On Tuesday, June 18th local time, energy giant Shell announced its acquisition of Singapore's liquefied natural gas (LNG) company Pavilion Energy, which will strengthen its leadership position in the LNG field.
Lanting Energy was founded in 2013 and is a subsidiary of Singapore's state-owned investment company Temasek. It mainly engages in the trade and transportation of LNG in Asia and Europe, supplying approximately 6.5 million tons of LNG annually. These contracts are sourced from industry giants such as Chevron, BP, and Qatar Energy.
Shell and Temasek have not disclosed the financial details of this transaction, but there have been media reports that Temasek's expected price exceeds $2 billion, but the actual transaction price is only a few hundred million dollars. In addition, Saudi Aramco reportedly participated in the bidding for Lanting Energy.
According to Shell, the acquisition funds will be absorbed within its capital expenditure guidelines. According to Shell's previously released Q1 financial report, the company's full year capital expenditure is expected to be between $22 billion and $25 billion.
Shell stated in a statement, "This transaction exceeds the internal rate of return threshold for Shell's integrated natural gas business, achieving a target of a 15% -25% increase in procurement volume relative to 2022."
It is reported that Lanting Energy will continue to operate as an independent enterprise until the transaction is completed.
The transaction is expected to be completed in the first quarter of 2025 and requires regulatory approval. As the world's largest LNG trader, Shell can meet nearly 1/5 of global demand.
Shell actively expands its LNG business
Zoe Yujnovich, head of Shell's integrated natural gas and upstream business, stated on Tuesday that this acquisition will strengthen Shell's leadership position in the LNG field. According to Shell's announced goals, the company plans to increase its LNG business by 30% from 2022 by 2030.
This transaction will provide Shell with channels to enter the natural gas markets in Europe and Singapore. Shell is still actively expanding its LNG business and expects global LNG demand to increase by over 50% by 2040 as countries gradually phase out more polluting fossil fuels.
As a fossil fuel, natural gas produces significantly less pollution and greenhouse gases during combustion than oil and coal, making it widely regarded as a transitional fuel for the transition to clean energy.