Page 3 - EurOil Week 25

EurOil COMMENTARY EurOil
Iberdrola offloads portfolio
onto Pavilion
The two companies have both described the deal as demonstration of transition
SPAIN
WHAT:
Iberdrola is selling out of its LNG portfolio.
WHY:
The company is shifting to a new focus, based on renewable energy and long-term generation.
WHAT NEXT:
Pavilion is expanding its global presence.
SPANISH utility Iberdrola has struck a deal to sell its LNG business to Singapore’s Pavilion Energy, for €115mn ($131mn). e move comes amid a broader shi for the Spanish company, which has touted a change of direction in light of industry trends and transition. e Singaporean company, meanwhile, also sees the deal as part of a transition, as it expands from its domestic focus into a more diversi ed entity.
Sale tale
e Spanish company announced the sale on June 20. e package of contracts will be trans- ferred to Pavilion Energy Trading & Supply, a unit of Pavilion, by January 1, 2020. e nal pricepaidmaybeadjustedupordown,depend- ing on the value of the LNG inventory on closing.
Iberdrola said this sale was part of its plan to sell down non-strategic assets. is aims to raise €3.5bn ($3.98bn) between 2018 and 2022, with almost half of this achieved. e company has also sold o assets such as bre optics in Spain, power generation in the UK and gas storage in the US.
e deal with Pavilion “represents a change in the group’s current gas supply strategy, to ful l not only the customer needs, but also those of combined cycle plants”. Iberdrola will now focus, instead, on short-term supply in European gas markets.
Pavilion, in a statement, put the volume of sale and supply contracts at 4mn tonnes per year (tpy), with 2mn tpy of long-term regas at the UK’s
Isle of Grain terminal. It also gains regas access in Spain and capacity on the Spain-France pipeline, with a time-charter on a newbuild MEGI vessel. In a related deal, Pavilion said it would supply gas to Iberdrola Generación Espana in Spain.
“This acquisition brings us a portfolio of prime assets primarily in Europe and the Atlantic Basin. e combined portfolio achieves global reach with the scale and exibility required to outperform,” said Pavilion’s group CEO, Frédéric Barnaud. “Today is a critical step towards our vision to be a leading global LNG player, leverag- ing our LNG portfolio with deep access to strate- gic gas markets in Singapore, Spain, and the UK, combined with sophisticated optimisation and riskmanagementskills.”
Outlook 2022
In February, Iberdrola set out a plan to make an “irreversible transition” to low carbon energy. Of the 10,000 MW it planned to build, nearly 65% would be in renewables.
The company identified industry trends – such as a need to reduce carbon emissions, produce more energy and need for e ciencies –as“requiringanewandsustainablemodel”.As part of this energy transition, renewable energies were identi ed as of critical importance.
Iberdrola said it was ready “to continue seiz- ing” the opportunity of this transition, while also creating value for its shareholders. During the 2018-22 period, it said it would invest €34bn ($38.05bn), with €30bn ($33.6bn) already
Week 25 27•June•2019 w w w . N E W S B A S E . c o m P3