According to sources familiar with the matter, Singapore’s Temasek Holdings is in the final stages of selling some assets from LNG trading firm Pavilion Energy to Shell. The deal, expected to be completed soon, will give Shell, already the world’s leading LNG trader, access to gas markets in Europe and Singapore as it continues to expand its LNG business. While the deal’s value is expected to be in the hundreds of millions of dollars, it falls short of the more than $2 billion that Temasek had initially hoped to receive. The sources requested anonymity as they were not authorized to speak to the media.
Temasek, Pavilion Energy, and Shell have chosen not to provide any comments regarding the deal. This agreement comes after Temasek put the Singapore-based trader up for sale earlier this year, following Pavilion Energy’s profitable performance in the last fiscal year due to strong LNG prices driven by the Ukraine conflict. Currently, Shell supplies a quarter of Singapore’s natural gas needs, and this deal will make them the largest supplier to the city-state. However, the sale of Pavilion Energy’s assets will not include Gas Supply Pte Ltd, which holds a license to import natural gas from Indonesia via pipeline, due to concerns over energy security. Pavilion Energy was established by Temasek ten years ago to focus on investments related to LNG. In 2013, Pavilion Energy invested approximately $1.3 billion in three gas blocks in Tanzania and expanded its presence in Europe through the acquisition of Iberdrola’s LNG assets in 2019, including regasification capacity in the UK and Spain.
Pavilion Energy, a major player in the European and Singaporean energy markets, has made significant strides in the LNG industry. In Europe, the company imports approximately 10% of LNG volumes in Spain, a country that has emerged as a key gas supplier in Europe due to its re-exportation of LNG to countries like Italy. This shift away from Russian gas was prompted by Russia’s invasion of Ukraine, which led countries to reduce their reliance on Russian gas.

In Singapore, Pavilion Energy is one of the four firms appointed by the Energy Market Authority to import LNG. The company plays a crucial role in meeting one-third of the city-state’s power and industrial gas demand, supplying LNG and piped natural gas. Additionally, Pavilion Energy is a major supplier of LNG to ships in Singapore, the world’s leading bunkering port.

Financially, Pavilion Energy has performed well. According to Temasek’s website, the company reported a profit after tax of $438 million for the year ending in March 2023. This marked a significant turnaround from the previous year’s loss of $666 million. Furthermore, revenue saw a substantial increase of 38% to reach $9.09 billion during the same period. As of March 2023, the company had a shareholder equity value of $3.63 billion, as indicated on Temasek’s website.