Adnoc Gas and Indian Oil’s 14-year LNG agreement: What does it mean?

Abu Dhabi: Adnoc Gas, the gas and LNG (liquefied natural gas) division of Adnoc, inked a 14-year signed a 14-year sales and purchase agreement with Indian Oil to supply the latter with LNG from the Das Island terminal. Das Island has a production capacity of up to 6 million tonnes per annum (mtpa). The $7-9 billion LNG supply agreement covers delivery of 1.2 mtpa, with first deliveries starting from 2026. As the world’s third longest-operating LNG plant, Adnoc Gas said Das Island has shipped over 3,500 LNG cargoes worldwide since starting operations.

The deal signifies a major step forward in the partnership between the two industry leaders.

Fatema Al Nuaimi, CEO of Adnoc Gas, said, “This agreement strengthens our long-standing partnership with IndianOil and is a testament to the dynamic and robust energy ties between the UAE and India.”

Al Nuaimi said, “As a reliable and responsible supplier of lower-carbon gas, ADNOC Gas looks forward to supporting India’s plans to make gas 15 per cent of its primary energy basket by 2030.”

What does it mean for Adnoc?
The agreement builds on ADNOC Gas’ strategy to expand its customer base, following a series of LNG agreements signed over the past two years.
These deals range from 0.4 MTPA to 1.2 MTPA. They are for periods ranging up to 14 years and reinforce its position as a leading supplier of reliable, lower-carbon LNG to key growth markets in Asia, such as India.

The agreement announced on Thursday builds on an existing relationship between Adnoc Gas and Indian Oil, India’s largest integrated energy company. By converting a previous Heads of Agreement into a long-term sales and purchase agreement (SPA), this deal boosts the bond between two of the fastest-growing energy markets in the world.

What does it mean for India-UAE?
The Adnoc-Indian Oil agreement is part of a series of deals signed between the UAE and India following their 2022 Comprehensive Economic Partnership Agreement (Cepa). The agreement helped non-oil trade between UAE and India 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 Cepa will help them increase trade to $100 billion by 2030.

India aims to have natural gas make up a 15 per cent share of its total energy mix by 2030. “India is scaling renewables, targeting 5 million tonnes of hydrogen by 2030, $96bn in hydrogen investments and a gas share increase of 6 per cent to 15 per cent alongside the $30 billion in mining and petrochemical expansion,” Hardeep Singh Puri, India’s Minister of Petroleum and Natural Gas said while commenting on the India-US energy cooperation.