Shell Acquires Singapore’s Pavilion Energy to Expand LNG Operations

Energy major Shell confirmed that it is seeking to consolidate and expand its position in liquified natural gas (LNG) through the acquisition of Singapore-based Pavilion Energy. While the terms of the deal are not being reported, Reuters says the deal is valued at “hundreds of millions of U.S. dollars,” and adds 6.5 mtpa in sale and supply contracts, nearly 10 percent of Shell’s current volume selling 70 mtpa annually.

Shell acquires Pavilion from the Singapore government-owned investment fund Temasek. The Financial Times is reporting that Shell beat out Saudi Aramco which was also bidding for Pavilion. Singapore launched the company 11 years ago as a play into the anticipated strong growth in LNG in Asia. Pavilion management highlights that they have built a global platform that is recognized in the LNG industry. Temasek in its 2023 financial statements a profit of $433 million from Pavilion.

While the company was started to focus on Asia, it expanded its operations and now has regasification capacity in the UK as well as Spain and Singapore. It also has large supply contacts with energy majors including BP, Chevron, and QatarEnergy.

“The acquisition of Pavilion Energy will strengthen Shell’s leadership position in LNG, bringing material volumes and additional flexibility into our global portfolio,” said Zoë Yujnovich, Shell’s Integrated Gas and Upstream Director. “We will acquire Pavilion’s portfolio of LNG offtake and supply contracts, which includes additional access to strategic gas markets in Asia and Europe.”

Pavilion’s operations include three LNG carrier vessels under time charter as well as two others. The company also launched its first LNG bunker vessel in 2024 with operations from Singapore and in the Southeast Asia region. As part of the agreement, Temasek will retain the pipeline business as well as other assets including a share of a gas project in Tanzania.

Shell has told investors that it believes LNG represents one of the strongest opportunities saying that it expects global demand will grow by more than 50 percent by 2040. They anticipate that China, South, and Southeast Asian countries will move rapidly to replace coal-fired plants with gas. LNG demand is expected to grow in Asia as it plays a critical role in the energy transition and replaces coal in heavy industry. 

Shell told investors the near-term plan calls for 20 to 30 percent growth for the LNG business by 2030, with Pavilion playing a key part in reaching that goal. They report that they expect to increase purchased LNG volumes by 15 to 25 percent relative to 2022. The Financial Times reports Pavilion supplies up to a third of Singapore’s gas needs for power and industrial use.

Singapore emerged as one of the first large markets for LNG in Asia with Shell highlighting it became the first to have an importing license a decade ago. It reports meeting up to a quarter of the country’s natural gas needs.