Temasek-owned Pavilion Energy to acquire LNG portfolio of Spanish utility giant for some $176m

Mr Frédéric H Barnaud (left), group CEO of Pavilion Energy, and Mr Aitor Moso, CEO of Liberalised Business, Iberdrola.
Mr Frédéric H Barnaud (left), group CEO of Pavilion Energy, and Mr Aitor Moso, CEO of Liberalised Business, Iberdrola.PHOTO: PAVILION ENERGY

SINGAPORE - Pavilion Energy, a unit of Temasek Holdings, is acquiring Spanish utility giant Iberdrola's portfolio of liquefied natural gas (LNG) assets, the company announced on Thursday (June 20).

Its wholly-owned subsidiary, Pavilion Energy Trading & Supply, will pay €115 million (S$176.2 million) to Iberdrola, Iberdrola Generación and Iberdrola Generación España, according to filings with Spain’s National Securities Market Commission.

But the deal's final valuation is subject to several upward or downward adjustments stipulated in the contract, and the value of the transferred LNG inventory as at the closing date, expected to be Jan 1, 2020. 

Iberdrola is one of the world's biggest electricity utilities by market capitalisation. The group is present in numerous countries and supplies energy to over 100 million people mainly in Spain, the United Kingdom, the United States, Brazil and Mexico.

Pavilion Energy has a fully integrated energy business that encompasses upstream investments, global LNG trading, shipping and optimisation as well as energy hedging and financial solutions.

The portfolio that Pavilion Energy is buying comprises about 4 million tons per annum of Iberdrola's long-term sale and supply LNG contracts.

It also includes long-term regasification of approximately 2 million tons per annum at the Grain LNG terminal (UK), regasification access in Spain and the Spanish-France border pipeline capacity, as well as the time-charter of a newbuild MEGI LNG vessel.

Regasification is the process of returning LNG to its gaseous state.

In a related transaction, both parties have concluded a gas sales agreement for Pavilion Energy to supply natural gas in Spain to Iberdrola Generación Espana.

Mr Frédéric H Barnaud, group chief executive of Pavilion Energy, said: "Building on Pavilion Energy's success in Singapore and in the Asia-Pacific Basin, this acquisition brings us a portfolio of prime assets primarily in Europe and the Atlantic Basin.

"Today is a critical step towards our vision to be a leading global LNG player, leveraging our LNG portfolio with deep access to strategic gas markets in Singapore, Spain, and the UK, combined with sophisticated optimisation and risk management skills."

The new portfolio will allow the company to offer greater flexibility and competitive offerings for customers in Singapore, it said in a media release. It will also contribute to the firm's position as an active Singapore-based LNG trader.

Pavilion Energy supplies one-third of Singapore's downstream natural gas demand. It is also an advocate of natural gas as a cleaner fuel for power generation, industrial use, and as bunkering fuel.