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Temasek's Pavilion Energy acquiring Iberdrola’s portfolio of LNG assets for 115m euros

TEMASEK-OWNED Pavilion Energy is acquiring Spanish energy giant Iberdrola's portfolio of liquefied natural gas (LNG) assets for 115 million euros (S$176.2 million), subject to adjustments.

According to Iberdrola's filings with Spain’s National Securities Market Commission, 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.

The transaction was entered into by Pavilion Energy’s wholly-owned subsidiary Pavilion Energy Trading & Supply, with Iberdrola, Iberdrola Generación and Iberdrola Generación España.

In its own announcement on Thursday, Pavilion Energy said the portfolio being acquired comprises Iberdrola’s long-term sale and supply LNG contracts, which amounts to around four million tonnes per annum (mpta). It also includes a two mpta long-term regasification at the Grain LNG terminal in the UK, regasification access in Spain and the Spanish-France border pipeline capacity, and the time-charter of a newbuild MEGI LNG vessel.

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In a related transaction, Pavilion Energy and Iberdrola have also concluded a gas sales agreement for Pavilion to supply naturall gas in Spain to Iberdrola Generación Espana.

Pavilion Energy group chief executive Frédéric Barnaud said the acquisition brings the group a portfolio of prime assets in Europe and the Atlantic Basin.

"The combined portfolio achieves global reach with the scale and flexibility required to outperform,” he said.

Pavilion Energy said it supplies one-third of Singapore’s downstream natural gas demand, and has been an ardent advocate of natural gas as a cleaner fuel for power generation, industrial use, and as bunkering fuel.

"This strategic transaction will enable Pavilion Energy to play a greater role in energy transition as well as to offer competitive solutions to our customers and suppliers," the company said in its media release.

Iberdrola said in a separate announcement that the deal "represents a change in the group's current gas supply strategy", to fulfill not only customer needs but also that of combined cycle plants. It is also part of its 3.5 billion euro non-strategic asset rotation plan for the period 2018 to 2022.

"The company will now focus on short-term supply, taking advantage of this trend in European gas markets," it added.