Pavilion Energy


Pavilion in LNG Supply Deal with Big European Firm

31 October 2013

Singapore (The Business Times)

First gas deliveries into S'pore and Asia expected in 2018

SINGAPORE'S new LNG (liquefied natural gas) player, Pavilion Energy, is in business. It has struck its first long-term LNG supply agreement with a European major, and the first deliveries of gas into Singapore and Asia are expected in 2018.

Under a second "trading" or spot deal, Pavilion expects to complete its first cargo delivery to Asia in February next year.

The company, with an initial authorised capital of $1 billion, was set up by Temasek Holdings in April to trade and ship LNG, and to invest in both upstream LNG projects and downstream LNG facilities such as regasification terminals.

These deals were disclosed by Pavilion's CEO, Seah Moon Ming, at the Gas Asia Summit yesterday.

A Pavilion spokesman told The Business Times that under the long-term deal, "Pavilion will receive an LNG supply of 0.5 million tonnes per annum over a period of 10 years starting from 2018".

He declined to give further details, such as the identity of the European major or contract value, at this time, but a ball-park estimate puts the latter figure at around US$0.5 billion annually.

Mr Seah said the two deals reflect Pavilion's three-prong approach towards diversifying its supply portfolio, namely through geography, pricing index and tenure.

Its long-term deal with the unnamed European major, which has the backing of a worldwide supply portfolio, is critical, given the uncertain energy landscape, he added.

Pavilion's spot deal follows the operational startup of subsidiary Pavilion Gas, which will handle regional LNG trading and distribution.

"As part of our plan to begin regional trading of LNG, we have put in place an experienced trading team, complete with the requisite mid-office and back-office functions," he said.

"Having our own LNG trading capabilities will enhance Singapore's overall supply security, especially in the area of spot procurement during sudden supply challenge."

BT understands that the current team comprises more than half a dozen front-end traders, and Pavilion plans to grow the numbers further.

In his speech, Mr Seah expressed the need for Singapore to have a second LNG terminal to enhance its energy security. "This will address both the increasing demand for natural gas, as well as the existing risks of concentrating Singapore's gas supply of LNG and piped natural gas on Jurong Island," he said.

The government has started looking into this and regulator Energy Market Authority is getting a consultant to carry out a feasibility study.

While no specific sites have been picked yet, Tuas View Extension - the hockey stick-shaped piece of land earmarked for future port development - is one possibility, given that LNG bunkering and break-bulk are being eyed as possible future activities here.

-- By Ronnie Lim

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