IOC signs $7-9 bn LNG Deal with ADNOC and TotalEnergies

Indian Oil Corporation (IOC), India's leading oil firm, has recently entered into two significant liquefied natural gas (LNG) import deals, as announced by the UAE's ADNOC Gas plc. The first deal, valued between $7 billion to $9 billion, spans 14 years and will see IOC importing up to 1.2 million tonnes per annum (mmtpa) of LNG from ADNOC Gas, starting in 2026. This agreement represents a significant advancement in the partnership between the two industry leaders.

Additionally, during Prime Minister Narendra Modi's recent visits to France and the UAE, IOC also signed a similar pact with TotalEnergies of France. This deal, lasting for ten years starting in 2026, will involve the import of 0.8 million tonnes per year of LNG.

Notably, this marks the first long-term agreement between TotalEnergies and an Indian company, and it is also the first time an Indian company has signed a long-term LNG import deal with ADNOC.

TotalEnergies, the world's third-largest LNG supplier, will supply LNG to IOC from its diverse portfolio across the globe. The deal has been hailed as a significant milestone for ADNOC Gas, expanding its global reach and solidifying its position as a preferred global LNG export partner, with IOC being a key strategic ally in the LNG market.

Ahmed Alebri, the CEO of ADNOC Gas, expressed excitement about strengthening the longstanding partnership with IOC and contributing to India's growth story through this long-term LNG sale deal.

The agreement commits ADNOC Gas to deliver up to 1.2 mmtpa of LNG to IOC in India, helping to fulfill the country's goal of increasing the share of natural gas in its energy mix to 15 per cent by 2030, up from the current 6.2 per cent.

Long-term LNG contracts are crucial in stabilising the inherently volatile spot LNG market, ensuring an affordable and reliable supply of LNG. These new deals not only diversify the supply source of LNG for IOC but also align with the growing demand for cleaner and more sustainable fuel sources in India.

The UAE's ADNOC Gas, the national oil and gas company of Abu Dhabi, has a rich history as the oldest supplier of natural gas from the Middle East.

India and the UAE have a Comprehensive Economic Partnership Agreement (CEPA), which grants LNG imports from the UAE a zero customs duty, whereas imports from other sources attract a customs duty of 2.5 per cent plus surcharge.

LNG is natural gas that has been cooled to an extremely low temperature of minus 162 degrees Celsius, transforming it into a liquid with only 1/600th of its original volume, making it feasible for transportation in specialised LNG vessels.

India currently has seven LNG import facilities on its east and west coasts, with IOC operating a 5 million tonne per year import terminal at Ennore in Tamil Nadu.