Saudi Aramco and Shell on the shortlist for sale of Pavilion Energy, sources say
Owner Temasek is evaluating bids for the sale of the LNG assets of Pavilion Energy
05 March 2024 - 13:23
byMarwa Rashad and Florence Tan
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Mount Tourmaline, world's first LNG-powered dry bulk vessel, is moored at Jurong Port in Singapore, on February 7, 2022. Picture: REUTERS/ISABEL KUA
Singapore/London — Singapore’s Temasek has shortlisted energy giants Shell and Saudi Aramco among a handful of companies to purchase most of the assets of liquefied natural gas (LNG) trading firm Pavilion Energy, sources with knowledge of the matter said.
The sale process comes a decade after the state investment firm created Pavilion Energy to focus on LNG-related investments, and takes place as spot Asian LNG prices have fallen more than 40% since mid-August, potentially weighing on the deal’s valuation.
Temasek is evaluating bids for the sale of Pavilion Energy’s assets, excluding its gas pipeline business, one of the sources said, adding that a final bidding round was likely in coming weeks, before a winner is announced if the price is right.
It was not immediately clear how many bids Temasek had received, or their financial terms.
Bloomberg first reported on the sale process in August 2023.
Pavilion Energy directed enquiries to Temasek, which declined to comment. Shell declined to comment and Saudi Aramco did not respond to a request for comment.
Barclays, which is advising Temasek on the sale, declined comment.
Unlisted Pavilion Energy had profit after tax of $438m in the fiscal year ended March 2023, after a loss of $666m a year earlier, Temasek’s website showed, while revenue rose 38% to $9.09bn.
Pavilion Energy’s shareholder equity value was $3.63bn by March 2023, the website showed.
Pavilion Energy invested about $1.3bn in three gas blocks in Tanzania in 2013, soon after it was set up.
As one of two firms appointed by Singapore’s Energy Market Authority to import LNG, Pavilion supplies one-third of the city state’s power and industrial gas with LNG and piped natural gas (PNG), its website says. It also supplies LNG to ships in Singapore, the world’s top bunkering port.
In Europe, Pavilion Energy imports about a tenth of LNG volumes in Spain.
It gained access to Europe with its 2019 purchase of Spanish energy company Iberdrola’s LNG assets, including long-term regasification capacity of about 2-million metric tonnes a year at Britain’s Grain LNG terminal, access to regasification capacity in Spain and on a pipeline between Spain and France.
For Shell, the world’s top LNG trader by volume and the only other LNG importer in Singapore, the acquisition would expand its market share in the city state. Shell, which raked in $2.4bn in LNG trading in the fourth quarter of 2023, has been importing LNG into Singapore since 2013.
For Aramco, the acquisition would help kickstart its LNG business, one of the sources said, as it races with Middle Eastern rivals QatarEnergy and Abu Dhabi National Oil Co to grab a share of the super-chilled fuel market.
“Aramco is late to the LNG party, but they have the money to catch up,” the source added.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Saudi Aramco and Shell on the shortlist for sale of Pavilion Energy, sources say
Owner Temasek is evaluating bids for the sale of the LNG assets of Pavilion Energy
Singapore/London — Singapore’s Temasek has shortlisted energy giants Shell and Saudi Aramco among a handful of companies to purchase most of the assets of liquefied natural gas (LNG) trading firm Pavilion Energy, sources with knowledge of the matter said.
The sale process comes a decade after the state investment firm created Pavilion Energy to focus on LNG-related investments, and takes place as spot Asian LNG prices have fallen more than 40% since mid-August, potentially weighing on the deal’s valuation.
Temasek is evaluating bids for the sale of Pavilion Energy’s assets, excluding its gas pipeline business, one of the sources said, adding that a final bidding round was likely in coming weeks, before a winner is announced if the price is right.
It was not immediately clear how many bids Temasek had received, or their financial terms.
Bloomberg first reported on the sale process in August 2023.
Pavilion Energy directed enquiries to Temasek, which declined to comment. Shell declined to comment and Saudi Aramco did not respond to a request for comment.
Barclays, which is advising Temasek on the sale, declined comment.
Unlisted Pavilion Energy had profit after tax of $438m in the fiscal year ended March 2023, after a loss of $666m a year earlier, Temasek’s website showed, while revenue rose 38% to $9.09bn.
Pavilion Energy’s shareholder equity value was $3.63bn by March 2023, the website showed.
Pavilion Energy invested about $1.3bn in three gas blocks in Tanzania in 2013, soon after it was set up.
As one of two firms appointed by Singapore’s Energy Market Authority to import LNG, Pavilion supplies one-third of the city state’s power and industrial gas with LNG and piped natural gas (PNG), its website says. It also supplies LNG to ships in Singapore, the world’s top bunkering port.
In Europe, Pavilion Energy imports about a tenth of LNG volumes in Spain.
It gained access to Europe with its 2019 purchase of Spanish energy company Iberdrola’s LNG assets, including long-term regasification capacity of about 2-million metric tonnes a year at Britain’s Grain LNG terminal, access to regasification capacity in Spain and on a pipeline between Spain and France.
For Shell, the world’s top LNG trader by volume and the only other LNG importer in Singapore, the acquisition would expand its market share in the city state. Shell, which raked in $2.4bn in LNG trading in the fourth quarter of 2023, has been importing LNG into Singapore since 2013.
For Aramco, the acquisition would help kickstart its LNG business, one of the sources said, as it races with Middle Eastern rivals QatarEnergy and Abu Dhabi National Oil Co to grab a share of the super-chilled fuel market.
“Aramco is late to the LNG party, but they have the money to catch up,” the source added.
Reuters
African gas: it’s boom or bust
Qatar to raise gas production further despite price plunge
CHRIS BARRON: Sasol gas ‘bomb’ set to hit economy
ALEXANDER PARKER: Who is really to blame for ‘gas-shedding’?
SA running out of time to avoid ‘day zero’ for industrial gas supply
Renergen loses a third of its market value
QatarEnergy halts Red Sea LNG shipping amid attacks
GAVIN MAGUIRE: World to get more gassy despite energy transition momentum
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
African gas: it’s boom or bust
PODCAST: Time to step on the gas?
ALEXANDER PARKER: Who is really to blame for ‘gas-shedding’?
China expected to drive global LNG demand, says Shell
SA running out of time to avoid ‘day zero’ for industrial gas supply
Renergen loses a third of its market value
QatarEnergy halts Red Sea LNG shipping amid attacks
GAVIN MAGUIRE: World to get more gassy despite energy transition momentum
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.