Shell to acquire Singaporean LNG trader Pavilion Energy in bet on booming natural gas demand
(Bloomberg) – Shell Plc agreed to buy liquefied natural gas (LNG) trader Pavilion Energy Pte, the latest bet by the oil major that demand for natural gas will continue rising.
The acquisition will consolidate more assets in the hands of what is already the world’s biggest LNG player, at a time when demand for LNG expands faster than other fossil fuels. Major energy producers, including Shell and Chevron Corp., assert that natural gas will play a long-term role in the energy transition.
The transaction will involve Shell purchasing all of Pavilion’s shares from Singaporean state-owned investment firm Temasek Holdings Pte, according to a statement from the Singaporean firm. Temasek expects the transaction to be completed by the first quarter of 2025 but didn’t disclose further details.
Pavilion, a unit of Temasek, trades and ships LNG in Asia and Europe, with a portfolio of about 6.5 million tons per year of long-term contracts. That’s about a 1/10th of Shell’s total LNG sales last year, which reached 67 million tons. The energy major also has stakes in multiple global LNG plants.
Temasek also has a license to import the fuel into Singapore and access to receiving terminals in Spain and the UK.
“Shell is one of the few companies that can absorb the volumes and optimize them” if demand falls in one place and rises in another, Barclays Plc said in a note.
Shell holds the largest gas liquefaction and marketing portfolio among energy majors, meeting almost a fifth of worldwide demand, according to Bloomberg Intelligence. The company expects global LNG demand will rise by more than 50% through 2040.
The acquisition “will strengthen Shell’s leadership position in LNG,” Zoe Yujnovich, integrated gas and upstream director, said in a statement on Tuesday. Shell plans to grow its LNG business by as much as 30% by 2030, compared with 2022, according to the statement.
Under the sale, Temasek will retain Gas Supply Pte, which imports piped gas from South Sumatra in Indonesia, as well as Pavilion’s interest in natural gas blocks in Tanzania.
