News Excerpt:
State-run Abu Dhabi National Oil Company (Adnoc) has offered India a stake in its upcoming LNG liquefaction terminal at Ruwais in Abu Dhabi.
More about the news:
- If it goes ahead, 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.
- Indian Oil Corp Ltd (IOC) also plans to sign a long-term LNG deal to buy one million metric tonnes per annum (mmtpa) of clean fuel from Adnoc.
- Conversations are going on at the government-to-government level.
Why the need for such a deal?
- The development comes amid a growing partnership between India and the UAE, an OPEC member. UAE, which has the world’s sixth crude reserves and seventh-largest natural gas reserves, and supplies 6% of India’s crude oil imports also has signed a free-trade agreement with India.
- 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.
- 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.
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About Adnoc:
- 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.
- At three million barrels per day, Adnoc is the world’s 12th largest producer of crude oil.
More about the LNG project
- 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.
LNG deal aimed at bolstering imports
- Indian Oil Corp (IOC) will also sign a long-term LNG deal to buy 1 mmtpa from Adnoc. IOC had earlier signed an agreement with Adnoc for the supply of 1.2 mmtpa of LNG from 2026.
- IOC previously signed a long-term contract with France’s TotalEnergies for 1 mmtpa of LNG for around 10 years.
- Petronet LNG also extended its contract with QatarEnergy LNG in February by signing a long-term deal for 7.5 mmtpa of LNG.
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