Shell PLC's subsidiary, Shell Eastern Trading Pte. Ltd., has entered into an agreement to acquire 100% of the shares in Pavilion Energy Pte. Ltd. from Carne Investments Pte. Ltd. This acquisition includes Pavilion Energy's global LNG trading business, which has a contracted supply volume of about 6.5 million tonnes per annum (mtpa). Pavilion Energy, headquartered in Singapore, operates in LNG trading, shipping, natural gas supply, and marketing activities in Asia and Europe.
Zoë Yujnovich, Shell’s Integrated Gas and Upstream Director, stated, "The acquisition of Pavilion Energy will strengthen Shell’s leadership position in LNG, bringing material volumes and additional flexibility into our global portfolio." The deal is expected to be completed by Q1 2025, subject to regulatory approvals and other conditions precedent. The acquisition will be absorbed within Shell’s cash capital expenditure guidance, and it is in excess of the internal rate of return (IRR) hurdle rate for Shell’s Integrated Gas business.
The transaction will integrate Pavilion Energy’s portfolio of LNG offtake and supply contracts into Shell’s global LNG portfolio, positioning Shell to deliver value and meet the energy security needs of its customers. Pavilion Energy’s pipeline gas business is not included in the transaction and will be transferred to Gas Supply Pte Ltd (GSPL), a wholly-owned subsidiary of Temasek, prior to completion. Additionally, Pavilion Energy’s 20% shareholding in block 1 and 4 in Tanzania are not included in the transaction.
Shell believes that LNG will play a critical role in the energy transition, replacing coal in heavy industry and power generation. The company 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. This acquisition is expected to contribute to these targets. Shell, through its BG acquisition, holds the first LNG importing license to Singapore and has been supplying nearly a quarter of the country’s natural gas needs for over a decade.
The global demand for LNG is projected to rise by more than 50% by 2040, and Shell's LNG Outlook 2024 indicates that LNG will support economic growth in China, South Asian, and South-east Asian countries. The company's Energy Transition Strategy 2024 emphasizes the role of LNG in reducing local air pollution and carbon emissions, as well as providing flexibility to the power system as renewable generation grows rapidly.