Pavilion Energy and Shell appointed as new LNG importers for Singapore (Amended)

PAVILION Energy and Shell have been appointed to supply Singapore with the next tranche of liquefied natural gas (LNG) needed by power plants and industries here.

The two companies were selected on the basis of the reliability, flexibility and competitive pricing of their LNG supplies, said Minister for Trade and Industry (Industry) S Iswaran on Monday, noting that they also secured strong support from buyers.

"Singapore's gas consumers will benefit from the new and improved terms offered by the two companies," said Mr Iswaran at the Singapore International Energy Week held at Marina Bay Sands.

Both companies will be awarded an exclusive franchise of three years from 2017, or until it has sold one million tonne a year of LNG, whichever comes first.

Four companies - Pavilion Energy, Sembcorp Industries, BG and Shell - had in May last year been shortlisted to participate in stage two of the selection process. BG and Shell's bids were later combined after the two companies merged earlier this year.

Market observers have said that being selected for the role would have a transformational effect on the local companies Pavilion Energy and Sembcorp Industries. It would provide Temasek's Pavilion Energy a boost to its cashflow, while allowing diversification for Sembcorp Industries' power generation business.

BG, now part of Shell, had earlier won the exclusive right to supply up to three million tonnes a year of LNG to Singapore for up to 20 years. The group has contracted almost all its franchised volume of three million tonnes a year.

Amendment note: In an earlier version of the story it was written that the three years for the LNG franchise would end in 2018. It has been revised to reflect that the three years will start from 2017 instead.

BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes