Market Commentary

Shell to Strengthen LNG Position with Pavilion Energy Acquisition

Jahanzeb Salam
20 Jun 2024 · 1 minute read

Most recently, the oil and gas giant Shell (SHEL:US) has announced plans to acquire Singapore's Pavilion Energy from Temasek, a global investment firm, in a deal expected to enhance Shell's leading position in the Liquefied Natural Gas (LNG) market.

The acquisition will provide Shell with access to key gas markets in Europe and Singapore. Pavilion Energy’s portfolio includes 6.5 million metric tons per annum (mtpa) of LNG supply contracts from major suppliers like Chevron, BP, and QatarEnergy, sourced from U.S. facilities such as Corpus Christi, Freeport, and Cameron LNG.

Included in the deal are Pavilion's regasification capacities: 2 mtpa at the UK’s Isle of Grain LNG terminal, regasification access in Singapore and Spain, and its LNG bunkering operations in Singapore, the world’s largest ship refueling port.

Zoë Yujnovich, Shell’s integrated gas and upstream director, noted that the acquisition would significantly enhance Shell's global LNG portfolio. Shell aims to expand its LNG business by 20% to 30% by 2030 and anticipates global LNG demand to increase by over 50% by 2040.

Temasek will retain Gas Supply Pte Ltd (GSPL) and Pavilion’s pipeline gas contracts, as well as its interest in Tanzania’s Blocks 1 and 4, which are not part of this deal.

The transaction, subject to regulatory approvals, is expected to be completed by the first quarter of next year. Until then, Pavilion Energy will operate independently.

In the domain of congressional trading, Congress members such as Rep. Michael McCaul and Rep. Ro Khanna were recently seen strategically enhancing their stakes in the firm, by acquiring shares of the oil behemoth in the past couple of months.