member] | Management Services Agreement [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Committed Monthly Fee	$ 520,000

XML

Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Current assets
Cash and cash equivalents	$ 5,460	$ 14,994
Restricted cash and cash equivalents	14,959	14,959
Accounts receivable—affiliate	1,055	2,615
Advances to affiliate	1,868	4,025
LNG inventory	1,987	10,430
Prepaid expenses and other	4,301	5,149
Total current assets	29,630	52,172
Non-current restricted cash and cash equivalents	76,106	76,106
Property, plant and equipment, net	1,392,443	1,433,822
Debt issuance costs, net	12,643	16,871
Other non-current assets	19,802	17,239
Total assets	1,530,624	1,596,210
Current liabilities
Accounts payable	408	1,420
Accrued liabilities	16,036	21,153
Due to affiliates	2,266	18,721
Deferred revenue	26,655	26,593
Deferred revenue—affiliate	21,839	21,786
Total current liabilities	67,204	89,673
Long-term debt, net of discount	2,076,502	2,071,807
Non-current deferred revenue	13,500	17,500
Non-current deferred revenue—affiliate	19,626	17,173
Other non-current liabilities	263	276
Commitments and contingencies
Partners’ deficit	(646,471)	(600,219)
Total liabilities and partners’ deficit	$ 1,530,624	$ 1,596,210

XML

Leases - Schedule of Future Minimum Rental Payments Due (Details) (USD $)	Dec. 31, 2014
Operating Leased Assets [Line Items]
2015	$ 9,533,000	[1],[2]
2016	9,645,000	[1],[2]
2017	9,764,000	[1],[2]
2018	2,397,000	[1],[2]
2019	1,727,000	[1],[2]
Thereafter	130,714,000	[1],[2],[3]
Total minimum payments required	163,780,000	[1],[2]
Land [Member] | Sabine Pass Liquefaction [Member]
Operating Leased Assets [Line Items]
Operating Leases, Future Minimum Payments Due, Future Minimum Sublease Rentals	33,800,000
Tug Boat Lease Sharing Agreement [Member]
Operating Leased Assets [Line Items]
Operating Leases, Future Minimum Payments Due, Future Minimum Sublease Rentals	$ 24,400,000

[1] Lease payments for our land leases represent our land lease payment obligations and do not take into account the $33.8 million sublease payments we will receive from Sabine Pass Liquefaction, as discussed in

[2] Lease payments for our tug boat lease represent our lease payment obligation and do not take into account the $24.4 million sublease payments we will receive from our customers that effectively offset these lease payment obligations, as discussed below.

[3] Includes certain lease option renewals as they are reasonably assured.

XML

Organization and Nature of Operations (Notes)

12 Months Ended

Dec. 31, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Nature of Operations

ORGANIZATION AND NATURE OF OPERATIONS

We are a Houston-based Delaware limited partnership formed by Cheniere Energy, Inc. (“Cheniere”) to own, develop and operate an LNG receiving and regasification terminal in western Cameron Parish, Louisiana, less than four miles from the Gulf Coast on the Sabine Pass deepwater ship channel (our “LNG terminal”). We were formed with one general partner, Sabine Pass LNG-GP, LLC (“Sabine Pass GP”), and one limited partner, Sabine Pass LNG-LP, LLC (“Sabine Pass LP”), both indirect subsidiaries of Cheniere. Cheniere has an 80.1% ownership in Cheniere Energy Partners LP Holdings, LLC, which in turn has a 55.9% ownership interest in Cheniere Energy Partners, L.P. (“Cheniere Partners”). Cheniere Partners is the 100% parent of Cheniere Energy Investments, LLC (“Cheniere Investments”), which in turn is the 100% parent of Sabine Pass GP and Sabine Pass LP and, indirectly, us.

Our LNG terminal includes existing infrastructure of five LNG storage tanks with capacity of approximately 16.9 Bcfe, two docks that can accommodate vessels with nominal capacity of up to 266,000 cubic meters and vaporizers with regasification capacity of approximately 4.0 Bcf/d.

Unless the context requires otherwise, references to “Sabine Pass LNG,” “we,” “us” and “our” refer to Sabine Pass LNG, L.P. and its wholly owned subsidiary.

XML

Long-Term Debt - Schedule of Long-Term Debt Instruments (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Debt Instrument [Line Items]
Long-term Debt, Gross	$ 2,085,500,000	$ 2,085,500,000
Total long-term debt, net of discount	2,076,502,000	2,071,807,000
2016 Senior Notes [Member]
Debt Instrument [Line Items]
Long-term Debt, Gross	1,665,500,000	1,665,500,000
Long-term debt discount	(8,998,000)	(13,693,000)
2020 Senior Notes [Member]
Debt Instrument [Line Items]
Long-term Debt, Gross	$ 420,000,000	$ 420,000,000

XML

Long-Term Debt (Tables)

12 Months Ended

Dec. 31, 2014

Debt Disclosure [Abstract]

Schedule of Long-Term Debt Instruments

As of December 31, 2014 and 2013, our long-term debt consisted of the following (in thousands):

	December 31,
	2014			2013
Long-term debt
2016 Senior Notes	$	1,665,500		$	1,665,500
2020 Senior Notes	420,000			420,000
Total long-term debt	2,085,500			2,085,500
Long-term debt discount
2016 Senior Notes	(8,998		)	(13,693		)
Total long-term debt, net	$	2,076,502		$	2,071,807

Schedule of Maturities of Long-term Debt

Below is a schedule of future principal payments that we are obligated to make on our outstanding debt at December 31, 2014 (in thousands): 

	Payments Due for the Years Ended December 31,
	Total		2015		2016 to 2017		2018 to 2019		Thereafter
Debt:
2016 Notes	$	1,665,500	$	—	$	1,665,500	$	—	$	—
2020 Notes	420,000		—		—		—		420,000
Debt	$	2,085,500	$	—	$	1,665,500	$	—	$	420,000

Schedule of Carrying Values and Estimated Fair Values of Debt Instruments

The following table (in thousands) shows the carrying amount and estimated fair value of our long-term debt:

	December 31, 2014				December 31, 2013
	Carrying Amount		Estimated Fair Value (1)		Carrying Amount		Estimated Fair Value (1)
2016 Senior Notes, net of discount	$	1,656,502	$	1,718,621	$	1,651,807	$	1,868,607
2020 Senior Notes	420,000		428,400		420,000		432,600

(1) The Level 2 estimated fair value was based on quotations obtained from broker-dealers who make markets in these and similar instruments based on the closing trading prices on December 31, 2014 and 2013, as applicable.

XML

Long-Term Debt - Schedule of Maturities of Long-Term Debt (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Debt Instrument [Line Items]
Total	$ 2,085,500,000	$ 2,085,500,000
2015	0
2016 to 2017	1,665,500,000
2018 to 2019	0
Thereafter	420,000,000
2016 Senior Notes [Member]
Debt Instrument [Line Items]
Total	1,665,500,000	1,665,500,000
2015	0
2016 to 2017	1,665,500,000
2018 to 2019	0
Thereafter	0
2020 Senior Notes [Member]
Debt Instrument [Line Items]
Total	420,000,000	420,000,000
2015	0
2016 to 2017	0
2018 to 2019	0
Thereafter	$ 420,000,000

XML

Supplemental Cash Flow Information (Tables)

12 Months Ended

Dec. 31, 2014

Supplemental Cash Flow Information [Abstract]

Schedule of Cash Flow, Supplemental Disclosures

The following table provides supplemental disclosure of cash flow information (in thousands):

	Year Ended December 31,
	2014		2013		2012
Cash paid during the year for interest, net of amounts capitalized	$	152,213	$	153,350	$	159,998

XML

Summary of Significant Accounting Policies (Notes)

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Our Consolidated Financial Statements were prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). Our Consolidated Financial Statements include the accounts of Sabine Pass LNG and its wholly owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.

Certain reclassifications have been made to conform prior period information to the current presentation.  The reclassifications had no effect on our overall consolidated financial position, results of operations or cash flows.

Use of Estimates

The preparation of Consolidated Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the accompanying notes. Management evaluates its estimates and related assumptions regularly, including those related to the value of property, plant and equipment, collectability of accounts receivable, derivative instruments, asset retirement obligations (“AROs”) and fair value measurements. Changes in facts and circumstances or additional information may result in revised estimates, and actual results may differ from these estimates.

Fair Value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Hierarchy Levels 1, 2 and 3 are terms for the priority of inputs to valuation techniques used to measure fair value. Hierarchy Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Hierarchy Level 2 inputs are inputs other than quoted prices included within Level 1 that are directly or indirectly observable for the asset or liability. Hierarchy Level 3 inputs are inputs that are not observable in the market.

In determining fair value, we use observable market data when available, or models that incorporate observable market data. In addition to market information, we incorporate transaction-specific details that, in management’s judgment, market participants would take into account in measuring fair value. We maximize the use of observable inputs and minimize our use of unobservable inputs in arriving at fair value estimates.

Recurring fair-value measurements are performed for commodity derivatives as disclosed in Note 5—Derivative Instruments. The carrying amount of cash and cash equivalents, restricted cash and cash equivalents, accounts receivable and accounts payable reported on the Consolidated Balance Sheets approximates fair value. The fair value of debt is the estimated amount we would have to pay to repurchase our debt, including any premium or discount attributable to the difference between the stated interest rate and market interest rate at each balance sheet date. Debt fair values, as disclosed in Note 7—Long-Term Debt, are based on quoted market prices for identical instruments, if available, or based on valuations of similar debt instruments. Non-financial assets and liabilities initially measured at fair value include certain assets and liabilities acquired in a business combination, intangible assets and AROs.

Revenue Recognition

LNG regasification capacity reservation fees are recognized as revenue over the term of the TUAs. Advance capacity reservation fees are initially deferred and amortized over a 10-year period as a reduction of a customer’s regasification capacity reservation fees payable under its TUA.  For a discussion of revenue from related parties, please read Note 8—Related Party Transactions.  Under each of these TUAs, Sabine Pass LNG is entitled to retain 2% of LNG delivered for each customer’s account at our LNG terminal, which is recognized as revenue as we perform the services set forth in each customer’s TUA.

Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Accounting for LNG Activities

Generally, we begin capitalizing the costs of our LNG terminal projects once the individual project meets the following criteria: (i) regulatory approval has been received, (ii) financing for the project is available and (iii) management has committed to commence construction. Prior to meeting these criteria, most of the costs associated with a project are expensed as incurred. These costs primarily include professional fees associated with front-end engineering and design work, costs of securing necessary regulatory approvals and other preliminary investigation and development activities related to our LNG terminal projects.

Generally, costs that are capitalized prior to a project meeting the criteria otherwise necessary for capitalization include: land and lease option costs that are capitalized as property, plant and equipment and certain permits that are capitalized as intangible LNG assets. The costs of lease options are amortized over the life of the lease once obtained. If no lease is obtained, the costs are expensed.

We capitalize interest and other related debt costs during the construction period of our LNG terminal. Upon commencement of operations, capitalized interest, as a component of the total cost, will be amortized over the estimated useful life of the asset.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Expenditures for construction activities, major renewals and betterments that extend the useful life of an asset are capitalized, while expenditures for maintenance and repairs and general and administrative activities are charged to expense as incurred. Interest costs incurred on debt obtained for the construction of property, plant and equipment are capitalized as construction-in-process over the construction period or related debt term, whichever is shorter. We depreciate our property, plant and equipment using the straight-line depreciation method. Upon retirement or other disposition of property, plant and equipment, the cost and related accumulated depreciation are removed from the account, and the resulting gains or losses are recorded in other operating costs and expenses.

Management tests property, plant and equipment for impairment whenever events or changes in circumstances have indicated that the carrying amount of property, plant and equipment might not be recoverable. In performing this test, an undiscounted cash flow analysis is performed at the lowest level for which identifiable cash flows are independent of cash flows from other assets. If the sum of the undiscounted future net cash flows is less than the net book value of the property, an impairment loss is recognized for the excess, if any, of the property’s net book value over its estimated fair value. We have recorded no impairments related to property, plant and equipment for 2014, 2013 or 2012. 

Derivative Instruments

We use derivative instruments to hedge our exposure to cash-flow variability from commodity price risk.

Derivative instruments are recorded at fair value and included in our Consolidated Balance Sheets as assets or liabilities depending on the derivative position and the expected timing of settlement, unless they satisfy criteria, and we elect, the normal purchases and sales exception. When we have the contractual right and intend to net settle, derivative assets and liabilities are reported on a net basis.

Changes in the fair value of our derivative instruments are recorded in current earnings, unless we elect to apply hedge accounting and meet specified criteria, including completing contemporaneous hedge documentation. We did not have any derivative instruments designated as cash flow hedges as of December 31, 2014 and 2013.

See Note 5—Derivative Instruments of our Notes to Consolidated Financial Statements for additional details about our derivative instruments.

Concentration of Credit Risk

Financial instruments that potentially subject us to a concentration of credit risk consist principally of cash and cash equivalents and restricted cash. We maintain cash balances at financial institutions, which may at times be in excess of federally insured levels. We have not incurred losses related to these balances to date.

The use of derivative instruments exposes us to counterparty credit risk, or the risk that a counterparty will be unable to meet its commitments. Our commodity derivative transactions are executed through over-the-counter contracts which are subject to nominal credit risk as these transactions are settled on a daily margin basis with investment grade financial institutions. Collateral deposited for such contracts is recorded as an other current asset and not netted within the derivative fair value. We monitor counterparty creditworthiness on an ongoing basis; however, we cannot predict sudden changes in counterparties’ creditworthiness. In addition, even if such changes are not sudden, we may be limited in our ability to mitigate an increase in counterparty credit risk. Should one of these counterparties not perform, we may not realize the benefit of some of our derivative instruments.

We have entered into certain long-term TUAs with unaffiliated third parties for regasification capacity at our LNG terminal. We are dependent on the respective counterparties’ creditworthiness and their willingness to perform under their respective TUAs. We have mitigated this credit risk by securing TUAs for a significant portion of our regasification capacity with creditworthy third-party customers with a minimum Standard & Poor’s rating of AA.

Long-Term Debt

Our debt consists of long-term secured debt securities with banks and other lenders.  Debt issuances are placed directly by us or through securities dealers or underwriters and are held by institutional and retail investors.  

Debt is recorded on our balance sheet at par value adjusted for unamortized discount or premium. Discounts, premiums and costs directly related to the issuance of debt are amortized over the life of the debt and are recorded in interest expense, net using the effective interest method. Gains and losses on the extinguishment of debt are recorded in gains and losses on the extinguishment of debt on our Consolidated Statements of Income.

Debt issuance costs consist primarily of arrangement fees, professional fees, legal fees and printing costs. These costs are recorded as debt issuance costs on our Consolidated Balance Sheets and are being amortized to interest expense over the term of the related debt facility. Upon early retirement of debt or amendment to a debt agreement, certain fees are written off as loss on early extinguishment of debt.

Income Taxes

We are a disregarded entity for federal and state income tax purposes. Our taxable income or loss, which may vary substantially from the net income or loss reported on our Consolidated Statements of Operations, is able to be included in the federal income tax return of Cheniere Partners, a publicly traded partnership which indirectly owns us. Accordingly, no provision or liability for federal or state income taxes is included in the accompanying Consolidated Financial Statements.

At December 31, 2014, the tax basis of our assets and liabilities was $460.3 million less than the reported amounts of our assets and liabilities.

Pursuant to the indentures governing our long-term debt (the “Senior Notes Indentures”), we are permitted to make distributions (“Tax Distributions”) for any fiscal year or portion thereof in which we are a limited partnership, disregarded entity or other substantially similar pass-through entity for federal and state income tax purposes. The permitted Tax Distributions are equal to the tax that we would owe if we were a corporation subject to federal and state income tax that filed separate federal and state income tax returns, excluding the amounts covered by the State Tax Sharing Agreement discussed immediately below. The Tax Distributions are limited to the amount of federal and/or state income taxes paid by Cheniere to the appropriate taxing authorities and are payable by us within 30 days of the date that Cheniere is required to make federal or state income tax payments to the appropriate taxing authorities.

In November 2006, we and Cheniere entered into a state tax sharing agreement. Under this agreement, Cheniere has agreed to prepare and file all state and local tax returns which we and Cheniere are required to file on a combined basis and to timely pay the combined state and local tax liability. If Cheniere, in its sole discretion, demands payment, we will pay to Cheniere an amount equal to the state and local tax that we would be required to pay if our state and local tax liability were computed on a separate company basis. There have been no state and local taxes paid by Cheniere for which Cheniere could have demanded payment from us under this agreement; therefore, Cheniere has not demanded any such payments from us. The agreement is effective for tax returns due on or after January 1, 2008.

Asset Retirement Obligations

We recognize AROs for legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or normal use of the asset and for conditional AROs in which the timing or method of settlement are conditional on a future event that may or may not be within our control. The fair value of a liability for an ARO is recognized in the period in which it is incurred, if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset. This additional carrying amount is depreciated over the estimated useful life of the asset. Our recognition of AROs is described below.

Based on the real property lease agreements at our LNG terminal, at the expiration of the term of the leases, we are required to surrender the LNG terminal in good working order and repair, with normal wear and tear and casualty expected. Our property lease agreements at our LNG terminal have terms of up to 90 years including renewal options. We have determined that the cost to surrender our LNG terminal in good order and repair, with normal wear and tear and casualty expected, is zero. Therefore, we have not recorded an ARO associated with our LNG terminal.

XML

Consolidated Statements of Income (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Revenues
Revenues	$ 265,947	$ 265,153	$ 268,273
Revenues—affiliate	256,760	256,399	255,611
Total revenues	522,707	521,552	523,884
Operating costs and expenses
Operating and maintenance expense	31,306	32,724	25,399
Operating and maintenance expense, net—affiliate	16,830	25,172	16,032
Depreciation expense	42,465	42,444	42,431
General and administrative expense	2,148	2,844	1,864
General and administrative expense—affiliate	12,499	13,264	10,790
Total operating costs and expenses	105,248	116,448	96,516
Income from operations	417,459	405,104	427,368
Other income (expense)
Interest expense	(161,135)	(161,041)	(171,495)
Loss on early extinguishment of debt	0	0	(42,587)
Derivative gain (loss), net	529	182	(622)
Other income	36	48	141
Total other expense	(160,570)	(160,811)	(214,563)
Net income	$ 256,889	$ 244,293	$ 212,805

XML

Quarterly Financial Data (unaudited) (Notes)

12 Months Ended

Dec. 31, 2014

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Data

Quarterly Financial Data—(in thousands)

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Year ended December 31, 2014:
Revenues	$	130,734	$	131,040	$	131,001	$	129,932
Income from operations	104,295		105,890		104,295		102,979
Net income	64,271		65,690		64,070		62,858
Year ended December 31, 2013:
Revenues	$	129,880	$	130,413	$	130,919	$	130,340
Income from operations	101,576		99,210		102,203		102,115
Net income	61,854		58,556		61,812		62,071

XML

Document and Entity Information (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Jun. 30, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	Sabine Pass LNG, L.P.
Entity Central Index Key	0001379714
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Document Type	10-K
Document Period End Date	Dec. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Common Stock, Shares Outstanding	0
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float		$ 0

XML

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Basis of Presentation, Policy

Basis of Presentation

Our Consolidated Financial Statements were prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). Our Consolidated Financial Statements include the accounts of Sabine Pass LNG and its wholly owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.

Certain reclassifications have been made to conform prior period information to the current presentation.  The reclassifications had no effect on our overall consolidated financial position, results of operations or cash flows.

Use of Estimates, Policy

Use of Estimates

The preparation of Consolidated Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the accompanying notes. Management evaluates its estimates and related assumptions regularly, including those related to the value of property, plant and equipment, collectability of accounts receivable, derivative instruments, asset retirement obligations (“AROs”) and fair value measurements. Changes in facts and circumstances or additional information may result in revised estimates, and actual results may differ from these estimates.

Fair Value, Policy

Fair Value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Hierarchy Levels 1, 2 and 3 are terms for the priority of inputs to valuation techniques used to measure fair value. Hierarchy Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Hierarchy Level 2 inputs are inputs other than quoted prices included within Level 1 that are directly or indirectly observable for the asset or liability. Hierarchy Level 3 inputs are inputs that are not observable in the market.

In determining fair value, we use observable market data when available, or models that incorporate observable market data. In addition to market information, we incorporate transaction-specific details that, in management’s judgment, market participants would take into account in measuring fair value. We maximize the use of observable inputs and minimize our use of unobservable inputs in arriving at fair value estimates.

Recurring fair-value measurements are performed for commodity derivatives as disclosed in Note 5—Derivative Instruments. The carrying amount of cash and cash equivalents, restricted cash and cash equivalents, accounts receivable and accounts payable reported on the Consolidated Balance Sheets approximates fair value. The fair value of debt is the estimated amount we would have to pay to repurchase our debt, including any premium or discount attributable to the difference between the stated interest rate and market interest rate at each balance sheet date. Debt fair values, as disclosed in Note 7—Long-Term Debt, are based on quoted market prices for identical instruments, if available, or based on valuations of similar debt instruments. Non-financial assets and liabilities initially measured at fair value include certain assets and liabilities acquired in a business combination, intangible assets and AROs.

Revenue Recognition, Policy

Revenue Recognition

LNG regasification capacity reservation fees are recognized as revenue over the term of the TUAs. Advance capacity reservation fees are initially deferred and amortized over a 10-year period as a reduction of a customer’s regasification capacity reservation fees payable under its TUA.  For a discussion of revenue from related parties, please read Note 8—Related Party Transactions.  Under each of these TUAs, Sabine Pass LNG is entitled to retain 2% of LNG delivered for each customer’s account at our LNG terminal, which is recognized as revenue as we perform the services set forth in each customer’s TUA.

Cash and Cash Equivalents, Policy

Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Accounting for LNG Activities, Policy

Accounting for LNG Activities

Generally, we begin capitalizing the costs of our LNG terminal projects once the individual project meets the following criteria: (i) regulatory approval has been received, (ii) financing for the project is available and (iii) management has committed to commence construction. Prior to meeting these criteria, most of the costs associated with a project are expensed as incurred. These costs primarily include professional fees associated with front-end engineering and design work, costs of securing necessary regulatory approvals and other preliminary investigation and development activities related to our LNG terminal projects.

Generally, costs that are capitalized prior to a project meeting the criteria otherwise necessary for capitalization include: land and lease option costs that are capitalized as property, plant and equipment and certain permits that are capitalized as intangible LNG assets. The costs of lease options are amortized over the life of the lease once obtained. If no lease is obtained, the costs are expensed.

We capitalize interest and other related debt costs during the construction period of our LNG terminal. Upon commencement of operations, capitalized interest, as a component of the total cost, will be amortized over the estimated useful life of the asset.

Property, Plant and Equipment, Policy

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Expenditures for construction activities, major renewals and betterments that extend the useful life of an asset are capitalized, while expenditures for maintenance and repairs and general and administrative activities are charged to expense as incurred. Interest costs incurred on debt obtained for the construction of property, plant and equipment are capitalized as construction-in-process over the construction period or related debt term, whichever is shorter. We depreciate our property, plant and equipment using the straight-line depreciation method. Upon retirement or other disposition of property, plant and equipment, the cost and related accumulated depreciation are removed from the account, and the resulting gains or losses are recorded in other operating costs and expenses.

Management tests property, plant and equipment for impairment whenever events or changes in circumstances have indicated that the carrying amount of property, plant and equipment might not be recoverable. In performing this test, an undiscounted cash flow analysis is performed at the lowest level for which identifiable cash flows are independent of cash flows from other assets. If the sum of the undiscounted future net cash flows is less than the net book value of the property, an impairment loss is recognized for the excess, if any, of the property’s net book value over its estimated fair value. We have recorded no impairments related to property, plant and equipment for 2014, 2013 or 2012. 

Derivative Instruments, Policy

Derivative Instruments

We use derivative instruments to hedge our exposure to cash-flow variability from commodity price risk.

Derivative instruments are recorded at fair value and included in our Consolidated Balance Sheets as assets or liabilities depending on the derivative position and the expected timing of settlement, unless they satisfy criteria, and we elect, the normal purchases and sales exception. When we have the contractual right and intend to net settle, derivative assets and liabilities are reported on a net basis.

Changes in the fair value of our derivative instruments are recorded in current earnings, unless we elect to apply hedge accounting and meet specified criteria, including completing contemporaneous hedge documentation. We did not have any derivative instruments designated as cash flow hedges as of December 31, 2014 and 2013.

See Note 5—Derivative Instruments of our Notes to Consolidated Financial Statements for additional details about our derivative instruments.

Concentration of Credit Risk, Policy

Concentration of Credit Risk

Financial instruments that potentially subject us to a concentration of credit risk consist principally of cash and cash equivalents and restricted cash. We maintain cash balances at financial institutions, which may at times be in excess of federally insured levels. We have not incurred losses related to these balances to date.

The use of derivative instruments exposes us to counterparty credit risk, or the risk that a counterparty will be unable to meet its commitments. Our commodity derivative transactions are executed through over-the-counter contracts which are subject to nominal credit risk as these transactions are settled on a daily margin basis with investment grade financial institutions. Collateral deposited for such contracts is recorded as an other current asset and not netted within the derivative fair value. We monitor counterparty creditworthiness on an ongoing basis; however, we cannot predict sudden changes in counterparties’ creditworthiness. In addition, even if such changes are not sudden, we may be limited in our ability to mitigate an increase in counterparty credit risk. Should one of these counterparties not perform, we may not realize the benefit of some of our derivative instruments.

We have entered into certain long-term TUAs with unaffiliated third parties for regasification capacity at our LNG terminal. We are dependent on the respective counterparties’ creditworthiness and their willingness to perform under their respective TUAs. We have mitigated this credit risk by securing TUAs for a significant portion of our regasification capacity with creditworthy third-party customers with a minimum Standard & Poor’s rating of AA.

Long-Term Debt, Policy

Long-Term Debt

Our debt consists of long-term secured debt securities with banks and other lenders.  Debt issuances are placed directly by us or through securities dealers or underwriters and are held by institutional and retail investors.  

Debt is recorded on our balance sheet at par value adjusted for unamortized discount or premium. Discounts, premiums and costs directly related to the issuance of debt are amortized over the life of the debt and are recorded in interest expense, net using the effective interest method. Gains and losses on the extinguishment of debt are recorded in gains and losses on the extinguishment of debt on our Consolidated Statements of Income.

Debt issuance costs consist primarily of arrangement fees, professional fees, legal fees and printing costs. These costs are recorded as debt issuance costs on our Consolidated Balance Sheets and are being amortized to interest expense over the term of the related debt facility. Upon early retirement of debt or amendment to a debt agreement, certain fees are written off as loss on early extinguishment of debt.

Income Taxes, Policy

Income Taxes

We are a disregarded entity for federal and state income tax purposes. Our taxable income or loss, which may vary substantially from the net income or loss reported on our Consolidated Statements of Operations, is able to be included in the federal income tax return of Cheniere Partners, a publicly traded partnership which indirectly owns us. Accordingly, no provision or liability for federal or state income taxes is included in the accompanying Consolidated Financial Statements.

At December 31, 2014, the tax basis of our assets and liabilities was $460.3 million less than the reported amounts of our assets and liabilities.

Pursuant to the indentures governing our long-term debt (the “Senior Notes Indentures”), we are permitted to make distributions (“Tax Distributions”) for any fiscal year or portion thereof in which we are a limited partnership, disregarded entity or other substantially similar pass-through entity for federal and state income tax purposes. The permitted Tax Distributions are equal to the tax that we would owe if we were a corporation subject to federal and state income tax that filed separate federal and state income tax returns, excluding the amounts covered by the State Tax Sharing Agreement discussed immediately below. The Tax Distributions are limited to the amount of federal and/or state income taxes paid by Cheniere to the appropriate taxing authorities and are payable by us within 30 days of the date that Cheniere is required to make federal or state income tax payments to the appropriate taxing authorities.

In November 2006, we and Cheniere entered into a state tax sharing agreement. Under this agreement, Cheniere has agreed to prepare and file all state and local tax returns which we and Cheniere are required to file on a combined basis and to timely pay the combined state and local tax liability. If Cheniere, in its sole discretion, demands payment, we will pay to Cheniere an amount equal to the state and local tax that we would be required to pay if our state and local tax liability were computed on a separate company basis. There have been no state and local taxes paid by Cheniere for which Cheniere could have demanded payment from us under this agreement; therefore, Cheniere has not demanded any such payments from us. The agreement is effective for tax returns due on or after January 1, 2008.

Asset Retirement Obligations, Policy

Asset Retirement Obligations

We recognize AROs for legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or normal use of the asset and for conditional AROs in which the timing or method of settlement are conditional on a future event that may or may not be within our control. The fair value of a liability for an ARO is recognized in the period in which it is incurred, if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset. This additional carrying amount is depreciated over the estimated useful life of the asset. Our recognition of AROs is described below.

Based on the real property lease agreements at our LNG terminal, at the expiration of the term of the leases, we are required to surrender the LNG terminal in good working order and repair, with normal wear and tear and casualty expected. Our property lease agreements at our LNG terminal have terms of up to 90 years including renewal options. We have determined that the cost to surrender our LNG terminal in good order and repair, with normal wear and tear and casualty expected, is zero. Therefore, we have not recorded an ARO associated with our LNG terminal.

XML

Consolidated Statements of Partners' Deficit (USD $) In Thousands, unless otherwise specified	3 Months Ended				12 Months Ended
	Dec. 31, 2014	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Partners' Capital, Beginning of Period		$ (600,219)		$ (552,394)	$ (600,219)	$ (552,394)	$ (643,596)
Increase (Decrease) in Partners' Capital [Roll Forward]
Net income	62,858	64,271	62,071	61,854	256,889	244,293	212,805
Capital contributions from Cheniere Partners					43,015	56,820	211,850
Non-cash contributions from limited partner					745
Distributions to limited partner					(346,901)	(348,938)	(333,453)
Partners' Capital, End of Period	(646,471)		(600,219)		(646,471)	(600,219)	(552,394)
General Partner Sabine Pass LNG-GP, LLC [Member]
Partners' Capital, Beginning of Period		0		0	0	0	0
Increase (Decrease) in Partners' Capital [Roll Forward]
Net income					0	0	0
Capital contributions from Cheniere Partners					0	0	0
Non-cash contributions from limited partner					0
Distributions to limited partner					0	0	0
Partners' Capital, End of Period	0		0		0	0	0
Limited Partner Sabine Pass LNG-LP, LLC [Member]
Partners' Capital, Beginning of Period		(600,219)		(552,394)	(600,219)	(552,394)	(643,596)
Increase (Decrease) in Partners' Capital [Roll Forward]
Net income					256,889	244,293	212,805
Capital contributions from Cheniere Partners					43,015	56,820	211,850
Non-cash contributions from limited partner					745
Distributions to limited partner					(346,901)	(348,938)	(333,453)
Partners' Capital, End of Period	$ (646,471)		$ (600,219)		$ (646,471)	$ (600,219)	$ (552,394)

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Long-Term Debt (Notes)

12 Months Ended

Dec. 31, 2014

Debt Disclosure [Abstract]

Long-term Debt

LONG-TERM DEBT

As of December 31, 2014 and 2013, our long-term debt consisted of the following (in thousands):

	December 31,
	2014			2013
Long-term debt
2016 Senior Notes	$	1,665,500		$	1,665,500
2020 Senior Notes	420,000			420,000
Total long-term debt	2,085,500			2,085,500
Long-term debt discount
2016 Senior Notes	(8,998		)	(13,693		)
Total long-term debt, net	$	2,076,502		$	2,071,807

Below is a schedule of future principal payments that we are obligated to make on our outstanding debt at December 31, 2014 (in thousands): 

	Payments Due for the Years Ended December 31,
	Total		2015		2016 to 2017		2018 to 2019		Thereafter
Debt:
2016 Notes	$	1,665,500	$	—	$	1,665,500	$	—	$	—
2020 Notes	420,000		—		—		—		420,000
Debt	$	2,085,500	$	—	$	1,665,500	$	—	$	420,000

Senior Notes

As of both December 31, 2014 and 2013, we had an aggregate principal amount of $1,665.5 million, before discount, of the 2016 Senior Notes and $420.0 million of the 2020 Senior Notes outstanding. Borrowings under the 2016 Senior Notes and 2020 Senior Notes bear interest at a fixed rate of 7.50% and 6.50%, respectively. The terms of the 2016 Senior Notes and the 2020 Senior Notes are substantially similar. Interest on the Senior Notes is payable semi-annually in arrears. Subject to permitted liens, the Senior Notes are secured on a first-priority basis by a security interest in all of our equity interests and substantially all of our operating assets.

We may redeem all or part of our 2016 Senior Notes at any time, and from time to time, at a redemption price equal to 100% of the principal plus any accrued and unpaid interest plus the greater of:

• 1.0%of the principal amount of the 2016 Senior Notes; or

• the excess of: a) the present value at such redemption date of (i) the redemption price of the 2016 Senior Notes plus (ii) all required interest payments due on the 2016 Senior Notes (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over b) the principal amount of the 2016 Senior Notes, if greater.

We may redeem all or part of our 2020Senior Notes at any time on or after November 1, 2016, at fixed redemption prices specified in the indenture governing the 2020Senior Notes, plus accrued and unpaid interest, if any, to the date of redemption. We may also, at our option, redeem all or part of the 2020Senior Notes at any time prior to November 1, 2016, at a “make-whole” price set forth in the indenture governing the 2020Senior Notes, plus accrued and unpaid interest, if any, to the date of redemption. At any time before November 1, 2015, we may redeem up to 35% of the aggregate principal amount of the 2020Senior Notes at a redemption price of 106.5% of the principal amount of the 2020Senior Notes to be redeemed, plus accrued and unpaid interest, if any, to the redemption date, in an amount not to exceed the net proceeds of one or more completed equity offerings as long as we redeem the 2020Senior Notes within 180 days of the closing date for such equity offering and at least 65% of the aggregate principal amount of the 2020 Senior Notes originally issued remains outstanding after the redemption.

Under the Sabine Pass LNG Indentures, except for permitted tax distributions, we may not make distributions until certain conditions are satisfied as described in Note 3—Restricted Cash and Cash Equivalents. During the years ended December 31, 2014, 2013 and 2012 we made distributions of $346.9 million, $348.9 million and $333.5 million, respectively, after satisfying all the applicable conditions in the indentures.

Fair Value Disclosures

The following table (in thousands) shows the carrying amount and estimated fair value of our long-term debt:

	December 31, 2014				December 31, 2013
	Carrying Amount		Estimated Fair Value (1)		Carrying Amount		Estimated Fair Value (1)
2016 Senior Notes, net of discount	$	1,656,502	$	1,718,621	$	1,651,807	$	1,868,607
2020 Senior Notes	420,000		428,400		420,000		432,600

(1) The Level 2 estimated fair value was based on quotations obtained from broker-dealers who make markets in these and similar instruments based on the closing trading prices on December 31, 2014 and 2013, as applicable.

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Accrued Liabilities (Notes)

12 Months Ended

Dec. 31, 2014

Accrued Liabilities [Abstract]

Accrued Liabilities

ACCRUED LIABILITIES

As of December 31, 2014 and 2013, accrued liabilities consisted of the following (in thousands): 

	December 31,
	2014		2013
Interest expense and related debt fees	$	14,959	$	14,959
LNG terminal costs	1,077		1,612
Other	—		4,582
Total accrued liabilities	$	16,036	$	21,153

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Leases (Tables)

12 Months Ended

Dec. 31, 2014

Leases [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases

Future annual minimum lease payments, excluding inflationary adjustments, are as follows (in thousands): 

Year ending December 31,	Lease Payments (2) (3)
2015	$	9,533
2016	9,645
2017	9,764
2018	2,397
2019	1,727
Thereafter (1)	130,714
Total minimum payments required	$	163,780

(1) Includes certain lease option renewals as they are reasonably assured.

(2) Lease payments for our land leases represent our land lease payment obligations and do not take into account the $33.8 million sublease payments we will receive from Sabine Pass Liquefaction, as discussed in Note 8—Related Party Transactions.

(3) Lease payments for our tug boat lease represent our lease payment obligation and do not take into account the $24.4 million sublease payments we will receive from our customers that effectively offset these lease payment obligations, as discussed below.

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Property Plant and Equipment (Tables)

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, plant and equipment consists of LNG terminal costs and fixed assets, as follows (in thousands): 

	December 31,
	2014			2013
LNG terminal costs
LNG terminal	$	1,643,018		$	1,642,007
LNG terminal construction-in-process	27			9
LNG site and related costs, net	142			149
Accumulated depreciation	(250,954		)	(208,729		)
Total LNG terminal costs, net	1,392,233			1,433,436
Fixed assets
Machinery and equipment	1,169			1,189
Computer and office equipment	424			424
Vehicles	654			599
Other	697			697
Accumulated depreciation	(2,734		)	(2,523		)
Total fixed assets, net	210			386
Property, plant and equipment, net	$	1,392,443		$	1,433,822

Property, Plant and Equipment Estimated Useful Lives Table

The identifiable components of our LNG terminal with similar estimated useful lives have a depreciable range between 15 and 50 years, as follows:

Components	Useful life (yrs)
LNG storage tanks	50
Marine berth, electrical, facility and roads	35
Regasification processing equipment (recondensers, vaporization and vents)	30
Sendout pumps	20
Others	15-30

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Commitments and Contingencies (Notes)

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

LNG TUA Commitments

We have entered into TUAs with Total, Chevron and Sabine Pass Liquefaction to provide berthing for LNG vessels and for the unloading, storage and regasification of LNG at our LNG terminal. See Note 8—Related Party Transactions for information regarding such agreements.

Services Agreements

We have entered into certain services agreements with affiliates. See Note 8—Related Party Transactions for information regarding such agreements.

Other Commitments

State Tax Sharing Agreement

In November 2006, we and Cheniere entered into a state tax sharing agreement. Under this agreement, Cheniere has agreed to prepare and file all state and local tax returns which we and Cheniere are required to file on a combined basis and to timely pay the combined state and local tax liability. If Cheniere, in its sole discretion, demands payment, we will pay to Cheniere an amount equal to the state and local tax that we would be required to pay if our state and local tax liability were computed on a separate company basis. There have been no state and local taxes paid by Cheniere for which Cheniere could have demanded payment from us under this agreement; therefore, Cheniere has not demanded any such payments from us. The agreement is effective for tax returns due on or after January 1, 2008.

Cooperative Endeavor Agreements

In July 2007, we executed CEAs with various Cameron Parish, Louisiana taxing authorities. See Note 8—Related Party Transactions for information regarding such agreements.

Legal Proceedings

We may in the future be involved as a party to various legal proceedings, which are incidental to the ordinary course of business. We regularly analyze current information and, as necessary, provide accruals for probable liabilities on the eventual disposition of these matters. In the opinion of management, as of December 31, 2014, there were no threatened or pending legal matters that would have a material impact on our consolidated results of operations, financial position or cash flows.

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Related Party Transactions (Notes)

12 Months Ended

Dec. 31, 2014

Related Party Transactions [Abstract]

Related Party Transactions

RELATED PARTY TRANSACTIONS

Terminal Use Agreement

Sabine Pass Liquefaction, LLC (“Sabine Pass Liquefaction”), a wholly owned subsidiary of Cheniere Partners, obtained approximately 2.0 Bcf/d of regasification capacity under a TUA with us as a result of an assignment in July 2012 by Cheniere Investments, a wholly owned subsidiary of Cheniere Partners, of its rights, title and interest under its TUA with us. Sabine Pass Liquefaction is obligated to make monthly capacity payments to us aggregating approximately $250 million per year, continuing until at least 20 years after Sabine Pass Liquefaction delivers its first commercial cargo at Sabine Pass Liquefaction’s facilities under construction. We entered into a terminal use rights assignment and agreement (“TURA”) with Sabine Pass Liquefaction and Cheniere Investments pursuant to which Cheniere Investments has the right to use Sabine Pass Liquefaction’s reserved capacity under the TUA and has the obligation to make the monthly capacity payments required by the TUA to us. Cheniere Investments’ right to use capacity at our LNG terminal will be reduced as each of Trains 1 through 4 reaches commercial operations. The percentage of the monthly capacity payments payable by Cheniere Investments will be reduced from 100% to zero (unless Cheniere Investments utilizes terminal use capacity after Train 4 reaches commercial operations), and the percentage of the monthly capacity payments payable by Sabine Pass Liquefaction will increase by the amount that Cheniere Investments’ percentage decreases. Cheniere Partners has guaranteed Sabine Pass Liquefaction’s obligations under the TUA and the obligations of Cheniere Investments under the TURA.

Services Agreements

We have entered into a long-term operation and maintenance agreement (the “O&M Agreement”) with Cheniere Investments pursuant to which we receive all necessary services required to operate and maintain our LNG receiving terminal. Cheniere Investments provides the services required under the O&M Agreement pursuant to a secondment agreement with a wholly owned subsidiary of Cheniere. We are required to pay a fixed monthly fee of $130,000 (indexed for inflation) under the O&M Agreement, and the counterparty is entitled to a bonus equal to 50% of the salary component of labor costs in certain circumstances to be agreed upon between us and the counterparty at the beginning of each operating year. In addition, we are required to reimburse the counterparty for its operating expenses, which consist primarily of labor expenses. Cheniere Investments provides the services required under the Sabine Pass LNG O&M Agreement pursuant to a secondment agreement with a wholly owned subsidiary of Cheniere.

We have entered into a long-term management services agreement (the “MSA”) with Cheniere LNG Terminals, LLC (“Cheniere Terminals”), a wholly owned subsidiary of Cheniere, pursuant to which Cheniere Terminals manages the operation of our LNG receiving terminal, excluding those matters provided for under the O&M Agreement. We are required to pay Cheniere Terminals a monthly fixed fee of $520,000 (indexed for inflation) under the MSA.

As of December 31, 2014 and 2013, we had $1.9 million and $4.0 million, respectively, of advances to affiliates under the foregoing services agreements. During the years ended December 31, 2014, 2013 and 2012, we recorded general and administrative expense—affiliate of $12.5 million, $13.3 million and $10.8 million, respectively, and we recorded operating and maintenance expense—affiliate of $17.3 million, $25.2 million and $16.0 million respectively, under the foregoing services agreements.

Agreement to Fund Our Cooperative Endeavor Agreements (“CEAs”)

In July 2007, we executed CEAs with various Cameron Parish, Louisiana taxing authorities that allow them to collect certain annual property tax payments in 2007 through 2016. This 10-year initiative represents an aggregate commitment of up to $25.0 million, and we will make resources available to the Cameron Parish taxing authorities on an accelerated basis in order to aid in their reconstruction efforts following Hurricane Rita. In exchange for our advance payments of annual ad valorem taxes, Cameron Parish will grant us a dollar for dollar credit against future ad valorem taxes to be levied against our LNG terminal starting in 2019. In September 2007, we entered into an agreement with Cheniere Marketing, pursuant to which Cheniere Marketing would pay us additional TUA revenues equal to any and all amounts payable under the CEAs in exchange for a similar amount of credits against future TUA payments it would owe us under its TUA starting in 2019. In June 2010, Cheniere Marketing assigned its TUA to Cheniere Investments and concurrently entered into a variable capacity rights agreement (“VCRA”), allowing Cheniere Marketing to utilize Cheniere Investments’ capacity under the TUA after the assignment. In July 2012, Cheniere Investments entered into an amended and restated VCRA with Cheniere Marketing in order for Cheniere Investments to utilize during construction of Sabine Pass Liquefaction’s liquefaction project the capacity rights granted under the TURA. Cheniere Marketing will continue to fund the CEAs during the term of the amended and restated VCRA and, in exchange, Cheniere Marketing will receive the benefit of any future credits.

These advance tax payments were recorded to other non-current assets, and payments from Cheniere Marketing that we utilized to make the ad valorem tax payments were recorded as deferred revenue—affiliate. As of December 31, 2014 and 2013, we had $19.6 million and $17.2 million, respectively, of other non-current assets resulting from ad valorem tax payments and non-current deferred revenue—affiliate resulting from these payments received from Cheniere Marketing.

Contracts for Sale and Purchase of Natural Gas and LNG

We are able to sell and purchase natural gas and LNG under agreements with Cheniere Marketing. Under these agreements, we purchase natural gas or LNG from Cheniere Marketing at a sales price equal to the actual purchase cost paid by Cheniere Marketing to suppliers of the natural gas or LNG, plus any third-party costs incurred by Cheniere Marketing in respect of the receipt, purchase and delivery of the natural gas or LNG to our LNG terminal. As a result, we record the purchases of natural gas and LNG from Cheniere Marketing to be utilized as fuel to operate our LNG terminal as operating and maintenance expense. We recorded $3.3 million, $3.3 million and $2.8 million of natural gas purchased from Cheniere Marketing under these agreements as operating and maintenance expense during the years ended December 31, 2014, 2013 and 2012, respectively. We recorded revenues of $0.7 million, $14.7 million and $2.8 million for natural gas sold to Cheniere Marketing under these agreements during the years ended December 31, 2014, 2013 and 2012, respectively.

LNG Terminal Export Agreement

In January 2010, we and Cheniere Marketing entered into an LNG Terminal Export Agreement that provides Cheniere Marketing the ability to export LNG from our LNG terminal.  We recorded revenues—affiliate of zero, zero, and $0.3 million pursuant to this agreement in the years ended December 31, 2014, 2013 and 2012, respectively.

Pipeline Compressor Agreement

In August 2010, we entered into an agreement with Cheniere Investments, under which Cheniere Investments reimburses us for a portion of the costs of installing, operating and maintaining pipeline compression equipment at our LNG terminal. During the years ended December 31, 2014, 2013 and 2012, we recorded revenues-affiliate from Cheniere Investments of zero, $0.6 million and $0.1 million, respectively.

Tug Boat Lease Sharing Agreement

In connection with our tug boat lease, Sabine Pass Tug Services, LLC (“Tug Services”), our wholly owned subsidiary, entered into a tug sharing agreement with a wholly owned subsidiary of Cheniere to provide its LNG cargo vessels with tug boat and marine services at our LNG terminal. Tug Services recorded revenues—affiliate of $2.8 million pursuant to this agreement in each of the years ended December 31, 2014, 2013 and 2012.

LNG Site Sublease Agreement

In June 2012, we entered into an agreement with Sabine Pass Liquefaction to sublease a portion of our terminal site for its liquefaction project. The annual sublease payment is $0.5 million. The initial term of the sublease expires on December 31, 2034, with options to renew for five10-year extensions with similar terms as the initial term. The annual sublease payment will be adjusted for inflation every five years based on a consumer price index, as defined in the sublease agreement. We recognized $0.5 million, $0.5 million and $0.3 million of sublease revenue from Sabine Pass Liquefaction as a credit to operating and maintenance expense—affiliate on our Consolidated Statements of Income for each of the years ended December 31, 2014, 2013 and 2012.

Cooperation Agreement

We have entered into an agreement with Sabine Pass Liquefaction to allow Sabine Pass Liquefaction certain rights to access the property and facilities that we own for the purpose of constructing, modifying and operating Sabine Pass Liquefaction’s facilities under construction. In consideration for the access we have given, Sabine Pass Liquefaction has agreed to transfer title to us of certain facilities, equipment and modifications. The term of this agreement is consistent with our TUA described above. As of December 31, 2014, Sabine Pass Liquefaction has conveyed $0.7 million of assets to us under this agreement.

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Leases (Notes)

12 Months Ended

Dec. 31, 2014

Leases [Abstract]

Leases

LEASES

During the years ended December 31, 2014, 2013 and 2012, we recognized rental expense for all operating leases of $9.2 million, $8.8 million and $9.4 million, respectively.

Future annual minimum lease payments, excluding inflationary adjustments, are as follows (in thousands): 

Year ending December 31,	Lease Payments (2) (3)
2015	$	9,533
2016	9,645
2017	9,764
2018	2,397
2019	1,727
Thereafter (1)	130,714
Total minimum payments required	$	163,780

(1) Includes certain lease option renewals as they are reasonably assured.

(2) Lease payments for our land leases represent our land lease payment obligations and do not take into account the $33.8 million sublease payments we will receive from Sabine Pass Liquefaction, as discussed in Note 8—Related Party Transactions.

(3) Lease payments for our tug boat lease represent our lease payment obligation and do not take into account the $24.4 million sublease payments we will receive from our customers that effectively offset these lease payment obligations, as discussed below.

Land Leases

In January 2005, we exercised our options and entered into three land leases for the site of our LNG terminal. The leases have an initial term of 30 years, with options to renew for six10-year extensions with similar terms as the initial term. In February 2005, two of the three leases were amended, thereby increasing the total acreage under lease to 853 acres.  In July 2012, we entered into an additional land lease, thereby increasing the total acreage under lease to 883 acres. The annual lease payments are adjusted for inflation every 5 years based on a consumer price index, as defined in the lease agreements. We recognized $1.8 million, $1.8 million and $1.5 million of site lease expense on our Consolidated Statements of Operations in 2014, 2013 and 2012, respectively,

Tug Boat Lease

In the second quarter of 2009, we acquired a lease (the “Tug Agreement”) for the use of tug boats and marine services at our LNG terminal as a result of our purchase of Sabine Pass Tug Services, LLC.  The term of the Tug Agreement commenced in January 2008 for a period of 10 years, with an option to renew two additional, consecutive terms of 5 years each.  We have determined that the Tug Agreement contains a lease for the tugs specified in the Tug Agreement.  In addition, we have concluded that the tug lease contained in the Tug Agreement is an operating lease, and as such, the equipment component of the Tug Agreement will be charged to expense over the term of the Tug Agreement as it becomes payable.

In connection with this lease acquisition, Sabine Pass Tug Services, LLC entered into a tug sharing agreement (the “Tug Sharing Agreement”) with Chevron, Total and a wholly owned subsidiary of Cheniere to provide their LNG cargo vessels with tug boat and marine services at our LNG terminal and effectively offset the cost of the Tug Agreement. The Tug Sharing Agreement provides for each of our customers to pay Sabine Pass Tug Services, LLC an annual service fee that we record as revenue and revenue—affiliate.

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Supplemental Cash Flow Information (Notes)

12 Months Ended

Dec. 31, 2014

Supplemental Cash Flow Information [Abstract]

Supplemental Cash Flow Information

SUPPLEMENTAL CASH FLOW INFORMATION

The following table provides supplemental disclosure of cash flow information (in thousands):

	Year Ended December 31,
	2014		2013		2012
Cash paid during the year for interest, net of amounts capitalized	$	152,213	$	153,350	$	159,998

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Accrued Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Accrued Liabilities [Abstract]
Interest expense and related debt fees	$ 14,959	$ 14,959
LNG terminal costs	1,077	1,612
Other	0	4,582
Total accrued liabilities	$ 16,036	$ 21,153

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Accrued Liabilities (Tables)

12 Months Ended

Dec. 31, 2014

Accrued Liabilities [Abstract]

Schedule of Accrued Liabilities

As of December 31, 2014 and 2013, accrued liabilities consisted of the following (in thousands): 

	December 31,
	2014		2013
Interest expense and related debt fees	$	14,959	$	14,959
LNG terminal costs	1,077		1,612
Other	—		4,582
Total accrued liabilities	$	16,036	$	21,153

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Organization and Nature of Operations (Details)	12 Months Ended
	Dec. 31, 2014 item m3
Sabine Pass LNG terminal [Member]
Organization and nature of operations [Line Items]
Number Of LNG Storage Tanks	5
Storage Capacity, in Bcfe	16.9
Number Of Docks	2
Volume of Vessel, in cubic meters	266,000
Regasification capacity, in Bcf/d	4.0
Cheniere Energy, Inc. [Member] | Cheniere Energy Partners LP Holdings, LLC [Member]
Organization and nature of operations [Line Items]
Noncontrolling interest ownership percentage by Parent	80.10%
Cheniere Energy Partners LP Holdings, LLC [Member] | Cheniere Energy Partners, LP [Member]
Organization and nature of operations [Line Items]
Limited Partners, ownership percentage	55.90%
Cheniere Energy Partners, LP [Member] | Cheniere Energy Investments, LLC [Member]
Organization and nature of operations [Line Items]
Limited Partners, ownership percentage	100.00%
Cheniere Energy Investments, LLC [Member]
Organization and nature of operations [Line Items]
Limited Partners, ownership percentage	100.00%
Cheniere Energy Investments, LLC [Member] | Sabine Pass LNG-GP, LLC [Member]
Organization and nature of operations [Line Items]
Limited Partners, ownership percentage	100.00%
Cheniere Energy Investments, LLC [Member] | Sabine Pass LNG-LP, LLC [Member]
Organization and nature of operations [Line Items]
Limited Partners, ownership percentage	100.00%

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Related Party Transactions - Cooperative Endeavor Agreements (Details) (Cheniere Marketing, LLC [Member], Cooperative Endeavor Agreements [Member], USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Cheniere Marketing, LLC [Member] | Cooperative Endeavor Agreements [Member]
Related Party Transaction [Line Items]
Tax Initiative Agreement Term	10 years
Aggregate commitment under the Agreement	$ 25.0
Due from Related Parties, Noncurrent	$ 19.6	$ 17.2

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Cash flows from operating activities
Net income	$ 256,889	$ 244,293	$ 212,805
Adjustments to reconcile net income to net cash provided by operating activities:
Use of (investment in) restricted cash and cash equivalents for certain operating activities	0	2,427	(3,654)
Depreciation	42,465	42,444	42,431
Loss on early extinguishment of debt	0	0	1,470
Amortization of debt issuance costs and discount	8,922	8,904	9,057
Other, net	22	44	2,179
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities	(6,138)	(751)	2,296
Due to affiliates	(16,456)	12,512	482
Deferred revenue	(3,938)	(3,947)	(4,089)
Advances to affiliate	2,157	(2,983)	(487)
Accounts and interest receivable	37	(31)	511
Accounts receivable—affiliate	1,561	(1,266)	(1,035)
Other, net	6,677	529	1,242
Other, net—affiliate	2,502	49	87
Net cash provided by operating activities	294,700	302,224	263,295
Cash flows from investing activities
Property, plant and equipment, net	(348)	(116)	(4,458)
Net cash used in investing activities	(348)	(116)	(4,458)
Cash flows from financing activities
Distributions to limited partner	(346,901)	(348,938)	(333,453)
Capital contributions from Cheniere Partners	43,015	56,820	208,354
Repayment of long-term debt	0	0	(550,000)
Proceeds from issuance of long-term debt	0	0	420,000
Debt issuance costs	0	(198)	(9,092)
Use of restricted cash and cash equivalents	0	0	6,288
Net cash used in financing activities	(303,886)	(292,316)	(257,903)
Net increase (decrease) in cash and cash equivalents	(9,534)	9,792	934
Cash and cash equivalents—beginning of period	14,994	5,202	4,268
Cash and cash equivalents—end of period	$ 5,460	$ 14,994	$ 5,202

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Derivative Instruments (Notes)

12 Months Ended

Dec. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

DERIVATIVE INSTRUMENTS

We have entered into certain derivative instruments to hedge the exposure to variability in expected future cash flows attributable to the future sale of our LNG inventory (“LNG Inventory Derivatives”) and to hedge the exposure to price risk attributable to future purchases of natural gas to be utilized as fuel to operate the Sabine Pass LNG terminal (“Fuel Derivatives”).

The following table (in thousands) shows the fair value of our derivative assets and liabilities that are required to be measured at fair value on a recurring basis as of December 31, 2014 and 2013, which are classified as prepaid expenses and other in our Consolidated Balance Sheets.

	Fair Value Measurements as of
	December 31, 2014								December 31, 2013
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
LNG Inventory Derivatives asset	$	—	$	145	$	—	$	145	$	—	$	—	$	—	$	—
Fuel Derivatives asset	—		—		—		—		—		27		—		27

The estimated fair values of our LNG Inventory Derivatives and Fuel Derivatives are the amounts at which the instruments could be exchanged currently between willing parties. We value these derivatives using observable commodity price curves and other relevant data. Derivative assets and liabilities arising from our derivative contracts with the same counterparty are reported on a net basis, as all counterparty derivative contracts provide for net settlement.

We recognize all derivative instruments that qualify for derivative accounting treatment, including our LNG Inventory Derivatives and Fuel Derivatives, as either assets or liabilities and measure those instruments at fair value unless they qualify for, and we elect, the normal purchase normal sale exception. For those instruments accounted for as derivatives, including all of our LNG Inventory Derivatives as of December 31, 2014, changes in fair value are reported in earnings.  For transactions in which we have elected the normal purchase normal sale exception, including all of our Fuel Derivatives as of December 31, 2014, gains and losses are not reflected on our Consolidated Statements of Income until the period of delivery.

The use of derivative instruments exposes us to counterparty credit risk, or the risk that a counterparty will be unable to meet its commitments in instances where our Fuel Derivatives or our LNG Inventory Derivatives are in an asset position. Except for the Fuel Derivatives with our affiliate described below, our commodity derivative transactions are executed through over-the-counter contracts which are subject to nominal credit risk as these transactions are settled on a daily margin basis with investment grade financial institutions. We are required by these financial institutions to use margin deposits as credit support for these commodity derivative activities. We had a collateral call of $0.1 million and a collateral deposit of $0.7 million for such contracts, which have not been reflected in the derivative fair value tables, but are included in the other current assets balance as of December 31, 2014 and 2013, respectively.

During the second quarter of 2013, we began to enter into forward contracts under an International Swaps and Derivatives Association master agreement with Cheniere Marketing, LLC (“Cheniere Marketing”), a wholly owned subsidiary of Cheniere, to hedge the exposure to price risk attributable to future purchases of natural gas to be utilized as fuel to operate our terminal. We elected to account for these physical hedges of future fuel purchases as normal purchase normal sale transactions, exempt from fair value accounting. We had not posted collateral with Cheniere Marketing for such forward contracts as of December 31, 2014.

The following table (in thousands) shows the fair value and location of our LNG Inventory Derivatives and Fuel Derivatives on our Consolidated Balance Sheets:

		Fair Value Measurements as of
	Balance Sheet Location	December 31, 2014		December 31, 2013
LNG Inventory Derivatives asset	Prepaid expenses and other	$	145	$	—
Fuel Derivatives asset	Prepaid expenses and other	—		27

The following table (in thousands) shows the changes in the fair value and settlements of our LNG Inventory Derivatives and Fuel Derivatives recorded in derivative gain (loss), net on our Consolidated Statements of Income during the years ended December 31, 2014, 2013 and 2012:

	Year Ended December 31,
	2014		2013		2012
LNG Inventory Derivatives gain	$	247	$	—	$	—
Fuel Derivatives gain (loss) (1)	281		182		(622		)

(1) Excludes settlements of our Fuel Derivatives with Cheniere Marketing for which we have elected the normal purchase normal sale exception from derivative accounting and have recorded as operating and maintenance expense.

Balance Sheet Presentation

Our LNG Inventory Derivatives and Fuel Derivatives are presented on a net basis on our Consolidated Balance Sheets as described above. The following table (in thousands) shows the fair value of our LNG Inventory Derivatives and Fuel Derivatives outstanding on a gross and net basis:

	Gross Amounts Recognized		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets
Offsetting Derivative Assets (Liabilities)							Derivative Instrument		Cash Collateral Received (Paid)		Net Amount
As of December 31, 2014:
LNG Inventory Derivatives	$	145	$	132	$	13	$	—	$	—	$	13
As of December 31, 2013:
Fuel Derivatives	27		—		27		—		—		27

XML

Summary of Significant Accounting Policies (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Basis of Presentation and Summary of Significant Accounting Policies [Line Items]
Advanced capacity reservation fees amortization period	10 years
Retained percentage of LNG delivered	2.00%
Impairments related to property, plant and equipment	$ 0	$ 0	$ 0
Provision for income taxes	0
Entity Not Subject to Income Taxes, Difference in Bases, Amount	460,300,000
Designated as Hedging Instrument [Member]
Basis of Presentation and Summary of Significant Accounting Policies [Line Items]
Derivative instruments designated as cash flow hedges	0	0
Sabine Pass LNG terminal [Member]
Basis of Presentation and Summary of Significant Accounting Policies [Line Items]
Asset Retirement Obligation	0
Sabine Pass LNG terminal [Member] | Maximum [Member]
Basis of Presentation and Summary of Significant Accounting Policies [Line Items]
Property lease term	90 years
Cheniere Energy, Inc. [Member] | Tax Sharing Agreement [Member]
Basis of Presentation and Summary of Significant Accounting Policies [Line Items]
Income Taxes Paid, Net	$ 0

XML

Long-Term Debt - Schedule of Carrying Values and Estimated Fair Values of Debt Instruments (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014		Dec. 31, 2013
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Carrying Amount, Long-term Debt	$ 2,076,502		$ 2,071,807
2016 Senior Notes [Member] | Reported Value Measurement [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Carrying Amount, Long-term Debt	1,656,502		1,651,807
2016 Senior Notes [Member] | Estimate of Fair Value Measurement [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes Payable, Fair Value Disclosure	1,718,621	[1]	1,868,607	[1]
2020 Senior Notes [Member] | Reported Value Measurement [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Carrying Amount, Long-term Debt	420,000		420,000
2020 Senior Notes [Member] | Estimate of Fair Value Measurement [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes Payable, Fair Value Disclosure	$ 428,400	[1]	$ 432,600	[1]

[1] The Level 2 estimated fair value was based on quotations obtained from broker-dealers who make markets in these and similar instruments based on the closing trading prices on December 31, 2014 and 2013, as applicable.

XML

Derivative Instruments (Tables)

12 Months Ended

Dec. 31, 2014

Derivative Instruments and Hedging Activities Disclosures [Line Items]

Fair Value of Derivative Assets and Liabilities

The following table (in thousands) shows the fair value of our derivative assets and liabilities that are required to be measured at fair value on a recurring basis as of December 31, 2014 and 2013, which are classified as prepaid expenses and other in our Consolidated Balance Sheets.

	Fair Value Measurements as of
	December 31, 2014								December 31, 2013
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
LNG Inventory Derivatives asset	$	—	$	145	$	—	$	145	$	—	$	—	$	—	$	—
Fuel Derivatives asset	—		—		—		—		—		27		—		27

Fair Value of Derivative Instruments by Balance Sheet Location

The following table (in thousands) shows the fair value and location of our LNG Inventory Derivatives and Fuel Derivatives on our Consolidated Balance Sheets:

		Fair Value Measurements as of
	Balance Sheet Location	December 31, 2014		December 31, 2013
LNG Inventory Derivatives asset	Prepaid expenses and other	$	145	$	—
Fuel Derivatives asset	Prepaid expenses and other	—		27

Derivative Gross Presentation on Consolidated Balance Sheets

The following table (in thousands) shows the fair value of our LNG Inventory Derivatives and Fuel Derivatives outstanding on a gross and net basis:

	Gross Amounts Recognized		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets
Offsetting Derivative Assets (Liabilities)							Derivative Instrument		Cash Collateral Received (Paid)		Net Amount
As of December 31, 2014:
LNG Inventory Derivatives	$	145	$	132	$	13	$	—	$	—	$	13
As of December 31, 2013:
Fuel Derivatives	27		—		27		—		—		27

Derivative gain (loss), net [Member]

Derivative Instruments and Hedging Activities Disclosures [Line Items]

Derivative Instruments, Gain (Loss)

The following table (in thousands) shows the changes in the fair value and settlements of our LNG Inventory Derivatives and Fuel Derivatives recorded in derivative gain (loss), net on our Consolidated Statements of Income during the years ended December 31, 2014, 2013 and 2012:

	Year Ended December 31,
	2014		2013		2012
LNG Inventory Derivatives gain	$	247	$	—	$	—
Fuel Derivatives gain (loss) (1)	281		182		(622		)

(1) Excludes settlements of our Fuel Derivatives with Cheniere Marketing for which we have elected the normal purchase normal sale exception from derivative accounting and have recorded as operating and maintenance expense.