Shell Secures Major LNG Deal With Temasek's Pavilion Energy: Details

Shell Eastern Trading Pte. Ltd., a subsidiary of Shell PLC SHEL, has finalized a deal to purchase Pavilion Energy Pte. Ltd. from Carne Investments Pte. Ltd., a fully owned entity of Temasek.

This acquisition covers the entirety of Pavilion Energy, which is noted for its expansive liquefied natural gas (LNG) operations, with about 6.5 million tonnes per annum of contracted supply.

Positioned in Singapore, Pavilion Energy is a key player in the global energy sector, managing a range of activities, including LNG trade, shipping, and the marketing of natural gas across Asia and Europe.

“We will acquire Pavilion’s portfolio of LNG offtake and supply contracts, which includes additional access to strategic gas markets in Asia and Europe,” stated Zoë Yujnovich, Shell’s Integrated Gas and Upstream Director.

The financial terms of the deal align with Shell’s existing cash capital expenditure forecasts and surpass the internal rate of return (IRR) benchmarks for its Integrated Gas segment.

This acquisition is in line with Shell’s ambitious growth plans, aiming for a 15-25% increase in purchased volumes compared to 2023, which were detailed during the Capital Markets Day earlier this year.

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The integration of Pavilion’s assets with Shell’s operations is scheduled to begin following the deal’s finalization, anticipated by the first quarter of 2025.

The completion hinges on obtaining necessary regulatory approvals and satisfying other conditions precedent. Notably, Pavilion’s pipeline gas business and its 20% interest in two blocks in Tanzania are excluded from this transaction.

Shell anticipates that the global demand for LNG will surge over 50% by 2040, driven by increased industrial coal-to-gas conversion in regions like China and Southeast Asia.

This acquisition is poised to position Shell at the forefront of LNG supply, especially in markets transitioning towards cleaner energy sources.

Shell is committed to expanding its LNG capacity by 20-30% by 2030 from its 2022 levels, in line with its outlined targets during the 2023 Capital Markets Day.

Shell stock has gained more than 14% in the last 12 months. Investors can gain exposure to the stock via Direxion Hydrogen ETF HJEN and VanEck Natural Resources ETF HAP.

Price Action: SHEL shares closed higher by 0.22% at $69.15 on Monday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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