Local LNG firm signs 10-year deal with Gazprom

Mr Seah Moon Ming told the Gastech Singapore conference yesterday how home-grown Pavilion Energy is growing its business despite the LNG industry slowdown by working with Russian, Chinese and Japanese firms.
Mr Seah Moon Ming told the Gastech Singapore conference yesterday how home-grown Pavilion Energy is growing its business despite the LNG industry slowdown by working with Russian, Chinese and Japanese firms.PHOTO: PAVILION ENERGY

Home-grown liquefied natural gas (LNG) company Pavilion Energy is growing its business, even as demand within the global gas industry continues to slow.

Chief executive Seah Moon Ming told the Gastech Singapore conference yesterday that the firm, backed by state investment company Temasek Holdings, has signed a 10-year LNG agreement with a unit of Russia's gas giant Gazprom .

It has also inked a memorandum of understanding with Chinese energy company Huadian to supply LNG from 2020 onwards, in addition to a similar agreement with Japan's Jera Co to jointly procure and invest in LNG.

"Pavilion Energy is very much focused on the long term as we continue to build expertise and capabilities across the entire LNG business," said Mr Seah. "The global picture will surely change again in the years ahead. We aim to remain competitive and effective by responding to shifts in all aspects of demand, supply and price."

He added that the company is "currently focused on developing regional demand".

"We see this as an important step towards building a reliable and robust LNG ecosystem in Singapore and, hopefully, for Asia."

Mr Seah said that the firm is supporting the use of the Singapore LNG index Group (SLInG), a new benchmark Asia LNG price index traded on the Singapore Exchange.

"Singapore is well-equipped to host this new and more open way of doing business in the LNG sector," he said, adding that the country, as neither a significant LNG seller or buyer, will provide a "neutral platform" for regional and international markets.

Mr Seah said Pavilion Energy is looking for industry stakeholders, particularly market makers and traders, to "get comfortable" with the SLInG and consider placing trades using it.

The Singapore Exchange is in the process of launching a SLInG swap product, he noted.

"Once this is ready, Pavilion Gas (a subsidiary of Pavilion Energy) will be keen to explore with interested counter-parties, both gas producers and buyers, on transacting cargoes on SLInG, within the next one to two years."

Added Mr Seah: "We see a fairer and more transparent market as the best outcome for LNG physical spot trading in Asia. ... With a clearer price benchmarking, the region will clearly benefit."

A version of this article appeared in the print edition of The Straits Times on October 28, 2015, with the headline 'Local LNG firm signs 10-year deal with Gazprom'. Print Edition | Subscribe