India’s largest refiner Indian Oil Corp Limited has signed long-term deals with France’s TotalEnergies and UAE’s ADNOC LNG to procure 2 million metric tonne per annum (mtpa) of liquefied natural gas.
Under this long-term contract valid for 10 years starting 2026, TotalEnergies will be supplying annually up to 0.8 MMT LNG to Indian Oil. This will be the first long-term LNG contract for TotalEnergies in India.
Indian Oil signed a similar agreement with Abu Dhabi Gas Liquefaction Co Ltd (ADNOC LNG) to establish a long-term LNG sale and purchase agreement (SPA). Under this, ADNOC LNG will supply 1.2 mtpa of LNG to Indian Oil starting from 2026 for next 14 years (till 2039).
The long-term LNG deals were signed during Prime Minister Narendra Modi’s visit to France last week.
Indian Oil has been looking for long-term deals to procure LNG as it wants to strengthen its gas infrastructure. As part of energy transition, Prime Minister Modi has set a target to increase the share of gas in India’s energy mix from 6.2% currently to 15% by 2030.
Indian Oil already has a 50:50 joint venture with the French oil major since 2020 with the name IndianOil Total Private Ltd (ITPL) to manufacture and market high-quality bitumen derivatives and specialty products for the road-building industry in India.
Long-term LNG contracts play an important role in balancing out the inherent volatility of the spot LNG market. The agreement will not only diversify the supply source of LNG for Indian Oil but also help in meeting the growing demand of cleaner and more sustainable fuel source.
India and the UAE have a Comprehensive Economic Partnership Agreement (CEPA), which provides for nil customs duty to be applied on LNG imports from the UAE against an applicable customs duty of 2.5% plus surcharge. The deal with ADNOC will be first such contract for it in India and is a step towards enhancing energy security of India.