What's Happening?
ADNOC Gas has entered into a significant long-term liquefied natural gas (LNG) supply agreement with India's Hindustan Petroleum Corporation Limited (HPCL), valued between $2.5 billion and $3 billion. This 10-year sales and purchase agreement will see
the supply of 0.5 million tonnes per annum of LNG, converting a previously signed heads of agreement into a binding contract. The deal underscores the growing energy partnership between the UAE and India, with India now being the UAE's largest LNG customer. By 2029, ADNOC Gas plans to operate 15.6 million tonnes per annum of LNG capacity, with 3.2 million tonnes per annum contracted to Indian energy companies, including HPCL. The supplies will be sourced from ADNOC Gas's Das Island liquefaction facility, which has a production capacity of up to 6 million tonnes per annum.
Why It's Important?
This agreement is a testament to the strengthening energy ties between the UAE and India, reflecting India's strategic move to increase natural gas in its energy mix to 15% by 2030. For ADNOC Gas, this deal not only secures a stable revenue stream but also solidifies its position as a key player in the global LNG market. The agreement is part of a broader strategy by ADNOC Gas to expand its footprint in the Asian market, having signed LNG contracts worth over $20 billion with Indian companies in the past two years. This deal is crucial for India as it seeks to diversify its energy sources and reduce its carbon footprint by increasing the share of cleaner fuels like natural gas.
What's Next?
As the agreement takes effect, both countries are likely to see enhanced economic and energy cooperation. For ADNOC Gas, the focus will be on ensuring the reliable delivery of LNG to meet the growing demand in India. This could lead to further investments in LNG infrastructure and technology to support increased production and supply capabilities. For India, this deal is a step towards achieving its energy transition goals, potentially leading to more such agreements with other global LNG suppliers. The successful implementation of this agreement could also encourage other Indian companies to explore similar partnerships, further integrating India into the global LNG supply chain.
