Walter Finch
BRITISH energy giant Shell is set to close its Madrid gas trading hub and relocate dozens of workers out of Spain just months after it acquired Pavilion Energy Spanish division.
The major restructuring will see nearly 50 employees at Pavilion’s prestigious Torre Cristal offices in the Spanish capital obliged to move to Singapore, Dubai, or London under threat of redundancy.
The move comes just months after the €81.65 million acquisition was approved by Spain’s Council of Ministers in October 2024.
Industry sources suggest the outcome might have been different had another bidder succeeded in acquiring Pavilion from Singapore’s Temasek sovereign wealth fund.
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Other potential buyers had reportedly planned to strengthen Madrid’s position as an operations centre rather than close it down.
The hub, established five years ago following Pavilion’s €115 million purchase of Iberdrola’s wholesale natural gas supply portfolio, has become a significant player in Spain’s energy market.
The restructuring is reportedly being justified on the ground of both optimising the running of the company and paying less in taxes.
The restructuring could have major implications for British energy supplies, as Pavilion holds long-term regasification rights at the Grain terminal in the UK, with a capacity of 2 million tonnes annually.
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The company also manages a fleet of five LNG vessels and one bunkering ship.
Shell’s decision to consolidate operations in its existing trading hubs reflects its position as the world’s largest gas trading company.
In 2023, Shell supplied 67 million tonnes of LNG globally, representing 16% of the world’s liquefied natural gas supply, through its network of 81 vessels.
The Spanish operation currently handles significant gas imports, particularly from Nigeria, and was Spain’s third-largest gas importer in 2023 with a 5% market share, behind only Naturgy and Endesa.
The Madrid office currently manages the arrival of 20 LNG tankers at Spanish ports.
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The timing is particularly sensitive as Pavilion’s gas supply contract with Iberdrola, one of Spain’s leading gas retailers, expires in 2025, creating uncertainty about future supply arrangements.
While Shell still requires certain approvals from Brussels to proceed with the changes, sources familiar with the matter indicate the company plans to maintain only minimal operations in Spain for essential national activities.
Shell’s acquisition includes 6.5 million tonnes per year of long-term LNG supply contracts, adding to its existing production of 38 million tonnes annually from facilities across eight countries including Nigeria, Australia, and Qatar.
