Temasek Finalizing Pavilion Energy LNG Asset Sale Deal with Shell

14 Jun, 2024

Temasek Finalizing Pavilion Energy LNG Asset Sale Deal with Shell

Singapore's Temasek Holdings is finalizing the sale of some assets from Pavilion Energy, a liquefied natural gas (LNG) trading firm, to Shell, with a deal expected to close in the coming days, according to sources familiar with the matter. This transaction will enable Shell, already the world’s top LNG trader, to enhance its presence in the gas markets of Europe and Singapore. The deal, valued in the hundreds of millions of US dollars, falls short of the over US$2 billion that Temasek initially sought.

Previously, Shell and Saudi Aramco were reported to be in advanced talks to acquire these assets. Temasek, Pavilion Energy, and Shell have all declined to comment on the ongoing negotiations. The sale follows Temasek's decision to list Pavilion Energy for sale after the firm posted a profit for the year ending March 2023, buoyed by strong LNG prices amid the Ukraine conflict. Pavilion Energy supplies a third of Singapore's power and industrial gas demand with LNG and piped natural gas and also provides LNG to ships in Singapore, the world's leading bunkering port.

Notably, the deal will exclude Gas Supply Pte Ltd, which imports natural gas from Indonesia, due to energy security concerns. Pavilion Energy has invested significantly in LNG-related assets, including gas blocks in Tanzania and regasification capacity in Europe through its acquisition of Iberdrola’s LNG assets. The firm plays a crucial role in Europe’s LNG market, particularly in Spain, re-exporting LNG to other European countries to help reduce dependency on Russian gas. Pavilion Energy posted a profit of US$438 million for the year to March 2023, reversing a previous loss, with revenue increasing by 38 percent to US$9.09 billion.