State-owned Indian Oil Corp. Ltd. (IOCL) has signed a $7-9 billion deal with Abu Dhabi National Oil Co. (ADNOC) for the supply of liquefied natural gas (LNG) from the Emirates to India.
The 14-year deal has secured up to 1.2 million metric tonnes per annum (mtpa) of fuel for the South Asian country, ADNOC Gas PLC said in a press release.
“The deal, valued at $7 billion to $9 billion (AED 25.7 billion to AED 33 billion) over its 14-year term, marks a major step forward in the partnership between the two industry leaders,” ADNOC Gas said, calling IOCL “India’s largest integrated and diversified energy company.”
“The historic agreement marks another important milestone for ADNOC Gas as it expands its global reach, strengthening its position as a global LNG export partner and reaffirming IOCL as its key strategic partner in the LNG market.”
India’s LNG Market
The peak export volume translates into more than five percent of India’s annual average overseas LNG purchases over the past five years at 23.3 million metric tonnes, according to data from the Petroleum Planning and Analysis Cell of the Ministry of Petroleum and Natural Gas. India imported 23.4 million metric tons in 2021-22, nearly doubling its annual LNG imports from about a decade ago, the data showed.
Last year, India’s LNG imports fell 17 percent year-on-year, the steepest drop on record, the International Energy Agency (IEA) said in a February 28 report.
“Price-driven fuel switching played the main role in suppressing LNG demand, but a modest 3 percent increase in domestic production also contributed to the decline in LNG inflows,” the intergovernmental body said.
A modest recovery in demand from the country’s power sector and sustained but slow growth in consumption in the industrial and city gas sectors could drive a four percent increase in India’s total gas consumption this year, the IEA projected.
India has been among the top four importers of LNG in the world along with China, Japan and Europe. The IEA in a June 2019 report forecast that India’s LNG imports would rise to more than 1.9 trillion cubic feet (54 billion cubic meters) next year.
India aims to grow the deployment of LNG, compressed natural gas, ethanol and biodiesel as alternative fuels in its transition to clean energy, according to its net zero roadmap tabled at the United Nations last year.
ADNOC Gas CEO Ahmed Alebri said the deal with IOCL “serves as a testament to ADNOC Gas’ ability to meet growing global demand for LNG, a critical fuel in the energy transition.”
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