As part of their growing energy collaboration, India has signed a 10-year supply agreement with state-owned ADNOC Gas and increased its liquefied natural gas (LNG) sourcing from the United Arab Emirates through public sector oil behemoth Hindustan Petroleum Corporation Limited (HPCL).
The agreement states that beginning in 2026, ADNOC Gas will provide HPCL with 500,000 metric tons of LNG annually (mtpa). The Das Island liquefaction facility of ADNOC Gas, which has a production capacity of 6 mtpa and is among the longest-running LNG plants in the world, will supply the LNG. Since its founding in 1977, the facility has transported more than 3,500 cargoes worldwide.
The newly opened Chhara LNG Terminal in Gujarat will supply HPCL with LNG to suit the needs of its refineries, the City Gas Distribution Network, and downstream consumers. Through this endeavor, HPCL is also able to obtain LNG and fulfill the increasing energy demand in the Indian market, as well as develop a diversified portfolio that includes both short-term and long-term LNG contracts.
After agreements with Indian Oil Corporation (IOCL) and GAIL India, this is ADNOC Gas’ third LNG supply arrangement with an Indian energy company in the last 12 months. ADNOC Gas is committed to providing up to 1.2 mtpa of LNG under the terms of the 14-year, $7–9 billion IOCL deal, but the GAIL arrangement calls for 0.52 mtpa over 10 years, also starting in 2026.
The UAE-India energy collaboration is a geopolitical statement in addition to an economic one. India now has a trustworthy energy partner in the UAE, especially as the battle for LNG around the world heats up after setbacks like the Russia-Ukraine war. India’s increasing energy links with the UAE help it overcome obstacles like possible US taxes on Indian exports because of its imports of Russian oil and balance off its reliance on other suppliers.
Driven by industrial expansion, oil refining, and the demand for cleaner energy alternatives to coal, India, the fourth-largest LNG importer in the world, wants to raise the proportion of natural gas in its primary energy mix from 6.2% to 15% by 2030.
By 2050, the nation’s natural gas consumption is expected to triple due to expansion in industries including steel, construction, and fertilizers. Long-term import agreements like the one with ADNOC Gas are essential for energy security because domestic production cannot keep up with this growing demand.
The agreement with HPCL is in line with Prime Minister Narendra Modi‘s overall energy plan, which has placed a strong focus on moving away from coal in order to lower carbon emissions.
Furthermore, by removing a 2.5% LNG import tax, the UAE-India Comprehensive Economic Partnership Agreement (CEPA), which was signed in 2022, makes such agreements easier and increases the competitiveness of UAE gas in the Indian market. In the first year following the adoption of CEPA, non-oil commerce between the two countries totaled $50.5 billion, with plans to reach $100 billion by 2030.
This deal is a component of ADNOC Gas’s bigger plan to increase its market share in the worldwide LNG industry, which is anticipated to expand by 15% over the next ten years due to demand in Asia. The company serves clients in more than 20 countries and provides over 60% of the UAE’s domestic gas demand as a subsidiary of the Abu Dhabi National Oil Company (ADNOC).
The transaction takes place as ADNOC is growing its global footprint, particularly in the US, where it has purchased shares in green energy and LNG projects. ADNOC’s goal to play a significant role in the energy transformation is highlighted by this international drive as well as home investments like the $13 billion slated for LNG capacity development by 2029.