Edgar Filing: CHENIERE ENERGY INC

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

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Check the appropriate box:

[_] Preliminary Proxy Statement

[_] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to (S) 240.14a-12

CHENIERE ENERGY, INC.
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(Name of Registrant as Specified In Its Charter)

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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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CHENIERE ENERGY, INC.
Three Allen Center
333 Clay Street, Suite 3400
Houston, Texas 77002-4102
713/659-1361

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held May 23, 2002

Notice is hereby given that the annual meeting of stockholders of Cheniere
Energy, Inc., a Delaware corporation (the "Company"), will be held on Thursday,
May 23, 2002, at 10:00 a.m., at Three Allen Center, 333 Clay Street, Suite 3400,
Houston, Texas, for the following purposes:

1. To elect a Board of seven directors to serve until the next annual meeting of
stockholders or until their successors are duly elected and qualified;

2. To approve a proposed amendment to the Company's 1997 Stock Option Plan to
increase the number of shares of common stock subject to the Plan from
1,500,000 to 2,000,000.

3. To appoint PricewaterhouseCoopers LLP as independent accountants for the
Company for the fiscal year ending December 31, 2002; and

4. To consider and act upon such other business as may properly be presented to
the meeting or any adjournment thereof.

A record of stockholders has been taken as of the close of business on April
1, 2002, and only those stockholders of record on that date will be entitled to
notice of and to vote at the meeting or any adjournment thereof. All
stockholders of the Company are invited to attend the meeting. The Board of
Directors, however, requests that you promptly sign, date and mail the enclosed
proxy, even if you plan to be present at the meeting. If you attend the
meeting, you can either vote in person or by your proxy. Please return your
proxy in the enclosed, postage-paid envelope.

By order of the Board of Directors,

/S/ DON A. TURKLESON
--------------------
Don A. Turkleson
Secretary

April 30, 2002

CHENIERE ENERGY, INC.
Three Allen Center
333 Clay Street, Suite 3400
Houston, Texas 77002-4102
713/659-1361

PROXY STATEMENT

This Proxy Statement and the enclosed proxy are being mailed to
stockholders of Cheniere Energy, Inc., a Delaware corporation (the "Company"),
commencing on or about April 30, 2002. The Company's Board of Directors is
soliciting proxies to be voted at the Company's annual meeting of stockholders
to be held in Houston, Texas on Thursday, May 23, 2002 and at any adjournment
thereof, for the purposes set forth in the accompanying notice.

The shares covered by a proxy, if such is properly executed and received
prior to the meeting, will be voted in accordance with the directions specified
thereon regarding election of directors, proposed amendment to the Company's
1997 Stock Option Plan to increase the number of shares of common stock subject
to the Plan from 1,500,000 to 2,000,000 and appointment of
PricewaterhouseCoopers LLP as independent accountants, and with respect to any
other matters which may properly come before the meeting, in accordance with the
judgment of the persons designated as proxies. A proxy may be revoked at any
time before it is exercised by giving written notice to, or filing a duly
executed proxy bearing a later date with, the Secretary of the Company, or by
voting in person at the meeting.

Management expects that the only matters to be presented for action at the
meeting will be the election of directors, approval of the proposed amendment to
the Company's 1997 Stock Option Plan to increase the number of shares of common
stock subject to the Plan from 1,500,000 to 2,000,000 and appointment of
PricewaterhouseCoopers LLP as independent accountants.

At the close of business on April 1, 2002, the record date for determining
the stockholders entitled to notice of and to vote at the meeting (the "Record
Date"), there were outstanding and entitled to vote 13,297,393 shares of the
Company's common stock, par value $.003 per share ("Common Stock"). Each share
of Common Stock entitles the holder to one vote on all matters presented at the
meeting.

The Company will bear the costs of soliciting proxies in the accompanying
form. In addition to solicitations by mail, a number of regular employees of the
Company may solicit proxies in person or by telephone.

ELECTION OF DIRECTORS

NOMINEES

At the meeting, seven nominees are to be elected to the Company's Board of
Directors, each director to hold office until the next annual meeting of
stockholders and until his successor is elected and qualified. Unless your proxy
specifies otherwise or withholds authority to vote for one or more nominees
named thereon and described below, it is intended that the shares represented by
your proxy will be voted for the election of these seven nominees. Proxies
cannot be voted for a greater number of persons than the number of nominees
named. If any nominee should become unavailable for election, your proxy may be
voted for a substitute nominee selected by the Board, or the Board may be
reduced accordingly. The Board is unaware of any circumstances likely to render
any nominee unavailable.

One of the directors elected at the annual meeting of stockholders held on
May 31, 2001 has since resigned from the Board of Directors. Emanuel Batler, who
was Vice-President of Philips Electronics Industries Ltd., the Canadian division
of the Dutch-based Philips Company, served as a director since July 2000 and as
a member of the Audit Committee and the Compensation Committee. Mr. Batler
resigned from the Board in October 2001 to pursue other endeavors. Cheniere
would like to thank Mr. Batler for his service to the company.

Director Nominee Director Since Age Position
-------------------- -------------- ------- -------------------------

Nuno Brandolini 2000 48 Director
Keith F. Carney 2001 45 Director
Paul J. Hoenmans 2001 69 Director
John K. Howie 2000 43 Director
Charles M. Reimer 1998 57 Director
Charif Souki 1996 49 Director and Chairman of
the Board of Directors
Walter L. Williams 1996 74 Director and Vice Chairman
of the Board of Directors

NUNO BRANDOLINI is currently a director and a member of the Audit Committee
and the Compensation Committee. Mr. Brandolini has served as Chairman and Chief
Executive Officer of Scorpion Holdings, Inc. since 1995. Prior to forming
Scorpion Holdings, Mr. Brandolini served as Managing Director of Rosecliff,
Inc., a leveraged buyout fund co-founded by Mr. Brandolini in 1993. Before
joining Rosecliff, Mr. Brandolini was a Vice President at Salomon Brothers, Inc.
where he was an investment banker involved in mergers and acquisitions in the
Financial Entrepreneurial Group. Mr. Brandolini has also worked for Lazard
Freres in New York and was President of The Baltheus Group, a merchant banking
firm, and Executive Vice President of Logic Capital Corp., a venture capital
firm. He currently serves on the Board of private and public companies such as
Arabella, Pac Pizza LLC, Sonex Research, The Original San Francisco Toymakers
and WalkAbout Computers. Mr. Brandolini was awarded a law degree by the
University of Paris, and received an M.B.A. from the Wharton School.

KEITH F. CARNEY is currently a director and Chairman of the Audit Committee
and a member of the Compensation Committee. Mr. Carney served as Chief
Financial Officer and Treasurer of the Company from July 1996 through November
1997 and Executive Vice President from 1997 through August 2001. Since October
2001, Mr. Carney has been President of Dolomite Advisors, LLC, a manager of
energy investment funds. At that time he was elected a director to Cheniere.
Prior to joining Cheniere, Mr. Carney was a securities analyst in the oil and
gas exploration/production sector with Smith Barney, Inc. from 1992-1996. From
1982-1990 he was employed by Shell Oil as an exploration geologist, with
assignments in the Gulf of Mexico, the Middle East and other areas. He received
an M.S. in geology from Lehigh University in 1982 and an M.B.A.-Finance from the
University of Denver in 1992.

PAUL J. HOENMANS is currently a director for Cheniere and a member of the
Compensation Committee. Mr. Hoenmans has over 22 years of senior executive
level experience in the industry. During that time he has served Mobil Oil
Corporation in various executive capacities, most recently as Director and
Executive Vice President, until 1997, with overall responsibility for policy,
strategy, performance, and stakeholder contact. From 1986 through 1996 he
served as the President of Mobil Oil Corporation's Exploration & Producing
Division, with worldwide responsibility for upstream operations. Mr. Hoenmans
has held various other positions of senior executive level responsibility with
Mobil since 1975, over both upstream and downstream operations worldwide
throughout the Americas, Africa, Southeast Asia, the Middle East, Europe, and
Scandinavia. Mr. Hoenmans is also currently serving as a director of Xpronet,
Inc., Veba Oel AG, and Talisman Energy, Inc.

JOHN K. HOWIE is currently a director of the Company, Chairman of the
Compensation Committee and a member of the Audit Committee. Mr. Howie has
served as a Vice President of EnCap Investments, LLC since July 1999. From
January 1994 until July 1999 he was a Senior Investment Associate at Range
Resources Corporation (previously Domain Energy Corporation) and an Acquisition
Coordinator with Domain Energy Corporation (previously Tenneco Ventures). Prior
to this he was a Senior Petroleum Engineer with Apache Corporation. Mr. Howie
received a Bachelor of Science in Chemical Engineering from New Mexico State in
December 1981.

CHARLES M. REIMER is currently President and Chief Executive Officer and a
director of Cheniere. Through May 2000, he served as President of British-
Borneo USA, Inc. in Houston. Prior to joining British Borneo in November 1998,
Mr. Reimer served from 1994 through 1998 as Chairman and Chief Executive Officer
of Virginia Indonesia Company (VICO), the operator on behalf of Union Texas
Petroleum Holdings, Inc. and LASMO plc, of major gas and oil reserves and
production located in East Kalimantan, Indonesia. Mr. Reimer began his career
with Exxon Company USA in 1967 and held various professional and management
positions in Texas and Louisiana. After leaving Exxon, Mr. Reimer was named
President of Phoenix Resources Company in 1985 and relocated to Cairo, Egypt to
begin eight years of international assignments. He also serves on the board of
directors of Gryphon Exploration Company, a privately held affiliate of
Cheniere.

CHARIF SOUKI, a co-founder of Cheniere, is currently Chairman of the Board
of Directors of the Company Mr. Souki is an independent investment banker with
20 years of experience in the industry. In the past few years he has
specialized in providing financing for promising microcap and small
capitalization companies with an emphasis on the oil and gas industry. Mr.
Souki received his B.A. from Colgate University and his M.B.A. from Columbia
University. He also serves on the board of directors of Gryphon Exploration
Company, a privately held affiliate of Cheniere.

WALTER L. WILLIAMS is currently Vice Chairman and a director of the
Company. Prior to joining the Company, Mr. Williams spent 32 years as a founder
and later Chairman and Chief Executive Officer of Texoil, Inc., a publicly held
Gulf Coast exploration and production company. Prior to that time, he was an
independent petroleum consultant. Mr. Williams received a B.S. in petroleum
engineering from Texas A&M University and is a Registered Engineer in Louisiana
and Texas. He has served as a director and member of the Executive Committee of
the Board of the Houston Museum of Natural Science.

BOARD AND COMMITTEE ACTIVITY AND STRUCTURE

The Company's operations are managed under the broad supervision and
direction of the Board of Directors, which has the ultimate responsibility for
the establishment and implementation of the Company's general operating
philosophy, objectives, goals and policies. Pursuant to delegated authority,
certain Board functions are discharged by the Board's standing Audit and
Compensation Committees. Members of the Audit and Compensation Committees for a
given year are selected by the Board following the annual stockholders' meeting.
During the fiscal year ended December 31, 2001, the Company's Board of Directors
held eight meetings, and in addition there were two written consents in lieu of
meetings, and each incumbent member of the Board attended or participated in at
least 75% of the aggregate number of (i) Board meetings and (ii) committee
meetings held by all committees of the Board on which he served during his
period of service as a director in the year 2001, except that Mr. Brandolini
attended 71% of the meetings for which he was eligible in 2001.

The Audit Committee annually recommends independent accountants for
appointment by the Board of Directors, reviews the services to be performed by
the independent accountants, and receives and reviews the reports submitted by
them. The committee also determines the duties and responsibilities of the
Company for the operation of its internal control system and receives and
reviews reports submitted by the Chief Financial Officer. The Audit Committee
held five meetings during the year ended December 31, 2001. The Committee's
members during 2001 from January 1 through September 30 were: Nuno Brandolini,
Chairman, Emanuel Batler and John K. Howie. From October 1 through December 31,
2001, the committee's members were: Keith F. Carney, Chairman, Nuno Brandolini
and John K. Howie.

The Compensation Committee reviews and approves the salaries and other
compensation for the executive officers of the Company. The Compensation
Committee also determines the eligible persons to whom stock options may be
granted, the time or times at which options shall be granted, the number of
shares of common stock subject to each option, the exercise price for the
purchase of shares subject to each option, the time or times when each option
shall become exercisable and the duration of the exercise period. The committee
also has discretionary authority to interpret the stock option plan, to
prescribe, amend and rescind rules and regulations relating to it, to determine
the details and provisions of each stock option agreement, and to make all
determinations necessary or advisable in administration of the plan. The
Compensation Committee held one meeting and there was one unanimous consent in
lieu of a meeting during 2001. The committee's members during 2001 from
January 1

through September 30 were: Emanuel Batler, Chairman, Nuno Brandolini and John K.
Howie. From October 1 through December 31, 2001, the Committee members were:
John K. Howie, Chairman, Keith F. Carney and Paul J. Hoenmans.

DIRECTOR COMPENSATION

During the fiscal year ended December 31, 2001, directors received no cash
remuneration for serving on the Board of Directors of the Company, nor were they
compensated for attending Board or committee meetings. From time to time,
outside members of the Board of Directors (those who do not serve as executive
officers of the Company) are compensated for their services to the Company
through the grant of options to purchase Common Stock of the Company.

In November 2001, the Board of Directors granted options to purchase 25,000
shares of Common Stock to each of its outside directors, Messrs. Brandolini,
Carney and Howie, and 50,000 shares of Common Stock to its outside director, Mr.
Hoenmans, in recognition of their service to the Company. The options vested
fully on the date of grant and are not contingent upon the Company's achievement
of earnings goals. The options are exercisable at a price of $1.06 per share,
the closing market price on The American Stock Exchange on the date of the
grants. The options expire five years from the date of grant.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE SEVEN
NOMINEES AS DIRECTORS OF THE COMPANY, TO SERVE UNTIL THE NEXT ANNUAL MEETING OF
STOCKHOLDERS OR UNTIL THEIR SUCCESSORS ARE DULY ELECTED AND QUALIFIED.

PROPOSED AMENDMENT TO 1997 STOCK OPTION PLAN
INCREASING NUMBER OF SHARES SUBJECT TO PLAN

The Company's Board of Directors has approved and declared the advisability
of amending the Company's 1997 Stock Option Plan (the "Plan") to increase the
total number of shares of Common Stock subject to the Plan from 1,500,000 to
2,000,000. The amendment would change the first sentence of Article V Section
5.1 to read:

"Subject to adjustment pursuant to the provisions of Section 5.2
hereof, the maximum number of shares of Common Stock which may be
issued and sold hereunder shall be 2,000,000."

The purpose of the Plan is to advance the interests of the Company and its
stockholders and subsidiaries by attracting, retaining and motivating the
performance of selected directors, officers, and employees of the Company of
high caliber and potential upon whose judgment, initiative and effort the
Company is largely dependent for the successful conduct of its business, and to
encourage and enable such directors, officers, and employees to acquire and
retain a proprietary interest in the Company by ownership of its stock. The
purpose of the amendment is to provide the Company with maximum flexibility and
additional resources with which to achieve the objectives of the Plan.

General and Administration. The Plan provides for the grant of
Nonqualified Stock Options and Incentive Stock Options (collectively,
"Options"). It is administered by a committee (the "Committee") comprised
solely of directors, each of whom is a "non-employee director" as defined in
Rule 16b-3 of the Securities Exchange Act of 1934, as amended ("Exchange Act"),
as selected by the Board of Directors; provided, however, with respect to any
Nonqualified Stock Options for directors who are Committee members, the Board of
Directors shall function in the capacity as the Committee under the Plan. The
Committee will select the persons who, from time to time, will receive Options,
the number that they are to receive, the Option price of the shares, the vesting
date, and the expiration date.

Shares of Stock Subject to Plan. Pursuant to the Plan, the Company may
grant Options exercisable for up to 1,500,000 shares of Common Stock, which is
proposed to be increased to 2,000,000. Those shares may be either authorized
but unissued shares or shares held in the Company's treasury. If any
outstanding Option terminates for any reason, the shares of Common Stock subject
to the unexercised portion of such Option become available for new Option
grants. The number of shares of Common Stock which may be issued under the Plan
and pursuant to then outstanding Stock Options are subject to adjustments to
prevent enlargement or dilution of rights resulting from stock dividends, stock
splits, recapitalizations, reorganizations or similar transactions.

Options. The two types of Options which the Committee may grant under the
Plan are Nonqualified Stock Options and Incentive Stock Options. Incentive
Options may only be granted to Eligible Persons who are considered employees of
the Company or any Subsidiary. An Option will be effective on the date it is
approved by the Committee unless the Committee specifies a later effective date.
The Company and the Optionee shall enter into a Stock Option Agreement which
details the terms and conditions of the Options granted. The Committee sets the
Option price; however, the Option price of an Incentive Stock Option shall not
be less than 100% (110% in the case of certain 10% shareholders) of the fair
market value of a share of Common Stock on the date of grant. A Nonqualified
Stock Option that is intended to qualify as performance based compensation to an
officer subject to Section 162(m) of the Code must be granted with an exercise
price equal to 100% of the fair market value of a share of Common Stock on the
grant date. An Option shall vest and become exercisable as stated in the
applicable Stock Option Agreement, provided that the Optionee is an eligible
Person on the applicable vesting dates. The Committee has sole discretion to
accelerate any Option at any time. An Option must be exercised within ten years
from the date of grant unless a shorter period is specified in the Stock Option
Agreement.

An Option may be exercised wholly or in part, in whole share increments, at
any time within the period permitted for exercise. Only the Optionee may
exercise an Option during the Optionee's lifetime, except that in the case of an
Optionee who is legally incapacitated, the Option shall be exercisable by the
Optionee's guardian or legal representative. Optionees may not transfer Options
other than by will or the laws of descent and distribution.

Tax Consequences to the Company. An Optionee does not recognize any income
for federal tax purposes at the time a Nonqualified Stock Option is granted, and
the Company is not then entitled to a deduction. When any Nonqualified Stock
Option is exercised, the Optionee recognizes ordinary income in an amount equal
to the difference between the fair market value of the shares on the exercise
date and the exercise price of the Nonqualified Stock Option, and the Company
generally recognizes a tax deduction in the same amount.

The Company is not entitled to a tax deduction as the result of the grant
or qualified exercise of an Incentive Stock Option. If an Optionee disposes of
shares acquired upon exercise of an Incentive Stock Option within either two
years after the date of its grant or one year after its exercise, the
disposition is a disqualifying disposition and the Optionee will recognize
ordinary income in the year of such disposition. The Company generally is
entitled to a deduction in the year of the disqualifying disposition in an
amount equal to the ordinary income recognized by the Optionee as a result of
such disposition.

Taxable compensation earned by certain named executive officers subject to
Section 162(m) of the Code in respect of stock options is generally intended to
satisfy the requirements for "qualified performance-based compensation," but no
assurance can be provided that the Company will be able to satisfy these
requirements in all cases, and the Company may, in its sole discretion,
determine in one or more cases that it is in its best interest not to satisfy
these requirements even if it is able to do so.

Termination of Service. Unless otherwise provided in the Stock Option
Agreement, if an Optionee dies after the date of grant, the executor or
administrator of the Optionee's estate, or anyone to whom an outstanding Option
has been validly transferred by will or the laws of descent and distribution,
will have the right, within one year after the Optionee's death, to exercise any
portion of the Option which was exercisable but unexercised at the time of the
Optionee's death. If an Optionee's employment or other service with the Company
or any Subsidiary is terminated due to permanent and total disability at any
time after grant, the Optionee, or his legal guardian or representative, will
have the right, within one year of the date of the Optionee's disability, to
exercise any portion of the outstanding Option which was exercisable but
unexercised at the time of the Optionee's termination due to disability. The
period for exercise of an Option after the date of death or disability is
limited by the maximum term set for exercise in the Stock Option Agreement. The
Committee may determine at or after the grant to make any

portion of an Option that is not exercisable at the date of death or disability
immediately vested and exercisable. Unless otherwise provided in the Stock
Option Agreement, if an Optionee's employment or other service with the Company
or any Subsidiary is terminated for cause (as defined in the Plan), the
Optionee's right to exercise any unexercised portion of any Option will
terminate and all rights under any Option will cease. If an Optionee's
employment or other service with the Company is terminated for any reason other
than death, permanent and total disability, or for cause, the Optionee will have
the right to exercise any Option to the extent it was exercisable and
unexercised on the date of termination during the period which ends the earlier
of 90 days after termination or the date that the Option expires.

Change in Control. Upon a "Change in Control" (as defined in the Plan) of
the Company, the unvested portion of every outstanding Option will become fully
and immediately vested and an Optionee must surrender his or her Option and
receive, for each share of Common Stock issuable under the Option outstanding at
such time, a cash payment equal to the excess of the fair market value of the
Common Stock at the time of the Change in Control over the Option price of the
Common Stock. The vesting and cash payment described above will not occur if
(i) the Change in Control was approved by at least two-thirds of the Board who
were serving as such immediately prior to the transaction and (ii) provision has
been made in connection with such transaction for (a) the continuation of the
Plan and/or the assumption of such Options by a successor corporation (or a
parent or subsidiary thereof) or (b) the substitution for such Options of new
Options covering the stock of a successor corporation (or a parent or subsidiary
thereof), with appropriate adjustments as to the number and kinds of shares and
exercise prices.

Termination and Amendment. The Plan terminates in April 2007. The Board
may, in its sole discretion and at any earlier date, terminate the Plan;
provided, however, no termination of the Plan shall in any manner affect any
Option already granted under the Plan without the consent of the Optionee or the
permitted transferee of the Option. The Board may at any time and from time to
time, amend or modify the Plan; however, no amendment or modification of the
Plan shall in any manner affect any Option already granted under the Plan
without the consent of the Optionee or the permitted transferee of the Option
and certain amendments may require stockholder approval.

Certain Securities Law Matters. The Company has registered under the
Securities Act of 1933 the common stock reserved for issuance under the Plan on
a registration statement on Form S-8 and intends to register the additional
shares in the same fashion if the amendment to the Plan is approved.

New Plan Benefits. The Board of Directors has voted to grant stock options
as set forth in the following table, contingent upon the stockholders' approval
of the proposed amendment to the 1997 Stock Option Plan. Options to be granted
to employees of the Company will vest equally over four years and are not
contingent upon the Company's achievement of earnings goals. The options expire
after the earlier of five years after the date granted or six months after the
termination of the optionholder's employment with the Company for any reason
other than retirement, death or disability.

Name and Position Number of Options(1)
----------------- --------------------
Charif Souki 62,899
Chairman of the Board

Walter L. Williams 41,932
Vice Chairman

Charles M. Reimer 62,899
President and Chief Executive Officer

Keith F. Carney --
Executive Vice President - Business Development

Don A. Turkleson 41,911
Vice President, Chief Financial Officer, Treasurer & Secretary

Jonathan S. Gross 31,499
Vice President - Exploration

Executive Group 241,111

Non-Executive Director Group --

Non-Executive Officer Employee Group --
____________
(1) The exercise price for these options is $1.06 per share, the closing market
price on The American Stock Exchange on November 9, 2001, the date of grant.
Based on the closing market price on The American Stock Exchange at December
31, 2001 ($1.00 per share) the value of the options is zero.

APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP
AS INDEPENDENT ACCOUNTANTS

The Board of Directors recommends to stockholders that the certified public
accounting firm of PricewaterhouseCoopers LLP serve as the Company's
independent accountants for the fiscal year ending December 31, 2002.
PricewaterhouseCoopers LLP has served as the Company's independent accountants
since May 1998 and has audited the financial statements of the Company from the
date of its inception (February 21, 1996) through December 31, 2001.

The Company anticipates that representatives of PricewaterhouseCoopers LLP
will participate in the annual meeting of stockholders, may make a statement if
they desire to do so, and will be available to respond to appropriate questions
concerning the Company's financial statements.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS.

MANAGEMENT

EXECUTIVE OFFICERS

The following table sets forth the names, ages and positions of each
executive officer of the Company, all of whom serve at the pleasure of the Board
of Directors and are subject to annual appointment by the Board:

Name Age Position
---------------- ----- -------------------------------------------------
Charif Souki 49 Chairman
Walter L. Williams 74 Vice Chairman
Charles M. Reimer 57 President and Chief Executive Officer
Don A. Turkleson 47 Vice President & Chief Financial Officer,
Secretary & Treasurer
Jonathan S. Gross 43 Vice President - Exploration

CHARIF SOUKI has served as Chairman of the Board of Directors since June
1999. From September 1997 until June 1999 he was Co-Chairman of the Board of
Directors, and he served as Secretary of the Company from July 1996 until
September 1997. Mr. Souki also served as a director of the Company throughout
the year ended December 31, 2001. Further information regarding Mr. Souki is
provided above under "Election of Directors--Nominees."

WALTER L. WILLIAMS has served as Vice Chairman of the Board of Directors
since June 1999. He served as President and Chief Executive Officer of the
Company from September 1997 until June 1999 and as Vice Chairman of the Board of
Directors from July 1996 until September 1997. Mr. Williams served as a
director of the Company throughout the year ended December 31, 2001. Further
information regarding Mr. Williams is provided above under "Election of
Directors--Nominees."

CHARLES M. REIMER has served as President and Chief Executive Officer of
Cheniere since October 2000. Mr. Reimer served as a director of the Company
throughout the year ended December 31, 2001. Further information regarding Mr.
Reimer is provided above under "Election of Directors--Nominees."

DON A. TURKLESON has served as Vice President and Chief Financial Officer,
Secretary and Treasurer of Cheniere since December 1997. Prior to joining
Cheniere in 1997, Mr. Turkleson was employed by PetroCorp Incorporated from 1983
to 1996, as Controller until 1986, then as Vice President - Finance, Secretary
and Treasurer. From 1975 to 1983, he worked as a Certified Public Accountant in
the natural resources division of Arthur Andersen & Co. in Houston. Mr.
Turkleson received a B.S. in accounting from Louisiana State University in 1975.
He is a director, and past Chairman of the Board of Neighborhood Centers, Inc.,
a nonprofit organization.

JONATHAN S. GROSS has served as Vice President-Exploration of Cheniere
since October 2000. He served as Technology Manager of the Company from June
1999 through October 2000. Mr. Gross began his career in 1981 with Amoco
Production Company as an exploration geophysicist. While at Amoco he held
senior technical positions in both domestic and international basins. In 1998
he joined Zydeco Energy, Inc., where he served as economist, exploration risk
specialist, and project manager. Mr. Gross received a Bachelor of Arts degree
in geology from the University of Chicago, and he is a member of the American
Association of Petroleum Geologists, the Society of Exploration Geophysicists,
and the Houston Geological Society.

EXECUTIVE COMPENSATION

The following table reflects all compensation received by the chief
executive officer and by each of the five other most highly compensated
executive officers of the Company during the three years ended December 31,
2001, 2000 and 1999 (collectively, the "Named Executives").

SUMMARY COMPENSATION TABLE

Long Term
Annual Compensation Compensation Awards
------------------- ---------------------
Securities Underlying
Name and Principal Position Year Salary Bonus Options/SARs(#)
--------------------------- ------ ---------- -------- ---------------------

Charif Souki (1) 2001 $125,000 $ 50,000 120,000
Chairman 2000 $120,000 $100,000 112,500
1999 $120,000 -- -

Walter L. Williams 2001 $150,000 -- 80,000
Vice Chairman 2000 $127,500 -- 67,500
1999 $120,000 -- 25,000

Charles M. Reimer (2) 2001 $180,000 -- 120,000
President and 2000 $ 60,000 -- 362,500
Chief Executive Officer 1999 -- -- -

Keith F. Carney (3) 2001 $ 94,904 -- 25,000
Executive Vice President - 2000 $112,500 -- 67,500
Business Development 1999 $100,000 -- 25,000

Don A. Turkleson 2001 $150,000 -- 80,000
Vice President, 2000 $112,500 -- 67,500
Chief Financial Officer, 1999 $100,000 -- 25,000
Secretary and Treasurer

Jonathan S. Gross 2001 $150,000 -- 60,000
Vice President - Exploration 2000 $120,000 -- 86,250
1999 $ 64,167 -- 18,750

(1) In October 1998, Mr. Souki commenced providing consulting services to the
Company pursuant to a Services Agreement and was compensated at a rate of
$10,000 per month. Such rate was increased to $15,000 per month in
November 2001. Mr. Souki was awarded a bonus of $50,000 in November 2001.
The timing of payment is contingent upon the occurrence of certain future
events.
(2) Mr. Reimer has an employment agreement with the Company. Pursuant to the
terms of the employment agreement, Mr. Reimer is entitled to severance pay
equal to two years' base salary in the event of a change in control or
termination by the Company.
(3) Mr. Carney's salary was paid at a rate of $150,000 per year effective
October 2000 and continuing until October 2001 when he resigned from
Cheniere to become President of Dolomite Advisors LLC.

OPTION GRANTS

Stock options granted to Named Executives during the year ended
December 31, 2001 are summarized in the following table:

Individual Grants
--------------------------------------------------------------------------------------------
Potential Realizable Value
at Assumed Annual Rates
Number of Securities % of Total of Stock Price Appreciation
Underlying Options/SARs Exercise or for Option Term
Options/SARs Granted to Employees Base Price Expiration ---------------------------
Name Granted in Fiscal Period Per Share Date 5% 10%
---- -------------------- -------------------- ----------- ---------- ------- ---------

Charif Souki 120,000 16.0% $1.06 11/09/06 $35,143 $77,657

Walter L. Williams 80,000 10.7% $1.06 11/09/06 $23,429 $51,771

Charles M. Reimer 120,000 16.0% $1.06 11/09/06 $35,143 $77,657

Don A. Turkleson 80,000 10.7% $1.06 11/09/06 $23,429 $51,771

Jonathan S. Gross 60,000 8.0% $1.06 11/09/06 $17,572 $38,828

These grants include the contingent grants described in under "Proposed
Amendment to 1997 Stock Option Plan Increasing Number of Shares Subject to
Plan - New Plan Benefits."

Options granted to named executives during 2001 have a term of five years
and vest 33% on each of the first three anniversaries of the date of grant.

Outside members of the Board of Directors (those who do not serve as
executive officers of the Company) are compensated for their services to the
Company through the grant of options to purchase Common Stock of the Company.

OPTION EXERCISES AND YEAR-END VALUES

The following table sets forth information regarding unexercised options or
warrants to purchase shares of Common Stock granted by the Company to Named
Executives. No Named Executives exercised any Common Stock options during the
fiscal year ended December 31, 2001.

Value of Unexercised
Number of Securities Underlying In-the-Money
Unexercised Options/SARs Options/SARs at
at December 31, 2001 December 31, 2001 (1)
-------------------------------------------- -----------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
------------------------ ------------------------- ------------- ---------------------- -------------

Charif Souki 45,833 186,667 $ - $ -

Walter L. Williams 85,000 137,500 - -

Charles M. Reimer 304,583 186,667 - -

Don A. Turkleson 47,500 137,500 - -

Jonathan S. Gross 38,125 126,875 - -

(1) The value of unexercised options and warrants to purchase Common Stock at
December 31, 2001 is calculated based upon The American Stock Exchange
closing market price of $1.00 per share on December 31, 2001.

INDEMNIFICATION OF OFFICERS AND DIRECTORS

The Company's Certificate of Incorporation provides that the liability of
directors for monetary damages shall be limited to the fullest extent
permissible under Delaware law. This limitation of liability does not affect
the availability of injunctive relief or other equitable remedies.

The Company's Certificate of Incorporation and Bylaws provide that the
Company shall indemnify its directors and officers to the fullest extent
possible under Delaware law. These indemnification provisions require the
Company to indemnify such persons against certain liabilities and expenses to
which they may become subject by reason of their service as a director or
officer of the Company or any of its affiliated enterprises. The provisions also
set forth certain procedures, including the advancement of expenses, that apply
in the event of a claim for indemnification.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information with respect to the shares of
Common Stock owned of record and beneficially as of April 1, 2002 by all persons
who own of record or are known by the Company to own beneficially more than 5%
of the outstanding Common Stock, by each director, nominee for director and
Named Executive, and by all directors and executive officers as a group:

Name Beneficial Ownership of Class
------------------------------------------------- ---------------------------- ---------------

BSR Investments, Ltd. 1,452,495 (1) 10.8%
Nuno Brandolini 263,750 (2) 1.9%
Keith F. Carney 196,667 (3) 1.5%
Jonathan S. Gross 49,500 (4) *
Paul J. Hoenmans 50,000 (5) *
John K. Howie 37,500 (6) *
Charles M. Reimer 370,059 (7) 2.7%
Charif Souki 145,583 (8) 1.1%
Don A. Turkleson 101,667 (9) *
Walter L. Williams 121,250 (10) *
All Directors and Officers as a group (9 persons) 1,335,976 (11) 9.3%

* Less than 1%.

(1) BSR Investments, Ltd. is controlled by Nicole Souki, the President of BSR
and the mother of Charif Souki. Charif Souki disclaims beneficial
ownership of the shares. Includes warrants to purchase 164,851 shares of
the Company's Common Stock. BSR's address is c/o Harney, Westwood &
Riegels, Box 71, Craigmuir Chambers, Road Town, Tortola, B.V.I.
(2) Includes 50,000 shares issuable upon exercise of currently exercisable
options held by Mr. Brandolini. Also includes warrants to purchase 213,750
shares of Common Stock held by Arabella SA, of which Mr. Brandolini
disclaims beneficial ownership. Mr. Brandolini serves as Chairman and
Chief Executive Officer of Scorpion Holdings, Inc, which manages
investments for Arabella SA. Mr. Brandolini also serves as a director of
Arabella SA.
(3) Includes 4,167 shares issuable upon exercise of currently exercisable
warrants and 167,500 shares issuable upon exercise of currently exercisable
options held by Mr. Carney.
(4) Includes 334 shares issuable upon exercise of currently exercisable
warrants, 38,125 shares issuable upon exercise of currently exercisable
options and 8,854 shares issuable upon exercise of options which become

exercisable within 60 days of the filing of this proxy statement. Excludes
118,021 shares issuable upon the exercise of options held by Mr. Gross but
not exercisable within 60 days of the filing of this proxy statement.
(5) Includes 50,000 shares issuable upon exercise of currently exercisable
options held by Mr. Hoenmans.
(6) Includes 37,500 shares issuable upon exercise of currently exercisable
options held by Mr. Howie.
(7) Includes 258,334 shares issuable upon exercise of currently exercisable
warrants and 54,583 shares issuable upon exercise of currently exercisable
options. Excludes 186,667 shares issuable upon the exercise of options
held by Mr. Reimer but not exercisable within 60 days of the filing of this
proxy statement.
(8) Includes 14,250 shares issuable upon exercise of currently exercisable
warrants and 85,500 shares owned by Mr. Souki's wife. Also includes 45,833
shares issuable upon exercise of currently exercisable options. Excludes
186,667 shares issuable upon the exercise of options held by Mr. Souki but
not exercisable within 60 days of the filing of this proxy statement. Does
not include 1,287,644 shares nor warrants to purchase 164,851 shares of
Cheniere Common Stock held by BSR Investments, Ltd. of which Charif Souki
disclaims beneficial ownership. BSR Investments, Ltd. is controlled by
Nicole Souki, the President of BSR Investments, Ltd. and the mother of
Charif Souki.
(9) Includes 4,167 shares issuable upon exercise of currently exercisable
warrants, 50,625 shares issuable upon exercise of currently exercisable
options and 15,625 shares issuable upon exercise of options which become
exercisable within 60 days of the filing of this proxy statement. Excludes
118,750 shares issuable upon the exercise of options held by Mr. Turkleson
but not exercisable within 60 days of the filing of this proxy statement.
(10) Includes 88,125 shares issuable upon exercise of currently exercisable
options, 15,625 shares issuable upon exercise of options which become
exercisable within 60 days of the filing of this proxy statement and 10,000
shares owned by Mr. Williams' wife. Excludes 118,750 shares issuable upon
the exercise of options held by Mr. Williams but not exercisable within 60
days of the filing of this proxy statement.
(11) Includes an aggregate of 582,291 shares issuable upon exercise of currently
exercisable options, 40,104 shares issuable upon exercise of options which
become exercisable within 60 days of the filing of this proxy statement and
495,002 shares issuable upon exercise of currently exercisable warrants.
Excludes an aggregate of 728,855 shares issuable upon the exercise of
options not exercisable within 60 days of the filing of this proxy
statement (of which 241,111 have been granted contingent upon stockholder
approval of the proposed Amendment to the 1997 Stock Option Plan described
herein).

REPORT OF THE AUDIT COMMITTEE

The following Report of the Audit Committee does not constitute soliciting
material and should not be deemed filed or incorporated by reference into any
other Company filing under the Securities Act of 1933 or the Securities Exchange
Act of 1934, except to the extent the Company specifically incorporates this
Report by reference therein.

During fiscal 2000, the Committee of the Board of Directors developed a
written charter for the Committee, which was approved by the full Board. The
complete text of the charter, which reflects standards set forth in new SEC
regulations and The American Stock Exchange rules, is reproduced in the appendix
to the Company's 2001 proxy statement.

The function of the Committee is to assist the Board in fulfilling its
oversight responsibilities through regular or special meetings with management
and the independent accountants on matters relating to:

- the Company's financial reporting in the Quarterly Reports on Form
10-Q and the Annual Report on Form 10-K,
- the Company's system of internal controls,
- the Company's relationship with its independent accountants,
- the Company's audit and accounting processes generally, and
- the Company's systems and policies to comply with applicable laws
and regulations.

In carrying out this function, the Committee provides independent and
objective oversight of the performance of the Company's financial reporting
process, system of internal controls and legal and regulatory compliance system.
The Committee provides for open, ongoing communication among the independent
accountants, financial and senior management and the Board concerning the
Company's financial and compliance position and affairs. The Committee has the
power to conduct or authorize investigations into any matters within its scope
of responsibilities and shall be empowered to retain independent counsel,
accountants, or others to assist it in the conduct of any investigation. The
Committee's responsibility is oversight, and it recognizes that the Company's
management is responsible for preparing the Company's financial statements and
complying with applicable laws and regulations. The members of the Committee
other than Keith Carney are "independent directors" as defined within The
American Stock Exchange rules. Mr. Carney served as Chief Financial Officer and
Treasurer of the Company from July 1996 through November 1997 and as Executive
Vice President from 1997 through August 2001. He left the Company to serve as
President of Dolomite Advisors, LLC, a manager of energy investment funds. Mr.
Carney has served on the Board since October 2001. The Board has determined that
Mr. Carney's membership on the Audit Committee is required by the best interests
of the Company and its stockholders because his experience as the chief
financial officer of a public company makes him the most highly qualified
individual on the Board to serve on the Audit Committee. As a result of his
employment with the Company during the last three years, Mr. Carney does not
satisfy the definition of an "independent director" under the American Stock
Exchange rules. However, because those rules allow one director who does not
meet the definition to nevertheless serve on the Audit Committee, the Board has
appointed him to that position for the reason stated above.

In overseeing the preparation of the Company's financial statements, the
Committee met with both management and the Company's independent accountants to
review and discuss all audited financial statements prior to their issuance and
to discuss significant accounting issues. Management advised the Committee that
all financial statements were prepared in accordance with generally accepted
accounting principles. The Committee's review included discussion with the
outside auditors of matters required to be discussed pursuant to Statement on
Auditing Standards (FAS) No. 61 (Codification of Statements on Auditing
Standards, AU 380) as amended by FAS 90. With respect to the Company's outside
auditors, the Committee, among other things, discussed with
PricewaterhouseCoopers LLP matters relating to its independence, including the
written disclosures and the letter from the outside accountants provided to the
Committee as required by the Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees). Finally, the Committee
continued to monitor the scope and adequacy of the Company's internal control
system. On the basis of these reviews and discussions, the Committee recommended
to the Board of Directors that the Board approve the inclusion of the Company's
audited financial statements in the Company's Annual Report on Form 10-K for the
year ended December 31, 2001 for filing with the Securities and Exchange
Commission.

Members of the Audit Committee
Keith F. Carney, Chairman
Nuno Brandolini
John K. Howie

PURSUANT TO SEC RULES, THIS SECTION OF THIS PROXY STATEMENT DOES NOT
CONSTITUTE "SOLICITING MATERIAL" AND SHOULD NOT BE DEEMED "FILED" WITH THE SEC
AND IS NOT INCORPORATED BY REFERENCE INTO THE COMPANY'S ANNUAL REPORT ON FORM
10-K OR ANY OTHER FUTURE FILING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, EXCEPT TO THE EXTENT THAT THE
COMPANY SPECIFICALLY INCORPORATES IT BY REFERENCE INTO A FILING.

INDEPENDENT ACCOUNTANTS' FEES

AUDIT FEES

Aggregate fees for professional services rendered by PricewaterhouseCoopers
LLP in connection with the audit of the Company's financial statements and
reviews of interim financial statements for the fiscal year ended December 31,
2001 were $96,000.

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES

During the fiscal year ended December 31, 2001, PricewaterhouseCoopers LLP
rendered no professional services in connection with the design and
implementation of financial information systems as used in paragraph (c)(4)(ii)
of Rule 2-01 of Regulation S-X.

ALL OTHER FEES

In addition to the fees described above, aggregate fees of $145,500 were
billed to the Company by PricewaterhouseCoopers LLP for the fiscal year ended
December 31, 2001 for other professional services such as tax return
preparation, review of registration statements and consultation related to
comment letters from the Securities and Exchange Commission. The Audit Committee
has discussed the non-audit services provided by PricewaterhouseCoopers LLP and
the related fees and has considered whether those services and fees are
compatible with maintaining auditor independence.

GENERAL

None of the hours expended on the engagement of PricewaterhouseCoopers LLP
to audit the Company's financial statements for the fiscal year ended
December 31, 2001 were attributed to work performed by persons other than
PricewaterhouseCoopers LLP permanent full-time employees.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation for the fiscal year ended December
31, 2001:

The Compensation Committee, which is comprised of non-employee directors of
the Company, establishes the general compensation policies of the Company,
establishes the compensation plans and compensation levels for officers and
certain other key employees and administers the Company's stock option plan.
The Committee also establishes salary ranges for officers and certain key
employees, and generally approves specific amounts within those ranges on the
recommendation of management.

In establishing compensation policies, the Committee believes that cash
compensation of executive officers, as well as other key employees, should be
competitive with other similar oil and gas companies or other business
opportunities available to such executive officers and key employees while,
within the Company, being fair and discriminating on the basis of personal
performance. Periodic awards of stock options are intended to both retain
executives and to motivate them to accomplish long-term growth objectives and
improve long-term market performance.

The Committee has from time to time retained outside compensation
consultants to conduct compensation surveys and advise the Committee concerning
compensation matters, and the Committee has surveyed the executive compensation
levels of companies in the oil and gas industry that are similar to the Company.

The Company seeks to relate a significant portion of the potential total
executive compensation to the Company's financial performance. In general,
executive financial rewards at Cheniere may be segregated into the following
components: salary and stock-based benefits. The Committee has not awarded any
bonus compensation, except for a December 2000 award of $100,000 and a November
2001 award of $50,000 to the Company's Chairman. Payment of the November 2001
award is contingent upon the occurrence of certain liquidity events.

Base compensation for senior executive officers is intended to afford a
reasonable degree of financial security and flexibility to those individuals who
are regarded by the Committee as acceptably discharging the levels and types of
responsibility implicit in their respective executive positions.

The Committee is of the view that properly designed and administered stock-
based incentives for senior executives closely align the executives' economic
interests with those of stockholders and provide a direct continuing focus upon
the goal of constantly striving to increase long-term stockholder value. Toward
that goal, the Company established the Cheniere Energy, Inc. 1997 Stock Option
Plan and has made periodic grants of stock options to its officers and other key
employees. See "Management - Executive Compensation" and "Management - Option
Grants."

Chief Executive Officer's Compensation. The Committee determines the
compensation of the Chief Executive Officer in substantially the same manner as
the compensation of the other officers. In establishing the base salary for Mr.
Reimer for the 2001 fiscal year, the Committee assessed (i) the performance of
the Company, (ii) total return to stockholders, (iii) progress toward
implementation of the Company's strategic business plan and (iv) compensation
levels of chief executive officers of similar companies in the oil and gas
industry. The performance by the Company is measured by, among other things,
corporate net earnings, revenues and a comparison to similar companies in the
oil and gas industry.

Mr. Reimer served as President and Chief Executive Officer of the Company
for the year ended December 31, 2001. Mr. Reimer received a base salary at the
rate of $180,000 per year. On November 9, 2001 the Committee awarded him
120,000 stock options at an exercise price of $1.06 per share, the closing
market price of the Common Stock on that date, including 62,899 stock options
granted contingent upon stockholder approval of the proposed Amendment to the
1997 Stock Option Plan described herein.

Omnibus Budget Reconciliation Act of 1993. Section 162(m) of the Omnibus
Budget Reconciliation Act of 1993 limits the deductibility to the Company of
cash compensation in excess of $1 million paid to the Company's chief executive
officer and the next four highest paid officers during any fiscal year, unless
such compensation meets certain requirements. During 2001, the Committee
reviewed compensation programs in light of the requirements of this law. The
Committee does not expect the law to impact the Company in 2002 or for the
foreseeable future in any significant way, if at all.

Members of the Compensation Committee
John K. Howie, Chairman
Keith F. Carney
Paul J. Hoenmans

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

In addition to serving as a director of the Company, several directors held
positions as executive officers during the fiscal year ended December 31, 2001.
Mr. Souki served as Chairman of the Board; Mr. Williams served as Vice Chairman
of the Board. Mr. Reimer served as President and Chief Executive Officer.

COMMON STOCK PERFORMANCE GRAPH

The following graph compares the cumulative total shareholder return on the
Company's Common Stock against the S&P Oil and Gas (Exploration & Production)
Index, and the Russell 2000 Index for the period beginning on August 31, 1996
and ending at fiscal year-end December 31, 2001. The Company's Common Stock
began trading on the OTC Bulletin Board on July 3, 1996, moved to the NASDAQ
SmallCap Market on April 11, 1997, again traded on the OTC Bulletin Board
beginning December 14, 2000, and began trading on The American Stock Exchange on
March 5, 2001. The graph was constructed on the assumption that $100 was
invested in the

Company's Common Stock, the S&P Oil and Gas (Exploration & Production) Index,
and the Russell 2000 Index on August 31, 1996.

COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG CHENIERE ENERGY, INC., S&P OIL & GAS (EXPLORATION & PRODUCTION) INDEX,
AND RUSSELL 2000 INDEX

[Graph appears here]

8/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
------- -------- -------- -------- -------- --------

Cheniere Energy, Inc. $100 $ 69 $ 33 $ 24 $ 23 $ 8
S&P Oil & Gas (Exploration $100 $107 $ 73 $ 87 $139 $110
& Production) Index
Russell 2000 Index $100 $134 $130 $155 $149 $151

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

BSR Investments, Ltd. ("BSR"), an entity holding approximately 9.7% of the
outstanding shares of the Company's Common Stock, is under the control of Nicole
Souki, the mother of Charif Souki, Chairman of the Board of Directors. Charif
Souki has been engaged, from time to time, as a consultant to BSR. Charif Souki
disclaims beneficial ownership of all shares held by BSR.

BSR purchased $2,000,000 of the notes issued in the Company's $4,000,000
December 1997 Bridge Financing and pledged a portion of its investment in
Cheniere Common Stock to fund its participation. In conjunction with the
financing, BSR received warrants to purchase 41,667 shares of the Company's
common stock. On September 15, 1998, BSR received warrants to purchase an
additional 100,000 shares of common stock as consideration for extending the
maturity of the notes to that date. Also in September 1998, the exercise price
of the warrants held by BSR was reduced from $9.50 to $6.00 per share as
consideration to extend the maturity date of the

notes to January 15, 1999. In March 1999, BSR exchanged notes payable of
$2,000,000 for 694,445 shares of Cheniere Common Stock ($2.88 per share). In May
1999, BSR purchased from another note holder $240,000 in short-term notes
payable by Cheniere. In July 1999, the Company repaid $120,000 to BSR at the
time it repaid 50% of the outstanding balances on all of the notes issued in the
December 1997 Bridge Financing. On September 30, 1999, BSR exchanged its
remaining $120,000 note payable and $1,000 in accrued interest for 27,500 units
($4.40 per unit), each unit representing one share of common stock and one half
warrant to purchase a share of common stock at an exercise price of $6.00 per
share on or before September 30, 2002. In April 2000, the Company issued an
additional 1,100 units, representing 1,100 shares of Common Stock and warrants
to purchase 1,100 shares of Common Stock, to BSR pursuant to a price adjustment
provision included in the September 1999 offering.

In conjunction with certain of the Company's private placements of equity,
placement fees have been paid to Investors Administration Services, Limited
("IAS"), a company in which the brother of Charif Souki, Cheniere's Chairman, is
a principal. Placement fees paid to IAS totaled $30,000 during the year ended
December 31, 2001.

In September 2001, the Company made a payment of $40,000 to its chairman,
Charif Souki, representing consulting fees for the months of October 2001
through January 2002.

All such transactions were approved by the Board of Directors of the
Company, and the Company believes that each such transaction was on terms that
were comparable to, or more favorable to the Company than, those that might have
been obtained by the Company on an arm's length basis from unaffiliated parties.

OTHER MATTERS

REQUIRED VOTE

Only holders of Common Stock as of the Record Date will be entitled to vote
in person or by proxy at the meeting. A majority of issued and outstanding
shares of Common Stock as of the Record Date represented at the meeting in
person or by proxy will constitute a quorum for the transaction of business.
Abstentions and broker non-votes will be counted for purposes of determining the
presence or absence of a quorum. Provided that a quorum is present at the
meeting, (i) the seven director nominees who receive the greatest number of
votes cast for election by stockholders entitled to vote therefor will be
elected directors, (ii) the proposed amendment to the Company's 1997 Stock
Option Plan will require approval by a majority of shares entitled to vote
thereon at the meeting and (iii) approval of PricewaterhouseCoopers LLP as
independent accountants will require approval by a majority of shares
represented in person or by proxy and entitled to vote at the annual meeting.
Because broker non-votes are not considered "shares present" with respect to
matters requiring the affirmative vote of a majority of shares represented in
person or by proxy at the meeting, broker non-votes will not affect the outcome
with respect to the proposed amendment to the Company's 1997 Stock Option Plan
and the approval of PricewaterhouseCoopers LLP as independent accountants.
Abstentions with respect to the proposed amendment to the Company's 1997 Stock
Option Plan and the approval of PricewaterhouseCoopers LLP as independent
accountants will have the same effect as a vote against approval thereof, but
will have no effect with respect to the election of directors.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Under Section 16(a) of the Exchange Act, directors, certain officers, and
beneficial owners of 10% or more of any class of the Company's stock ("Reporting
Persons") are required from time to time to file with the Securities and
Exchange Commission and The American Stock Exchange reports of ownership and
changes of ownership. Reporting Persons are required to furnish the Company
with copies of all Section 16(a) reports they file. Based solely on its review
of forms and written representations received from Reporting Persons by it with
respect to the fiscal year ended December 31, 2001, the Company believes that
all filing requirements applicable to the Company's officers, directors and
greater than 10% stockholders have been met, except for the late filing of a
Form 4 by Walter Williams.

STOCKHOLDER PROPOSALS

Management anticipates that the Company's 2003 annual stockholders meeting
will be held during May 2003. Any stockholder who wishes to submit a proposal
for action to be included in the proxy statement and form of proxy relating to
the Company's 2003 annual stockholders meeting must submit the proposal to the
Company on or before December 30, 2002. Any such proposals should be timely
sent to the Secretary of the Company, 333 Clay Street, Suite 3400, Houston,
Texas 77002-4102. Such proposal must meet all of the requirements of the
Securities and Exchange Commission to be eligible for inclusion in the Company's
2003 proxy materials. Furthermore, proposals by stockholders may be considered
untimely if the Company has not received notice of the proposal at least forty-
five days prior to the mailing of the proxy materials.

AVAILABILITY OF ANNUAL REPORT

The Company is including herewith a copy of its Annual Report on Form 10-K
for the fiscal year ended December 31, 2001, which has been filed with the
Securities and Exchange Commission in Washington, D.C. and is incorporated in
this Proxy Statement by reference.

The Company will furnish to any person any exhibits described in the list
accompanying such report upon payment of reasonable fees relating to the
Company's furnishing such exhibits. Requests for copies should be directed to
the Company at 333 Clay Street, Suite 3400, Houston, Texas 77002-4102.

By order of the Board of Directors,

/S/ DON A. TURKLESON
--------------------
Don A. Turkleson
Secretary

April 30, 2002

CHENIERE ENERGY, INC.

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 23, 2002

The undersigned hereby appoints Jonathan S. Gross and Don A. Turkleson, and
each of them, either one of whom may act without joinder of the other, each with
full power of substitution and ratification, attorneys and proxies of the
undersigned to vote all shares of Cheniere Energy, Inc. which the undersigned is
entitled to vote at the annual meeting of stockholders to be held at Cheniere's
offices at Three Allen Center, 333 Clay Street, Suite 3400, Houston, Texas on
Thursday, May 23, 2002 at 10:00 a.m., Houston, Texas time, and at any
adjournment thereof.

(TO BE VOTED AND SIGNED ON REVERSE SIDE)

Please date, sign and mail your
PROXY CARD BACK AS SOON AS POSSIBLE!

Annual Meeting of Stockholders
CHENIERE ENERGY, INC.

May 23, 2002

Please Detach and Mail in the Envelope Provided

A PLEASE MARK YOUR VOTES.

FOR election (except as indicated below) WITHHOLD authority to NOMINEES: Nuno Brandolini
1. ELECTION OF vote for all nominees Keith F. Carney
DIRECTORS listed at right Paul J. Hoenmans
John K. Howie
Charles M. Reimer
Charif Souki
Walter L. Williams

INSTRUCTION: To withhold authority to vote for any individual nominee, print that nominee's name on the line below.

______________________________________________

2. Approval of the amendment to the 1997 Stock Option Plan FOR AGAINST ABSTAIN
increasing the total number of shares of Common Stock to 2,000,000.

3. Appointment of PricewaterhouseCoopers LLP as independent accountants FOR AGAINST ABSTAIN
for the year ended December 31, 2002.

4. In their discretion, upon such other matters (including procedural and
other matters relating to the conduct of the meeting) which may properly
come before the meeting and any adjournment thereof.

THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE HEREON. IF NO CONTRARY SPECIFICATION IS MADE, THEN THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE SEVEN DIRECTOR NOMINEES NAMED IN ITEM 1 AND FOR EACH OF THE PROPOSALS IDENTIFIED IN
ITEMS 2, 3 AND 4.

THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING OF STOCKHOLDERS AND THE PROXY STATEMENT FURNISHED
HEREWITH. PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED, PRE-ADDRESSED STAMPED ENVELOPE.

Signature(s) of Stockholder: _________________________________________________ Dated this ____ day of _____________, 2002.

Note: Please sign exactly as your name appears on your stock certificate. When signing as executor, administrator, trustee or other
representative, please give your full title. All joint owners should sign.