Adnoc Gas, the integrated gas processing unit of Adnoc, announced a 14-year supply agreement valued at between $7 billion and $9 billion with Indian Oil Corporation Limited, the South Asian country’s largest refiner.
Adnoc Gas will supply up to 1.2 million metric tonnes per annum of liquefied natural gas to IOCL, the company said on Tuesday night.
“We are pleased to announce this long-term LNG sale, further strengthening the long-standing partnership with IOCL,” Adnoc Gas chief executive Ahmed Alebri said.
“We look forward to expanding our collaboration and take pride in the knowledge that Adnoc Gas’ LNG exports will further support the development of IOCL and contribute to India’s growth story.”
Competition for LNG has increased since Russia's invasion of Ukraine last year, with Europe importing record volumes of the supercooled fuel to replace Moscow's gas supplies.
Global LNG trade hit a high of $450 billion in 2022 amid a surge in European demand, according to the International Energy Agency.
Despite a rise in demand, LNG supply grew by only 5.5 per cent last year, mostly due to maintenance at large export terminals and as Freeport LNG’s Texas-based plant – one of the world’s largest export centres of the supercooled fuel – was shut down after a fire.
The deal is a “significant milestone” for Adnoc Gas as it expands its global presence, reinforcing its position as an “LNG export partner of choice”, the company said.
It also supplies more than 60 per cent of the UAE's gas needs.
The company has also signed a three-year supply agreement with TotalEnergies Gas and Power, a subsidiary of France’s TotalEnergies, for the export of LNG as demand for less polluting fuel picks up globally amid decarbonisation efforts.
India, which overtook the UK as the world’s fifth-largest economy last year, aims to increase the share of natural gas in the country's total energy mix to 15 per cent by 2030, from about 6 per cent currently.
The country’s LNG import capacity nearly doubled last year, from 21 million tonnes a year in 2014, Indian Prime Minister Narendra Modi said in a speech in February.
India has also been focusing on diversifying its crude oil supply while increasing domestic production.
In May, IOCL chairman Shrikant Vaidya said the refiner was committed to long-term oil and gas contracts with the Middle East, despite India’s growing reliance on discounted crude barrels from Russia.
“Though I might have taken oil from the other geographies, my continued relations with the Middle East, in terms of oil supply, remain intact,” said Mr Vaidya, during an energy industry event in Dubai.
The International Energy Agency warned earlier this week that “fierce” competition for gas exports may emerge this winter on stronger-than-expected economic growth in China and colder weather in North-East Asia.
Earlier this year, Adnoc raised about Dh9.1 billion ($2.5 billion) from the sale of a 5 per cent stake in Adnoc Gas.
The company sold more than 3.8 billion shares, with the initial public offering drawing strong demand from institutional and retail investors, and generating more than $124 billion in orders.
Adnoc Gas reported a 9 per cent annual increase in its first-quarter net profit as it optimised costs and maintained robust margins despite a sharp slide in hydrocarbon prices.
Net income for the three months to the end of March rose to $1.3 billion, compared with a pro forma adjusted net profit of $1.2 billion recorded during the same period last year, the company said in May.