Shell to Enhance LNG Leadership with Pavilion Energy Acquisition from Temasek Subsidiary

Shell to Enhance LNG Leadership with Pavilion Energy Acquisition from Temasek Subsidiary

(IN BRIEF) Shell Eastern Trading Pte. Ltd., a subsidiary of Shell plc, has agreed to acquire Pavilion Energy Pte. Ltd. from Carne Investments Pte. Ltd., a subsidiary of Temasek. This acquisition includes Pavilion Energy’s global LNG trading business, which handles approximately 6.5 million tonnes per annum (mtpa) of LNG supply contracts. Shell aims to strengthen its leadership in the LNG sector by integrating Pavilion Energy’s portfolio, enhancing its global LNG capabilities across strategic markets in Asia and Europe.

(PRESS RELEASE) LONDON, 18-Jun-2024 — /EuropaWire/ — Shell Eastern Trading Pte. Ltd., a subsidiary of Shell plc, has announced an agreement to acquire Pavilion Energy Pte. Ltd., including its global liquefied natural gas (LNG) trading business, from Carne Investments Pte. Ltd., a subsidiary of Temasek. The acquisition involves 100% of Pavilion Energy’s shares and includes a contracted supply volume of approximately 6.5 million tonnes per annum (mtpa) of LNG.

Based in Singapore, Pavilion Energy operates a comprehensive energy business focusing on LNG trading, shipping, and natural gas supply across Asia and Europe.

According to Zoë Yujnovich, Shell’s Integrated Gas and Upstream Director, this acquisition will significantly bolster Shell’s position in the LNG market, providing substantial volumes and enhanced flexibility within its global portfolio. The transaction encompasses Pavilion Energy’s portfolio of LNG offtake and supply contracts, offering increased access to key gas markets in Asia and Europe. Shell aims to leverage these assets to deliver added value while meeting the energy security requirements of its customer base.

The financial impact of the acquisition aligns with Shell’s existing cash capital expenditure guidance and surpasses the internal rate of return (IRR) hurdle rate set for its Integrated Gas business. This acquisition is also in line with Shell’s growth targets, specifically aiming for a 15-25% increase in purchased volumes relative to 2022, as outlined during the 2023 Capital Markets Day.

Pending regulatory approvals and other customary closing conditions, the transaction is expected to close by the first quarter of 2025. Following completion, Shell plans to initiate the integration of Pavilion Energy’s portfolio into its operations to maximize synergies and operational efficiencies.

Notes to editors

• Pavilion Energy’s portfolio comprises about 6.5 mtpa of its long-term sale and supply LNG contracts. It also includes long-term regasification capacity of approximately 2 mtpa at the Isle Grain LNG terminal (United Kingdom), regasification access in Singapore and Spain, as well as the time-charter of three M-type, Electronically Controlled Gas Injection (MEGI) LNG vessels and two Tri-Fuel Diesel Electric (TFDE) vessels. It also has a LNG bunkering business with its first vessel deployed in early 2024.
• Pavilion Energy’s pipeline gas business is not included as part of the transaction and will be transferred to Gas Supply Pte Ltd (GSPL), a wholly-owned subsidiary of Temasek, prior to completion.
• Pavilion Energy’s 20% shareholding in block 1 and 4 in Tanzania are not included in the transaction.
• Global demand for LNG is estimated to rise by more than 50% by 2040, as industrial coal-to-gas switching gathers pace in China, South Asian and South-east Asian countries. These countries are expected to use more LNG to support their economic growth, according to Shell’s LNG Outlook 2024.
• Shell believes LNG will play a critical role in the energy transition, replacing coal in heavy industry. It also has a continued role in displacing coal in power generation, helping to reduce local air pollution and carbon emissions. LNG helps to provide the flexibility the power system needs, at a time when renewable generation is growing rapidly. Find out more in Shell’s Energy Transition Strategy 2024.
• Shell plans to grow its LNG business by 20-30% by 2030, compared with 2022, and purchased LNG volumes are planned to grow by 15-25%, relative to 2022, as outlined in the 2023 Capital Markets Day. This transaction is expected to help deliver these targets.
• Shell, via its BG acquisition, holds the first LNG importing license to Singapore, supplying nearly a quarter of the country’s natural gas needs. For more than 10 years, Shell has brought LNG to Singapore and other markets in Asia reliably and competitively, trading in LNG, Crude, Oil products and other energy commodities to serve customers across Asia, actively contributing to the region’s energy supply security. Shell is a pioneer in developing LNG as a marine fuel for bunkering in Singapore.

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