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Temasek’s Pavilion Energy Plans to Invest in Asia LNG Assets

Pavilion Energy Pte, the liquefied natural gas unit of Singapore’s state-owned investment company, wants to invest in Asian terminals and infrastructure to further its aim of supplying gas to the region.

Pavilion Energy, owned by Temasek Holdings Pte, will add more funds to its initial authorized capital of $1 billion to fulfill its ambitions, Chief Executive Officer Seah Moon Ming said at an LNG conference in Singapore today. He didn’t say how the company will raise the additional money.

“We will acquire assets across the full LNG value chain by building strong relationships with key partners, investing and co-investing in gas acreage, liquefaction plants and assets, shipping and regasification,” Seah said.

Temasek set up Pavilion Energy in April to tap growing demand for LNG in Asia, the company said at the time. Pavilion will start trading LNG in Asia within the next three months and will seek to form partnerships with existing trading companies in Japan, South Korea, China and Taiwan, according to Seah. It will seek to reduce supply risk by considering purchases of LNG from North America, Australia and Africa, he said. Pavilion Energy has no long-term supply contracts, according to data compiled by Bloomberg.

Price Indexes

Pavilion will adopt a mix of price indexes for contracts of different durations, according to Seah, who didn’t specify which gas prices the company will use. Long-term LNG contracts, which are typically more than 10 years in length, are usually settled on the basis of a formula with a fixed percentage linked to Brent oil or the Japan Crude Cocktail price.

Singapore imported its first LNG cargo in March to inaugurate its 3 million metric-ton-a-year receiving facility on Jurong Island. Completion of a third tank in early 2014 will expand the terminal to 6 million tons.

BG Plc (BG/) won the contract in 2008 to supply 3 million tons of LNG to Singapore annually over 10 years starting in 2013. It sold 2.7 million tons as of August, the company said on its website. A second license to supply the Asian city-state with 1 million tons through 2018 will be awarded through a competitive process held by Singapore’s energy regulator, the Energy Market Authority.

Temasek Holdings

Singapore has what it takes to attract LNG to Asia and set prices for the region, with Pavilion Energy playing a key role, Seah said.

Temasek’s holdings jumped to a record S$215 billion in the year ended March 31 as surging global stock markets bolstered assets. Energy and resources companies make up 6 percent of its investments, according to its annual report released in July.

The state-owned investor said in July new investment opportunities include industries such as energy, resources, life sciences, consumer and technology.

To contact the reporter on this story: Chou Hui Hong in Singapore at chong43@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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