ADNOC to supply gas to Indian Oil
- Under this long-term contract, ADNOC LNG would be supplying LNG to Indian Oil starting from 2026 for next 14 years, till 2039 for an annual volume up to 1.2 million metric tonnes per annum (MMTPA).
New Delhi: State-run Indian Oil Corporation Ltd (IOCL) has signed an agreement with Abu Dhabi Gas Liquefaction Company Ltd (ADNOC LNG) for long term supplies of liquified natural gas (LNG).
The companies have executed a head of agreement (HoA) to establish a long term LNG sale and purchase agreement (SPA), said people in the know of the developments. Under this long-term contract, ADNOC LNG would be supplying LNG to Indian Oil starting from 2026 for next 14 years, till 2039 for an annual volume up to 1.2 million metric tonnes per annum (MMTPA).
Long-term LNG contracts play an important role in balancing out the inherent volatility of spot LNG market and thus make it an affordable and reliable LNG supply.
The agreement would diversify the supply source of LNG for Indian Oil and would help in meeting the growing demand of cleaner and more sustainable fuel source.
Earlier Mint had reported that Indian Oil is in talks with ADNOC for long term contracts of LNG supplies.
In another development, IndianOil and TotalEnergies Gas and Power Ltd are set to execute a HoA to establish a long term LNG sale and purchase agreement (SPA).
Under this long-term contract valid for 10 years starting 2026, TotalEnergies would supply annually upto 0.8 MMT LNG to IndianOil. This would be the first Long Term LNG contract for TotalEnergies in India.
Queries sent to IndianOil, ADNOC and Total Energies remained unanswered till press time.
Indian companies have been looking at securing diversifying their import sources and securing long term deals over the past one year as the Russia-Ukraine war brought about volatility in the global energy market.
The efforts to diversify import sources gained momentum after Gazprom defaulted in its supplies to state-run GAIL under a long term contract for around a year since May last year as spot LNG sales fetched better prices.
Gazprom Marketing and Trading Singapore (GMTS), earlier a subsidiary of Russian gas giant Gazprom, had agreed to supply GAIL (India) Ltd 2.5 million tonnes of LNG every year for 20 years starting 2018-19. The supply began in June 2018 but remained disrupted for a year after the Russian invasion of Ukraine. This forced the Indian state-run company to buy expensive spot cargoes, prompting the government to look for newer LNG sources.
India’s natural gas consumption has been on rising, with the Centre’s focus on developing a gas-based economy, with the country consuming 163.06 million metric standard cubic metres per day (mmscmd) in FY 2021-22. Gas comprises about 6.2% of India’s primary energy mix, far behind the global average of 24%. The government plans to increase this share to 15% by 2030. India is dependent on imports for as much as 85% of its oil needs and 55% of its natural gas demand.
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First Published:17 Jul 2023, 10:37 PM IST
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