Temasek Gas Unit Signs First Long-Term Deal With Europe Supplier

Pavilion Energy Pte, the liquefied natural gas unit of Singapore’s state-owned investment company, made its first long-term deal with a European supplier.

Pavilion Energy, owned by Temasek Holdings Pte, will receive 500,000 metric tons a year of LNG for 10 years starting in 2018, the company said in an e-mail, without identifying the seller. The contract is with “a major European oil and gas multinational” for delivery into Singapore and the region, Chief Executive Seah Moon Ming said in a speech at a conference in the city-state today.

Singapore, Asia’s oil-trading center, is also vying to become a hub for LNG, supercooled gas shipped by tankers rather than pipelines. It opened its first LNG terminal in May with an initial annual capacity of 3.5 million tons, increasing to 6 million tons by the end of the year. Natural gas supplied 84 percent of Singapore’s electricity in 2012, according to the Energy Market Authority, the nation’s energy regulator.

Temasek set up Pavilion Energy in April to tap growing demand for LNG in Asia, the company said at the time. Pavilion Gas, its unit that manages gas operations and LNG distribution, has started trading the fuel and expects to complete its first cargo delivery to Asia by February, Seah said.

“We are also looking into global investments with the aim of building a diversified asset portfolio,” Seah said. The company will add more funds to its initial authorized capital of $1 billion to fulfill its ambitions, he said last month.

A fourth tank is planned to take capacity to 9 million tons by 2016. That will allow Singapore to offer last-minute deliveries, or spot cargoes, to buyers in Asia seeking an alternative to long-term contracts.

BG Contract

BG Plc won the contract in 2008 to supply 3 million tons of LNG to Singapore annually over 10 years starting in 2013. Singapore may award as many as two further supply licenses, seeking 1.5 million tons a year initially, Second Trade Minister S. Iswaran said today. The country’s energy regulator will lift a moratorium on piped gas supplies when BG has fulfilled its contract or by 2018, Iswaran said today.

Temasek’s holdings jumped to a record S$215 billion ($173 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: Pratish Narayanan in Singapore at pnarayanan9@bloomberg.net

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

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