India sources more LNG from UAE in push for green energy

New Delhi, Aug 8 (IANS) India has sourced more liquefied natural gas (LNG) from the United Arab Emirates with public sector oil giant Hindustan Petroleum Corporation Limited (HPCL), signing a 10-year supply agreement with state-owned ADNOC Gas as part of the deepening energy partnership between the two countries.

Under the terms of the agreement, ADNOC Gas will supply 500,000 metric tonnes per annum (mtpa) of LNG to HPCL, starting in 2026. The LNG will be sourced from ADNOC Gas’ Das Island liquefaction facility, which has a production capacity of 6 mtpa and is one of the world’s longest-operating LNG plants, having shipped over 3,500 cargoes globally since its inception in 1977.

HPCL will receive LNG at the recently commissioned Chhara LNG Terminal, Gujarat, to meet the demand of its refineries, City Gas Distribution Network and for marketing to downstream customers. This initiative further enables HPCL to build a diverse portfolio encompassing long and short-term LNG contracts, and also to secure LNG and meet the growing energy demand in the Indian market.

This agreement marks ADNOC Gas’ third LNG supply deal with an Indian energy company in the past 12 months, following contracts with Indian Oil Corporation (IOCL) and GAIL India. The IOCL deal, a 14-year agreement valued between $7 billion and $9 billion, commits ADNOC Gas to supplying up to 1.2 mtpa of LNG, while the GAIL agreement involves 0.52 mtpa over 10 years, also starting in 2026.

Apart from economics, the UAE-India energy partnership reflects a geopolitical statement. The UAE has emerged as a reliable energy partner for India, particularly as global LNG competition intensifies following disruptions like the Russia-Ukraine conflict. India’s growing energy ties with the UAE provide a counterbalance to its reliance on other suppliers and help navigate challenges like potential US tariffs on Indian goods due to its oil imports from Russia.

India, the world’s fourth-largest LNG importer, is aiming to increase the share of natural gas in its primary energy mix from 6.2 per cent to 15 per cent by 2030, driven by industrial expansion, oil refining, and the need for cleaner energy alternatives to coal.

The country’s natural gas consumption is projected to triple by 2050, fuelled by growth in sectors like fertilisers, steelmaking, and construction. However, domestic production cannot keep pace with this rising demand, making long-term import agreements like the one with ADNOC Gas critical for energy security.

The deal with HPCL aligns with India’s broader energy strategy under Prime Minister Narendra Modi, who has emphasised diversifying away from coal to reduce carbon emissions.

Additionally, the UAE-India Comprehensive Economic Partnership Agreement (CEPA), signed in 2022, facilitates such deals by eliminating a 2.5 per cent import tax on LNG, making UAE gas more competitive in the Indian market. Non-oil trade between the two nations reached $50.5 billion in the first year after CEPA’s implementation, with ambitions to hit $100 billion by 2030.

For ADNOC Gas, this agreement is part of a broader strategy to capture a larger share of the global LNG market, which is expected to grow by 15 per cent over the next decade, driven by demand in Asia. The company, a subsidiary of the Abu Dhabi National Oil Company (ADNOC), supplies approximately 60 per cent of the UAE’s domestic gas needs and serves customers in over 20 countries.

The deal comes at a time when ADNOC is expanding its international presence, including in the US, where it has acquired stakes in LNG and green energy projects. This global push, coupled with domestic investments like the $13 billion planned for LNG capacity expansion by 2029, underscores ADNOC’s ambition to be a major player in the energy transition.

–IANS

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