Gas importer Pavilion eyes Europe to drive global LNG ambitions

Singapore's gas importer and marketer Pavilion Energy is targeting new markets in Europe and expanding in Asia in a bid to become a global liquefied natural gas (LNG) trader, its chief executive said.

The company expects a turnover of $3 billion next year with half the amount to come from its Europe portfolio after a recent acquisition and the rest from Singapore, Frederic Barnaud, Pavilion Energy's group chief executive said in an interview.

Pavilion, owned by Singapore's sovereign wealth fund Temasek Holdings, does not publish annual accounts and declined to reveal last year's turnover.

It is also aiming to increase its global headcount to about 150 people by next year, by adding 40 to 50 people in various functions such as finance, risk management, LNG trading and operations in its European headquarters of Madrid which it plans to open in January 2020.

The Madrid office follows its acquisition in June of Spanish energy company Iberdrola's LNG assets, which doubled Pavilion's portfolio and gave it access to European regasification terminals as well as Atlantic supplies.

"(We will) build the global LNG business that is also anchored around three critical markets: Singapore, Spain and the UK where we will import LNG and then sell and trade the gas in the wholesale market, in hubs and large industrial customers," he said.

Pavilion joins other Asian companies who are increasingly looking for more flexibility to buy and trade LNG amid uncertainty in climate policies as countries grapple with the dilemma of using cheaper coal versus the more typically expensive but cleaner gas option.

 

BEING AGILE

With new supply sources emerging from the United States and the majority of LNG demand centred in Asia, cargoes will have to be shipped from far and swapped around, which "requires specific competence", Barnaud said.

"We are not looking at extremely aggressive or taking excessive risk in the market, we are looking at being agile and reasonably balanced in our supply," he said in his first interview since taking over the helm at Pavilion last year.

In Asia, Singapore will remain the centre of Pavilion's LNG market where it plans to leverage the city state's geographical proximity to top buyers such as Japan and South Korea, and shipping flows.

The firm is in talks with LNG terminal operator Singapore LNG Corp (SLNG) to possibly extend its storage lease when the current one expires in March 2020, after about 2-1/2 years, Barnaud said.

It has also indicated its interest for a potential fifth LNG storage tank that SLNG is considering to construct, he added.

The tank space would allow Pavilion to break up large cargoes into smaller ones for re-export to neighbouring countries, he said.

It is also developing LNG bunkering activities, in line with Singapore's vision of becoming a hub for the cleaner alternative to shipping fuel.

Pavilion supplies natural gas for one-third of Singapore's industrial requirements while in Spain, it will have about 3% to 5% of market share once its acquisition is complete.

"Our profile has changed, we see that others are looking at us differently already. That will lead to opportunities (in commercial developments)," Barnaud said. (Reporting by Jessica Jaganathan; editing by Emelia Sithole-Matarise)

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