IOC and UAE’s ADNOC Gas Sign $7-9 Billion LNG Import Agreement

The largest oil company in India, IOC, has agreed to pay ADNOC Gas plc USD 7-9 billion over a 14-year period starting in 2026 to buy LNG from the UAE.

During the visit that Prime Minister Narendra Modi made to France and the United Arab Emirates last week, Indian Oil Corporation (IOC) and TotalEnergies of France struck an agreement that is comparable to this one.

The deal with IOC for the export of up to 1.2 million tonnes per year (mmtpa) of LNG, according to a statement from ADNOC Gas, is “valued in the range of USD 7 billion to USD 9 billion over its 14-year term, and signifies a major step forward in the partnership between the two industry leaders.”

The agreement with TotalEnergies Gas and Power Ltd (TotalEnergies) calls for the importation of 0.8 million tonnes of LNG annually commencing in 2026 for a period of ten years.

The agreement that TotalEnergies has made with an Indian business is its first long-term one. Additionally, this is the first time an Indian business has partnered with Adnoc on a long-term LNG import agreement.

The third-largest LNG provider in the world, TotalEnergies, would provide LNG to IOC from their diverse global portfolio.

The announcement noted that the historic agreement “marks another significant milestone for ADNOC Gas as it expands its global reach, reinforces its position as a global LNG export partner of choice, and reaffirms IOC as its key strategic partner in the LNG market.”

Ahmed Alebri, Chief Executive Officer of ADNOC Gas, commented on the arrangement, saying that the long-term LNG sale pact further enhances the long-standing collaboration with IOC.

We are excited to deepen our partnership and take satisfaction in the knowledge that ADNOC Gas’ LNG exports will continue to assist IOC’s expansion and add to India’s success story.

According to the terms of the contract, ADNOC Gas would provide IOC in India with up to 1.2 mmtpa of LNG. The agreement, which is a key fuel in the energy transition, “serves as a testament to ADNOC Gas’ ability to meet the growing global demand for LNG,” according to the announcement.

IOC is securing new contracts in accordance with the government’s objective to raise natural gas’s share in the energy basket from its current 6.2% to 15% by 2030.

Long-term LNG contracts are crucial in reducing the inherent volatility of the spot LNG market, making it a stable and economical source of LNG.

According to an official, these agreements will assist fulfill the rising need for cleaner and more sustainable fuel sources as well as diversify the sources of LNG supply for IOC.

The government of Abu Dhabi’s national oil and gas business, ADNOC Gas, is the region’s first importer of natural gas.

According to the official, India and the UAE have a CEPA (Comprehensive Economic Partnership Agreement) with the UAE government that allows nil customs tax to be levied on LNG imports from the UAE in comparison to an applicable customs duty of 2.5% plus surcharge.

Natural gas is converted into LNG, a liquid that is 1/600th of its original volume, by cooling it to minus 162 degrees Celsius. This enables it to be transported in LNG boats that are particularly made.

On its east and west coastlines, India has seven LNG import terminals. At Ennore in Tamil Nadu, IOC runs a 5 million ton per year import terminal.