Adnoc's $3B LNG Deal with India

Adnoc Gas' Latest Milestone: $3 Billion LNG Deal with India

One of the largest energy companies in the United Arab Emirates, Adnoc Gas, has once again secured a strategically important agreement that will determine the long-term directions of LNG (liquefied natural gas) exports. According to the latest announcement, Adnoc Gas and India's Hindustan Petroleum Corporation Limited (HPCL) have signed a 10-year sales and purchase agreement with a total value that could reach $3 billion. This deal not only deepens the energy partnership between the UAE and India but also highlights Adnoc Gas' growing role in Asian markets.

Collaboration Beyond Business

The announcement of the agreement took place during an official visit to India by the President of the United Arab Emirates. During the visit, numerous high-level meetings occurred, including the exchange of contracts between the leaders of Adnoc Gas and HPCL. This event exemplifies how energy industry relations play a key role in the diplomatic framework of the two countries, beyond just a business level.

Details of the Agreement

The contract covers the delivery of 0.5 million tons of LNG annually over the next ten years. The LNG will be exported from Adnoc Gas' Das Island liquefaction facility, one of the oldest and most reliable LNG production sites in the world. The facility has a capacity of 6 million tons per year and has delivered over 3500 shipments worldwide.

This agreement transforms a previous Heads of Agreement into a long-term Sales and Purchase Agreement (SPA). Its value is estimated to be between $2.5 and $3 billion over the entire period, and it is part of an ambitious strategy aimed at strengthening Adnoc Gas' position in Asia, particularly in India.

India: Adnoc Gas' Largest LNG Buyer

India has become the largest LNG importer for Adnoc Gas, with 20% of the LNG operated by the company expected to be destined for India by 2029. This means that Indian companies, including HPCL, will purchase 3.2 million tons of LNG annually from a total of 15.6 million tons handled by the company. This represents a significant share in the global supply chain and ensures that India continues to play a crucial role in Adnoc Gas' strategy.

India aims to increase the share of natural gas in its energy mix to 15% by 2030, and Adnoc Gas, as a reliable and lower-carbon LNG supplier, is an ideal partner during this transitional period.

Growing Asian Presence

Adnoc Gas is not only bolstering its presence in India but also in other rapidly growing Asian economies. Over the past three years, they have signed several long-term contracts covering annual volumes between 0.4 and 1.2 million tons, with terms of up to 14 years. These contracts demonstrate Adnoc Gas' intent to remain a major player in the LNG market, especially in regions where reliable, low-carbon energy supply is crucial.

The Role of LNG in the Future Energy Market

Adnoc Gas' business model and growth strategy reflect the changes occurring in the global energy market. Despite criticism of fossil fuels and responses to climate change, LNG continues to play a vital role in transitional energy mix, particularly where replacing coal or oil is an urgent task, but renewables cannot yet fully meet energy needs.

LNG is particularly advantageous in the industrial sector and in countries grappling with rapid urbanization and population growth, where stable and reliable energy supply is essential for both societal and economic reasons.

The Strategic Role of Das Island

Adnoc Gas' facility on Das Island plays a crucial role, not only because of its production volume but also its operational stability. The technological infrastructure there, along with decades of experience, ensures that the company can meet global market demands. The over 3500 successfully completed LNG shipments are proof of reliability that can be built upon in the coming decades.

Summary

The new LNG agreement between Adnoc Gas and Hindustan Petroleum is more than just a business transaction. It is a strategic step strengthening the economic partnership between the UAE and India while solidifying Adnoc Gas' position in one of the largest and most dynamically growing markets in Asia.

This agreement fits well into Adnoc's long-term strategy of relying on stable, low-carbon solutions amid the transformation of the energy sector. In the coming years, similar agreements are expected to follow this step, further strengthening Adnoc Gas' global presence, particularly in South and East Asia.

(Source: Based on a statement from Adnoc Gas.)