CHENIERE ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED Many of our leases contain renewal options exercisable at our sole discretion. Options to renew a lease are included in the lease term and recognized as part of the right-of-use asset and lease liability only to the extent they are reasonably certain to be exercised, such as when necessary to satisfy obligations that existed at the execution of the lease or when the non-renewal would otherwise result in a significant economic penalty. We have elected the practical expedient to omit leases with an initial term of 12 months or less (“short-term lease”) from recognition on the balance sheet. We recognize short-term lease payments on a straight-line basis over the lease term and variable payments under short-term leases in the period in which the obligation is incurred. Certain of our leases contain non-lease components which are not separated from the lease components when calculating the right-of-use asset and lease liability per our use of the practical expedient to combine both components of an arrangement for all classes of leased assets. Certain of our leases also contain variable payments, such as inflation, that are not included when calculating the right-of-use asset and lease liability unless the payments are in-substance fixed. We recognize lease expense for operating leases on a straight-line basis over the lease term. We recognize lease expense for finance leases as the sum of the amortization of the right-of-use assets on a straight-line basis and the interest on lease liabilities using the effective interest method over the lease term. The following table shows the classification and location of our right-of-use assets and lease liabilities on our Consolidated Balance Sheets (in millions): The following table shows the classification and location of our lease costs on our Consolidated Statements of Operations (in millions): (1) Presented in cost of sales, operating and maintenance expense or selling, general and administrative expense consistent with the nature of the asset under lease. During the year ended December 31, 2018, we recognized lease expense for all operating leases of $335 million. 101 Consolidated Statements of Operations Location Year Ended December 31, 2020 2019 Operating lease cost (a) Operating costs and expenses (1) $ 432  $ 612  Finance lease cost: Amortization of right-of-use assets Depreciation and amortization expense 2  3  Interest on lease liabilities Interest expense, net of capitalized interest 7  10  Total lease cost $ 441  $ 625  (a) Included in operating lease cost: Short-term lease costs $ 93  $ 230  Variable lease costs paid to the lessor 16  7  December 31, Consolidated Balance Sheets Location 2020 2019 Right-of-use assets—Operating Operating lease assets, net $ 759  $ 439  Right-of-use assets—Financing Property, plant and equipment, net 53  56  Total right-of-use assets $ 812  $ 495  Current operating lease liabilities Current operating lease liabilities $ 161  $ 236  Current finance lease liabilities Other current liabilities 2  1  Non-current operating lease liabilities Non-current operating lease liabilities 597  189  Non-current finance lease liabilities Non-current finance lease liabilities 57  58  Total lease liabilities $ 817  $ 484 