Singaporean firm to invest 2tri/- in gas industry

Pavilion Energy, the liquefied natural gas unit of Singapore's state-owned investment company, will pay $1.3 billion (about 2tri/-) for a 20 per cent stake in three gas blocks off the shore of Tanzania.

Pavilion Energy, owned by Temasek Holdings, entered an agreement today with Ophir Energy Plc (OPHR), which owns 40 per cent of the estimated 15 trillion cubic feet (tcf) of gas in Tanzania Blocks 1, 3 and 4, the Singapore-based company said today in a statement.

The transaction is scheduled to be completed in the first quarter of 2014. The investment helps Pavilion Energy diversify its supply of LNG to meet Asian demand as Singapore vies to become a gas-trading hub. The first deliveries from Tanzania are scheduled to start in 2020.

"The natural gas developments in Tanzania hold tremendous potential, not just for Pavilion Energy but for Singapore and Asia," Chairman Tan Sri Mohd Hassan Marican said in today's statement. Temasek set up Pavilion in April to supply LNG in Asia, the company said at the time.

Pavilion Gas, the unit that manages operations and LNG distribution, started trading and plans to complete its first delivery to Asia by February, Chief Executive Seah Moon Ming said in a speech last month. Pavilion signed its first long-term deal in October with a European supplier for 500,000 metric tons of LNG annually for 10 years starting in 2018.

The contract is with "a major European oil and gas multinational" for delivery to Singapore and the region, said Seah, declining to identify the firm. Pavilion has increased its capital to $6.9 billion from the initial $1 billion earlier this year, it said today.

The company will use various price indexes for contracts of different durations, Seah said in a speech in September. Long-term LNG contracts, typically more than 10 years, are usually settled on the basis of a formula with a fixed percentage linked to Brent oil or the Japan Crude Cocktail price.

Singapore, Asia's oil-trading centre, also wants to be 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, which is scheduled to rise to 6 million tons by the end of the year. Gas supplied 84 per cent of Singapore's electricity in 2012, according to the Energy Market Authority, the nation's energy regulator.

A fourth tank is planned to raise capacity to 9 million tons by 2016. That would allow Singapore to offer last-minute deliveries, or spot cargoes, to buyers in Asia seeking an alternative to long-term contracts. Temasek's total 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 per cent of the investments, according to its annual report released in July. The state-owned investor said in July that new investment opportunities include industries such as energy, resources, life sciences, consumer and technology.
Source: Daily News, reported from Dar es Salaam, Tanzania
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