Last June 20 Iberdrola and Pavilion Energy Trading & Supply Pte. Ltd., a subsidiary of Pavilion Energy Pte. Ltd., announced the signing of an agreement whereby the Singaporean company would acquire the portfolio of long-term liquefied natural gas (LNG) supply contracts belonging to the Spanish company. The Asian group thus makes the leap to Europe by committing to this fuel.

Pavilion Energy supplies one third of the demand for natural gas in Singapore, and is a staunch defender of this fuel as a source of clean energy for industrial use and fuel. With this transaction the company seeks to play a more important role in the energy transition, and offer competitive solutions to its customers and suppliers.

Long-term sale and supply
The portfolio acquired includes contracts for the long-term sale and supply of LNG, including particularly the contract for providing service to the United Kingdom, with maritime transport and a regasification capacity at the Grain LNG terminal with an annual volume of over five billion cubic meters. It also includes other accessory contracts such as access to regasification in Spain, the frontier oil pipeline capacity between Spain and France, and the rental of a new MEGI LNG ship.

In parallel to this transaction, which is expected to be closed on January 1 2020, both parties also signed a contract for Pavilion Energy to supply natural gas in Spain to Iberdrola Generación España.

Iberdrola's divestment strategy
Frédéric H. Barnaud, CEO of the Pavilion Energy group, says of the transaction: “Building on Pavilion Energy’s success in Singapore and in the Asia-Pacific Basin, this acquisition brings us a portfolio of prime assets primarily in Europe and the Atlantic Basin. The combined portfolio achieves global reach with the scale and flexibility required to outperform”.

For its part, Iberdrola justifies the transaction as part of its non-strategic asset rotation plan, with which it intends to divest assets for an amount of 3.5 billion euros during the period 2018-2022. With this transaction, whose final valuation will depend on certain adjustments and on the value of the inventory transferred, the Spanish company expects to achieve a divestment of over 1.7 billion euros, half the amount envisaged in its plan. As it explains in a press note, in the future it will focus on more short-term supply, in order to “leverage the natural trend in the development of gas markets in Europe”.