Adnoc signs 15-year LNG supply deal with India to boost energy ties

Agreement reached during visit by Sheikh Khaled bin Mohamed to New Delhi

Indian Prime Minister Narendra Modi welcomes Sheikh Khaled bin Mohamed, Crown Prince of Abu Dhabi, at Hyderabad House in New Delhi. EPA

Adnoc has signed a preliminary 15-year agreement with state-backed Indian Oil to supply 1 million tonnes a year of liquefied natural gas to India, amid efforts by the countries to expand co-operation in several key sectors including energy.

The LNG will be primarily sourced from Adnoc’s lower-carbon Ruwais LNG project, the Abu Dhabi Media Office said on Monday. Adnoc also signed an agreement with the Indian Strategic Petroleum Reserve to extend its existing oil storage agreement and support India’s energy security.

Indian Oil is set to become the largest buyer of LNG from Adnoc by 2029. The annual purchase will reach 2.2 million tonnes, with 1.2 million tonnes coming from Adnoc's Das Island operations and one million tonnes from Ruwais LNG, the Abu Dhabi energy company said in a statement on Tuesday.

“India is an important, strategic partner of the UAE and this agreement underscores Adnoc’s commitment to delivering secure, lower-carbon energy to support the country’s energy security," said Rashid Al Mazrouei, senior vice president of marketing at Adnoc.

The announcements came after a meeting between Sheikh Khaled bin Mohamed, Crown Prince of Abu Dhabi, and Indian Prime Minister Narendra Modi in New Delhi.

Sheikh Khaled, also chairman of the Abu Dhabi Executive Council, arrived in India on Sunday, accompanied by a high-level delegation, including ministers, senior officials, business leaders and prominent economic partners from the UAE.

During the visit, Abu Dhabi-based investment and holding company ADQ also signed an agreement with the government of India's western state of Gujarat to develop a major food and agriculture park, Abu Dhabi Media Office said.

The Emirates Nuclear Energy Corporation has also partnered with the Nuclear Power Corporation of India to provide a formal framework to share knowledge and exchange expertise across all areas of nuclear energy development.

The UAE and India signed a comprehensive economic partnership agreement in February 2022 to boost trade ties. The Cepa helped non-oil trade between the countries to increase by 5.8 per cent to $50.5 billion in the first 12 months after it took effect in May 2022. The countries hope the agreement will help them boost trade to $100 billion by 2030.

Benefits of the Cepa include enhanced market access, lower or eliminated tariff rules, simpler customs procedures, clear and transparent rules, and rule-based competition.

The Emirates has been focusing heavily on diversifying its economy away from oil by developing sectors such as technology, manufacturing, tourism, trade and innovation. Its non-oil foreign trade hit a record Dh1.4 trillion ($381 billion) in the first six months of this year, as it continues to forge closer trade ties with partners around the world.

In January, President Sheikh Mohamed visited India and met Mr Modi while attending the Vibrant Gujarat business summit. Mr Modi visited the UAE in February and inaugurated the Baps Hindu Mandir in Abu Dhabi. The countries also signed a pact to expand investment co-operation in digital infrastructure.

Energy ties

Adnoc's latest deals follow Adnoc Gas' signing of a 10-year agreement in January to supply 500,000 tonnes per year of LNG to Gail India, India's largest natural gas provider, which is majority-owned by the government.

Adnoc, which is responsible for almost all of the UAE’s oil production, is looking to position itself as a major player in the LNG market, as demand for the fuel is projected to grow over the next few decades.

Ruwais LNG, located in Abu Dhabi, will have a total capacity of 9.6 million tonnes per annum and is expected to more than double Adnoc's LNG production capacity. It is scheduled to commence in the second half of 2028.

Meanwhile, in January, both countries also signed an initial agreement that aims to invest in renewable energy projects in India, potentially reaching a total capacity of 60 gigawatts. Indian officials at the time said one of the agreements was on renewable energy, which also includes green hydrogen and solar.