Abu Dhabi’s Adnoc offers India stake in its upcoming LNG liquefaction terminal

  • If concluded, this would be India’s first equity stake in an overseas LNG terminal, adding heft to its energy-security efforts.
  • In a related development, Indian Oil Corp plans to sign a long-term LNG deal for one million metric tonnes per annum of clean fuel from Adnoc.

Utpal Bhaskar
First Published5 Jun 2024, 11:46 AM IST
IOC's proposed deal is part of India’s efforts to fortify its imports of LNG. Photo: Bloomberg
IOC’s proposed deal is part of India’s efforts to fortify its imports of LNG. Photo: Bloomberg

New Delhi: State-run Abu Dhabi National Oil Company (Adnoc) has offered India a stake in its upcoming LNG liquefaction terminal at Ruwais in Abu Dhabi. In a related development, Indian Oil Corp Ltd (IOC) plans to sign a long-term LNG deal to buy one million metric tonnes per annum (mmtpa) of clean fuel from Adnoc, said two people aware of the development.

If concluded, this would be India’s first equity stake in an overseas LNG terminal, adding heft to energy-security efforts by the world’s third-largest energy consumer. The development comes amid a growing partnership between India and the UAE, an OPEC member. Prime Minister Narendra Modi has visited the country seven times in the past nine years and UAE President Sheikh Mohamed bin Zayed Al Nahyan has visited India four times. India has also signed a free-trade agreement with the UAE.

“Conversations are on at the government-to-government level,” said one of the two people cited above.

The LNG project at Al Ruwais Industrial City will have two 4.8-mmtpa LNG liquefaction trains with a total capacity of 9.6 mmtpa. This will double Adnoc’s LNG production capacity to around 15 mmtpa. Adnoc has already signed three LNG agreements from the project with Germany’s SEFE Marketing & Trading Singapore Pte Ltd, EnBW Energie Baden-Württemberg AG (EnBW), and China’s ENN Natural Gas.

Also read: Petronet LNG Q4 a letdown amid diversification, competition risks

An Adnoc spokesperson wrote in an emailed response to Mint’s queries, “We don’t comment on market speculation,” adding, “Adnoc’s lower-carbon Ruwais LNG project continues to progress toward the final investment decision, expected this year.”

India imports around 55% of its gas requirement to meet the growing demand from its fertiliser, power, and city gas distribution sectors. According to the Petroleum Planning and Analysis Cell (PPAC), India’s LNG imports increased 17.5% year-on-year by volume in FY24 to 23.5 mmtpa.

LNG deal aimed at bolstering imports

“Indian Oil Corp will also sign a long-term LNG deal to buy 1 mmtpa from Adnoc,” said one of the people cited above. IOC had earlier signed an agreement with Adnoc for the supply of 1.2 mmtpa of LNG from 2026.

The proposed deal is part of India’s efforts to fortify its imports of LNG. IOC previously signed a long-term contract with France’s TotalEnergies for 1 mmtpa of LNG for around 10 years, as Mint reported. Petronet LNG also extended its contract with QatarEnergy LNG in February by signing a long-term deal for 7.5 mmtpa of LNG.

Also read: Indian Oil signs second long-term LNG deal with France's TotalEnergies

“This is about securing a toe-hold outside the country. It will help Indian state-run firms become world-class companies. Adnoc has been a good partner and has been offering India opportunities. The relationship between the two governments at the highest level has helped,” said one of the people cited above.

With a growing presence in India’s energy security architecture, Adnoc is the only company to commit to India’s strategic crude oil reserve programme to date. In February 2018, an Indian consortium comprising ONGC Videsh, Indian Oil Corp and Bharat PetroResources Ltd was awarded a 10% participating interest in Abu Dhabi’s offshore Lower Zakum Concession – a first for India. 

Additionally, a consortium comprising Bharat Petroleum Corp Ltd (BPCL) and IOC was awarded the exploration rights for the Abu Dhabi Onshore Block 1. Adnoc was also interested in picking up a 25% stake in the ill-fated largest global refinery and petrochemicals complex proposed at Ratnagiri in Maharashtra, which hit the skids because of farmers’ protests.

Queries emailed to spokespersons for India’s ministry of petroleum and natural gas and IOC did not elicit a response.

Also read: India’s crude oil consumption up 4.6% in FY24, output rises marginally at 0.6%, imports steady: PPAC

India has been actively courting the UAE, which has the world’s sixth crude reserves and seventh-largest natural-gas reserves, and supplies 6% of India’s crude-oil imports. At three million barrels per day, Adnoc is the world’s 12th largest producer of crude oil.

The push for long-term contracts has gained momentum since the gas market saw volatility in 2022 due to the Russia-Ukraine war; as Russia’s Gazprom, the world’s largest explorer of natural gas, failed to honour the terms of a deal to supply LNG to GAIL (India) Ltd. A former Gazprom subsidiary, Gazprom Marketing and Trading Singapore, had signed an agreement with GAIL to supply 2.5 million tonnes of LNG per annum for 20 years, starting 2018-19.

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First Published:5 Jun 2024, 11:46 AM IST
HomeIndustryEnergyAbu Dhabi’s Adnoc offers India stake in its upcoming LNG liquefaction terminal

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