Singapore’s Pavilion Energy considers sale of LNG assets

Three sources with details of the case said Shell and Saudi Aramco, competing to purchase the assets of Temasek-owned liquefied natural gas (LNG) trading company Pavilion Energy, are now closed in price negotiations after completing the due diligence.

Singapore’s state investment firm, Temasek, is considering the sale of LNG assets held by Pavilion Energy, a company it set up a decade ago to focus on LNG-related investments. 

Sources familiar with the matter suggest that the assets could fetch more than $2 billion.

Key Players and Responses

• Pavilion Energy, Temasek, Shell, and Barclays, which is advising Temasek, declined to comment on the potential sale.

• Saudi Aramco, whose gas unit is overseeing negotiations, did not respond to requests for comment.

Aramco’s Strategic Move

• Saudi Aramco sees the potential deal as a way to establish itself as a global LNG player.

• The company aims to accelerate gas exploration and increase production by over 60% from 2021 levels by 2030. It also plans to invest in LNG projects abroad, following its acquisition of a minority stake in MidOcean Energy for $500 million last year.

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Significance of LNG Trading

• LNG trading contributed significantly to Shell’s profits in the fourth quarter of last year. As the world’s largest LNG trader, Shell benefits from its global operations, allowing it to capitalize on shifts in regional demand and pricing.

• Shell believes that gas and LNG will play a crucial role in the energy transition by replacing more polluting coal in power plants.

Pavilion Energy’s Role

• Pavilion Energy, appointed by Singapore’s Energy Market Authority to import LNG, supplies one-third of the city-state’s power and industrial gas demand with LNG and piped natural gas.

• It also provides LNG to ships in Singapore, the world’s leading bunkering port.

• Pavilion Energy made significant investments in gas blocks in Tanzania in 2013 and gained access to Europe through its 2019 acquisition of Iberdrola’s LNG assets, including regasification capacity in the United Kingdom and Spain.

The potential sale of Pavilion Energy’s LNG assets underscores the dynamic nature of the global energy market and the strategic shifts taking place among key players in the LNG industry.