The Gulf Leaders
13 February 2025
Abu Dhabi – In a landmark development for global energy markets, the Abu Dhabi National Oil Company (ADNOC) has sealed long-term LNG supply agreements with Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Ltd (BPCL). This ADNOC LNG Deal is set to significantly enhance the UAE-India energy partnership, strengthen energy security for India, and broaden ADNOC’s global market footprint.
ADNOC and Indian Oil Corporation (IOC)
Agreement Details: ADNOC and IOC have signed a 14-year sales and purchase agreement, with deliveries commencing in 2026. IOC will receive up to 1.2 million metric tons per annum (MMTPA) of LNG, with the deal valued between $7 billion and $9 billion.
- LNG Source: The LNG will come from ADNOC’s Das Island liquefaction facility, known for its capacity to produce up to 6 million metric tons per year.
- Strategic Impact: By 2029, IOC is projected to become ADNOC’s largest LNG customer, with total annual offtake reaching 2.2 MMTPA.
ADNOC and Bharat Petroleum Corporation Ltd (BPCL)
- Agreement Details: ADNOC will supply BPCL with 40 LNG cargoes over five years, starting in April 2025. The contract includes a gradual increase in delivery volumes and a potential five-year extension.
- Diverse Partnerships: BPCL is also negotiating an oil import deal with Brazil’s Petrobras, indicating India’s broader strategy to diversify energy sources.
Why These Deals Matter for India
India is on a mission to increase natural gas’s share in its energy mix from 6.2% to 15% by 2030. The ADNOC LNG deal with IOC and BPCL is pivotal in achieving that goal. They provide:
- Long-Term Energy Security: Securing LNG supplies through 2040 ensures stability amid fluctuating global energy prices.
- Supplier Diversification: ADNOC joins a growing list of India’s LNG suppliers, which includes U.S. firms and Malaysian company Petronas.
- Infrastructure Growth: The deals will drive investments in India’s regasification terminals, crucial for efficient LNG distribution.
The UAE’s Strategic Gains
For ADNOC, these agreements are more than just sales contracts; they align with the UAE’s broader economic and energy diversification strategy. Key benefits include:
- Market Expansion: Establishing a stronger foothold in India, one of the world’s fastest-growing LNG markets.
- Revenue Growth: The IOC deal alone could generate up to $9 billion in revenue.
- Sustainability Leadership: ADNOC’s Ruwais LNG project will use clean energy, positioning the UAE as a leader in low-carbon LNG production.
ADNOC’s Global LNG Footprint
While India remains a focal point, ADNOC is actively expanding its LNG partnerships worldwide. Current collaborations include:
- Japan: Agreements with Osaka Gas and JERA Global Markets.
- Malaysia: A 15-year deal with Petronas.
- Germany: LNG supply to EnBW for its Ruwais project.
- China: Partnerships with PetroChina and ENN for long-term LNG deliveries.
Economic Ripple Effects for the UAE
The UAE’s energy strategies align with its broader economic vision of reducing oil dependence and enhancing global trade relations. The ADNOC LNG Deal plays a crucial role in this vision by:
- Boosting Non-Oil Trade: Non-oil trade hit AED 1.4 trillion ($381.2 billion) in the first half of 2024, an 11.2% increase from the previous year.
- Driving Infrastructure Investment: The LNG agreements will necessitate infrastructure development in UAE ports and LNG facilities.
- Enhancing Geopolitical Influence: Collaborations with India, Japan, and Germany strengthen the UAE’s global energy diplomacy.
The Road Ahead: A Win-Win for UAE and India
As ADNOC prepares for India Energy Week 2025, these LNG deals underscore the growing UAE-India energy alliance. For India, the agreements guarantee a steady supply of cleaner energy. For the UAE, they represent a strategic step toward becoming a global LNG powerhouse. In the evolving landscape of global energy, the ADNOC LNG Deal with IOC and BPCL stands as a testament to the power of cross-border partnerships in securing a sustainable and prosperous energy future for all involved.
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