Sources: “Aramco”, “Shell” in the final stage of negotiations to acquire “Pavilion Energy”

Three informed sources said that Shell and Saudi Aramco, which are competing to buy the assets of Pavilion Energy, a liquefied natural gas trading company owned by Temasek in Singapore, are now in price negotiations after completing the due diligence process.

According to Reuters, the sale comes ten years after the Singapore State Investment Corporation established Pavilion Energy to focus on investments related to liquefied natural gas. Two sources said the assets could fetch more than $2 billion.

Aramco believes that the deal will make it a global player in the liquefied natural gas sector. Aramco is accelerating its gas exploration operations, and aims to increase production by more than 60% from 2021 levels by 2030.

Aramco is also looking to invest in liquefied natural gas projects abroad, after buying a minority stake last year in Midocean Energy for $500 million.

LNG trading accounted for nearly a third of Shell’s profits in the fourth quarter of last year. The company, the world’s largest LNG trader, has operations around the world that allow it to take advantage of regional shifts in demand and pricing.

Shell said it believes that gas and liquefied natural gas will play a crucial role in the energy transition by replacing coal, which is more polluting to the environment, in power plants.

As one of four companies appointed by the Energy Market Authority of Singapore to import LNG, Pavilion Energy supplies a third of Singapore’s power and industrial gas needs through LNG and pipelined natural gas, according to its website. The company also supplies LNG to ships in Singapore, the world’s largest ship bunkering port.

The company invested about $1.3 billion in three gas sites in Tanzania in 2013, shortly after its establishment, and was able to reach Europe through its purchase in 2019 of Iberdrola’s liquefied natural gas assets, including regasification services in the United Kingdom and Spain.

Temasek’s website showed that unlisted Pavilion Energy recorded profits after tax of $438 million for the year ending March 2023, offsetting a loss of $666 million a year ago, while revenues rose 38% to $9.09 billion.