Shell, the world's largest LNG trader, is doubling down on the sector and further boosting its liquefied natural gas business as it signed a deal to buy Singapore-based LNG trading firm Pavilion Energy.
Shell said on Tuesday that its subsidiary Shell Eastern Trading Pte. Ltd. has reached an agreement with Carne Investments Pte. Ltd., an indirect wholly-owned subsidiary of Temasek, to acquire 100% of the shares in Pavilion Energy.
Pavilion Energy has a global business encompassing LNG trading, shipping, natural gas supply, and marketing activities in Asia and Europe. It has a global LNG trading business with a contracted supply volume comprising about 6.5 million tonnes per annum (mtpa).
Shell will buy Pavilion Energy's portfolio of LNG offtake and supply contracts, which includes additional access to strategic gas markets in Asia and Europe, said Zoë Yujnovich, Shell's Integrated Gas and Upstream Director.
"The acquisition of Pavilion Energy will strengthen Shell's leadership position in LNG, bringing material volumes and additional flexibility into our global portfolio," Yujnovich said in a statement.
Integration of portfolios will begin after completion of the deal, which is expected by the first quarter of 2025, subject to regulatory approvals and fulfillment of other conditions precedent, Shell said.
In the race to buy Pavilion Energy, Shell beat Saudi oil giant Aramco, which was rumored to be shortlisted together with the UK-based supermajor as a front-runner for a potential acquisition.
Saudi Aramco has made forays into the global LNG market in recent months, including last week's non-binding Heads of Agreement (HoA) for a 20-year LNG offtake deal with NextDecade Corporation's planned train 4 at the Rio Grande LNG export facility in Texas.
Shell, for its part, plans to grow its LNG business by 20-30% by 2030, compared with 2022. The world's top LNG trader expects global LNG demand to surge by 50% by 2040, driven by higher demand from Asia, with coal-to-gas switching in China and a boost in LNG consumption to fuel economic growth in South and Southeast Asia.
By Tsvetana Paraskova for Oilprice.com
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