Pavilion, Uniper Sign LNG Capacity Deal
Singaporean Pavilion Gas and German utility Uniper have agreed to use each other's storage capacity, they said September 20. Pavilion will be able to use the Gate LNG terminal in Rotterdam and Grain LNG in UK and Uniper wlll be able to use the SLNG Terminal in Singapore, the companies said September 20.
The multi-year agreement allows Uniper, which also trades coal, to access Singapore storage and reload facility while Pavilion benefits from the access to LNG re-gas capacities in Gate LNG terminal and Grain LNG terminal. This should provide Pavilion access to UK and continental European gas markets, while Uniper will benefit from getting access to LNG assets in the fast-growing Asian market. At a time of thin margins, this will allow greater efficiency of operations.
“Europe’s demand for LNG is expected to grow as it looks to reducing its reliance on pipe gas. Access to these markets will also enhance the flexibility within our LNG portfolio and create further optimisation opportunities. Pavilion Gas is well-positioned to expand and grow its LNG trading presence regionally and globally, and we continue to welcome collaboration opportunities to grow our trading business,” Pavilion CEO Seah Moon Ming told the CWC LNG conference in Singapore.
Three focus areas
Pavilion Energy sees three core pillars where it will play a part in driving its LNG growth. According to Seah, the first focus area is the Singapore operations where the company focusing heavily on the LNG bunkering segment. In May this year, Pavilion Gas successfully conducted the first ever LNG bunkering truck-to-ship operations in Singapore and southeast Asia.
“We see the benefits and potential of the LNG bunkering industry, which is expected to expand to $10bn by 2023, up from just $214 million last year. LNG is set to play a significant role in the energy mix for the maritime sector with the IMO 0.5% global sulphur cap on marine fuels coming into force in the year 2020. We look forward to a thriving LNG bunkering hub in Singapore as part of the global LNG bunkering ecosystem,” he said.
The wider Asia-Pacific market is Pavilion’s second focus area, where small-scale LNG could play a critical role. Small-scale LNG allows LNG to be transported and distributed in smaller quantities to hard-to-reach locations where pipelines do not exist.
Seah said that the Asia-Pacific region accounts for 70% of LNG demand while southeast Asia’s LNG demand is expected to grow seven times to reach 70mn mt/yr by 2035. Indonesia could start importing LNG as early as 2019 if domestic supplies prove insufficient for its growing energy needs. And Thailand, which has been importing LNG since 2011, plans to triple its LNG intake by 2022, from the 5mn mt/yr today.
Receiving terminal capacity in southeast Asia is also expected to double to about 50mn mt/yr over the next five years, he said adding that in Singapore, SLNG has announced a terminal capacity expansion to 11mn mt/yr next year, and the possibility of up to 15mn mt/yr of capacity in the near future.
LNG trading is the third focus area for Pavilion. Last month, Pavilion Gas and Singapore LNG Corporation (SLNG) signed an agreement for LNG storage and reload services at the SLNG terminal on Jurong Island.
Pavilion plans to work closely with SLNG to facilitate multi-user access of the SLNG Terminal for LNG trading activities, small-scale LNG opportunities, LNG breakbulk and vessel cool-down services, he said.
“To conclude, these three core pillars represent our mid-term focus on LNG. While I have no doubt that this may change in the future as the market develops, these areas of focus will be key in shaping our role in driving LNG growth.”
Shardul Sharma