Singapore's Temasek Holdings (Private) Limited has shortlisted energy giants Shell plc (LSE:SHEL) and Saudi Arabian Oil Company (SASE:2222) (Saudi Aramco) among a handful of companies to purchase most of the assets of liquefied natural gas (LNG) trading firm Pavilion Energy (Pavilion Energy Pte. Ltd.), sources with knowledge of the matter said. The sale process comes a decade after the state investment firm set up Pavilion Energy to focus on LNG-related investments, and takes place as spot Asian LNG prices have fallen more than 40% since mid-August, potentially weighing on the deal's valuation.

Temasek is evaluating bids for the sale of Pavilion Energy's assets, excluding its gas pipeline business, one of the sources said, adding that a final bidding round was likely in coming weeks, before a winner is announced if the price is right. It was not immediately clear how many bids Temasek had received, or their financial terms. Bloomberg first reported on the sale process in August. Pavilion Energy directed enquiries to Temasek, which declined to comment.

Shell declined to comment and Saudi Aramco did not respond to a request for comment. Barclays, which is advising Temasek on the sale, declined comment. "Pavilion Energy has a decent portfolio from a long-term volumes perspective, so it would be a good opportunity for Aramco to enter the LNG business.

For Shell, it would further expand their massive portfolio," an industry source said. Saudi Aramco has been exploring different opportunities globally and the acquisition would help kickstart its LNG business, one of the sources said, adding: "Aramco is late to the LNG party, but they have the money to catch up".