Supermajor Shell, through its Shell Eastern Trading Pte. Ltd. subsidiary, has reached an agreement with Carne Investments Pte. Ltd., an indirect wholly owned subsidiary of Temasek, to acquire 100% of the shares in Pavilion Energy Pte. Ltd. Financial terms of the deal were not disclosed.
Pavilion Energy includes a global liquefied natural gas (LNG) trading business with a contracted supply volume comprising about 6.5 mtpa from suppliers including Chevron, BP, and QatarEnergy. The contracts also include Iberdrola’s LNG asset portfolio from Pavilion Energy’s 2019 acquisition. In addition, the company has offtake contracts from leading US liquefaction facilities at Corpus Christi Liquefaction, Freeport LNG, and Cameron LNG.
Based in Singapore, Pavilion Energy’s global energy business encompasses LNG trading, shipping, natural gas supply, and marketing activities in Asia and Europe.
“The acquisition of Pavilion Energy will strengthen Shell’s leadership position in LNG, bringing material volumes and additional flexibility into our global portfolio,” said Zoë Yujnovich, Shell’s integrated gas and upstream director. “We will acquire Pavilion’s portfolio of LNG offtake and supply contracts, which includes additional access to strategic gas markets in Asia and Europe. By integrating these into Shell’s global LNG portfolio, Shell is strongly positioned to deliver value from this transaction while helping to meet the energy security needs of our customers.”
Shell said the acquisition will be absorbed within its cash capital expenditure guidance, which remains unchanged. The deal is more than the internal rate of return hurdle rate for the company’s integrated gas business, delivering on its 15 to 25% growth ambition for purchased volumes, relative to 2022, as outlined during its 2023 Capital Markets Day.
The deal is expected to be completed by the first quarter of 2025, subject to regulatory approvals and fulfilment of other conditions.
Pavilion Energy’s portfolio of 6.5 mtpa in long-term sale and supply LNG contracts also includes long-term regasification capacity of approximately 2 mtpa at the Isle Grain LNG terminal in the UK, regasification access in Singapore and Spain, as well as the time-charter of three M-type, electronically controlled gas-injection LNG vessels and two tri-fuel diesel-electric vessels. It also has a LNG bunkering business with its first vessel deployed in early 2024.
In February, Pavilion Energy successfully deployed its newbuild LNG Bunker Vessel Brassavola for her maiden ship-to-ship LNG bunkering operation.
“In the last 10 years, Pavilion Energy has grown from its Singapore beginnings into an international energy business marketing and trading LNG in key markets across Europe and Asia to help meet rising energy demand,” said Juliet Teo, head, portfolio development group and head, Singapore market of Temasek. “We believe Shell is well positioned to grow Pavilion Energy’s business and strengthen its global LNG hub in Singapore.”
Pavilion Energy’s pipeline gas business is not included as part of the transaction and will be transferred to Gas Supply Pte Ltd, a wholly owned subsidiary of Temasek, prior to completion of the deal.
Pavilion Energy’s 20% shareholding in blocks 1 and 4 in Tanzania are also not included in the transaction.
Shell believes LNG will play a critical role in the energy transition, replacing coal in heavy industry. It also has a continued role in displacing coal in power generation, helping to reduce local air pollution and carbon emissions. LNG helps to provide the flexibility the power system needs, at a time when renewable generation is growing rapidly.
Shell, via its BG acquisition, holds the first LNG importing license to Singapore, supplying nearly a quarter of the country’s natural gas needs. Shell has brought LNG to Singapore and other markets in Asia for over a decade.
