HPCL inks $3 billion LNG deal with UAE's Adnoc Gas during president's visit

Abu Dhabi's Adnoc Gas will supply 0.5 million tonnes of LNG a year to HPCL for 10 years starting 2028

Hindustan Petroleum Corporation Ltd (HPCL) has signed a $3 billion deal to buy liquefied natural gas from the Abu Dhabi National Oil Company Gas (Adnoc Gas), making it the UAE's top customer, the firm said.

The two firms signed a Sales and Purchase Agreement (SPA) during a very brief two-hour visit to India by UAE President Sheikh Mohammed bin Zayed Al Nahyan for talks with Prime Minister Narendra Modi on Monday.

Abu Dhabi's state firm will supply 0.5 million tonnes of LNG a year to HPCL for 10 years starting 2028.

"This agreement converts a previously signed Heads of Agreement between the two companies into a long-term SPA and is valued at approximately $2.5-3 billion over its (10 year) duration, for the export of 0.5 million tonnes per annum (mtpa) of liquefied natural gas (LNG)," Adnoc Gas said in a statement.

 

HPCL said it will receive the LNG at its 5 million tonnes per annum LNG import terminal at Chhara, Gujarat.

"The supplies under this agreement will support HPCL in meeting the requirements of its refineries, City Gas Distribution (CGD) network and gas demand across key sectors such as fertilisers, power and petrochemicals etc," HPCL said in a separate statement.

"This partnership will further strengthen HPCL's position as a reliable supplier of natural gas, complementing its portfolio of other petroleum products, to meet the nation's growing and evolving energy needs." The strategic partnership, it said, aligns HPCL with India's aspiration of increasing the share of gas in its energy basket. "Such long-term contracts play a vital role in ensuring reliability, affordability and supply security amidst a highly volatile geo-political and evolving global energy landscape," it said. "This agreement also signifies a deepening relationship between India and UAE, with India being the largest LNG customer of UAE." The milestone agreement represents a further step in strengthening the strategic partnership between the UAE and India, while reinforcing Adnoc Gas' role as a reliable and trusted supplier of LNG to Asia's fast-growing markets, Adnoc Gas said. Fatema Al Nuaimi, Chief Executive Officer of Adnoc Gas, said: "We are pleased to sign this long-term LNG supply agreement with Hindustan Petroleum Corporation which reflects the strong and growing energy partnership between the UAE and India.

This agreement underscores Adnoc Gas' commitment to delivering reliable LNG to meet global demand, while supporting India'' ambition to increase natural gas to 15 per cent of its energy mix by 2030."  The pact with HPCL brings the total value of contracts being supported and operated by Adnoc Gas to over $20 billion, the firm said in the statement. India is now the UAE's largest customer and a very important part of Adnoc Gas' LNG strategy.

"The company's growth is tied to the continued success of India," it said.

By 2029 Adnoc Gas will be the operator for 15.6 million tonnes per annum of LNG and of that 3.2 million tonnes is contracted to Indian energy companies including HPCL.

"This agreement will be supplied from Adnoc Gas' Das Island liquefaction facility, which has a production capacity of up to 6 million tonnes per annum and ranks among the world's longest-operating LNG plants. Since commencing operations, Das Island has delivered more than 3,500 LNG cargoes globally, demonstrating its strong operational performance and long-standing reliability," it said.

The HPCL agreement aligns with Adnoc Gas' strategy to broaden its customer base and expand its presence in India and in key growth markets across Asia. Over the past three years, the company has secured a series of long-term LNG agreements ranging from 0.4 to 1.2 million tonnes per annum, with contract durations of up to 14 years.

"These contracts further reinforce Adnoc Gas' position as a leading supplier of reliable, lower-carbon LNG to Asia's rapidly growing energy markets," the statement added.

HPCL operates two oil refineries on India' s east and west coasts and holds stakes in HPCL-Mittal Energy Ltd and Mangalore Refinery and Petrochemicals Ltd (MRPL) joint venture refineries. It last year commissioned a 5 million tonnes per annum LNG import and regasification terminal at Chhara as it looks to boost its presence across the gas sector.

The firm has a license to sell CNG and piped cooking gas to households and industries in 25 geographical areas.