Singapore-based Temasek Holdings is reportedly on the verge of sealing a deal with Shell Plc. (NYSE:SHEL) for the sale of assets from its liquefied natural gas trading firm, Pavilion Energy.
What Happened: The deal, which is expected to be finalized in the coming days, will provide Shell, the world's leading LNG trader, with access to gas markets in Europe and Singapore. The deal's value is estimated to be in the hundreds of millions of U.S. dollars, significantly lower than the initial asking price by Temasek, Reuters reported, citing two sources with knowledge of the matter.
The Pavilion Energy asset sale will exclude Gas Supply Pte Ltd, which holds a license to import natural gas from Indonesia via pipeline, due to energy security concerns.
Temasek had put the Singapore-based trader up for sale after Pavilion Energy turned a profit in the year to March 2023, driven by robust LNG prices following the Ukraine war.
Shell, which already supplies a quarter of Singapore's natural gas needs, will become the city-state's largest gas supplier as a result of this deal.
"Pavilion's positions in both the Atlantic and Pacific, alongside LNG bunkering, fit nicely within Shell's existing portfolio and LNG market growth ambitions," said Saul Kavonic, an energy analyst at MST Marquee.
Temasek declined to comment on the report, while Pavilion Energy and Shell did not immediately respond to Benzinga's request for comment.
Why It Matters: The LNG market has been witnessing significant activity recently. In May, Shell and Exxon Mobil Corp. were reported to be considering the sale of their North Sea assets in a deal valued at $500 million. The potential deal would mark Exxon's complete exit from the North Sea, where it has had a presence since 1964.
However, the energy industry is also facing challenges. On Tuesday, California Attorney General Rob Bonta filed an amended complaint targeting major fossil fuel companies like Exxon Mobil, Shell, BP, and ConocoPhillips, requiring them to forfeit profits earned through illegal activities related to climate change. This has led to increased scrutiny of the industry's practices and could impact future deals and operations.
Price Action: Shares of Shell PLC closed at $70.41 on Wednesday, up 0.17%. Premarket trading on Thursday shows a slight dip of 0.27%, according to the data from Benzinga Pro.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote