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According to Adnoc Gas, the SPA converts the previous heads of agreement between the company and GAIL announced in January into a definitive agreement.
Under the SPA, Adnoc Gas will supply 0.52 mtpa of LNG to GAIL for ten years, starting from 2026.
The LNG will be supplied from Adnoc Gas’ Das Island liquefaction facility.
Adnoc currently owns a 70 percent stake in Adnoc LNG, which currently produces about 6 mtpa of LNG from its facilities on Das Island.
India boosting LNG imports
Earlier this year, GAIL also signed a long-term deal to buy 1 mtpa of LNG for a period of 10 years from energy trader Vitol.
The company owns and operates a network of over 16,000 km of natural gas pipelines in India.
GAIL holds a stake in India’s largest LNG importer, Petronet LNG, and buys volumes under long-term LNG deals, including from Qatar and the US.
It also charters LNG carriers and operates the 5 mtpa Dabhol LNG terminal in India.
In 2023, India ranked as the fourth-largest importer of LNG globally, with expectations for further growth in LNG imports over the next decade, Adnoc Gas noted in the statement.
The country continues to increase its monthly LNG import this year.
India aims to increase the share of natural gas in the country’s total primary energy mix to 15 percent by 2030, from about 6 percent today.
“India is witnessing a growing demand for LNG to meet its increasing natural gas demand in a diversified sectoral pattern,” Sanjay Kumar, director (marketing) at GAIL, said in the statement.
Kumar said GAIL plans to “significantly” increase its term LNG portfolio in the coming years to meet this rising demand.
“This SPA with Adnoc Gas is a crucial step in this direction, enabling GAIL to augment its existing LNG portfolio to better serve its diverse consumer base,” Kumar said.
Doubling LNG production capacity
Rashid Khalfan Al Mazrouei, Adnoc Gas senior vice president, marketing, said global LNG demand is expected to rise by 15 percent over the next decade, driven by industrial coal-to-gas switching in China and the increased use of LNG for power generation across Southern and Southeast Asia.
“We are committed to more than doubling our LNG production capacity as part of our strategy to capture a larger share of the growing global demand for lower carbon intensity products like ours,” he said.
In addition to the Das Island LNG plant, Adnoc Gas will buy a 60 percent operating interest from its parent company Adnoc in the 9.6 mtpa Al Ruwais LNG export plant in H2 2028, when the first production is due.
Adnoc Gas expects to splash about $5 billion on the transaction.
In June, Adnoc announced the final investment decision on the Ruwais project and the $5.5 billion EPC award to a joint venture led by France’s Technip Energies.
Before that, Adnoc issued in March this year a limited notice to proceed for early engineering, procurement, and construction activities to the joint venture.
BP, Mitsui & Co., Shell, and TotalEnergies also agreed to buy a 10 percent equity stake in Adnoc’s new LNG export terminal.
Adnoc recently signed a sales and purchase agreement with German gas importer Securing Energy for Europe (SEFE) to supply the latter with LNG from its LNG terminal in Al Ruwais.
This is the first definitive agreement for the supply of LNG from the Ruwais LNG project.
To date, over 7 mtpa of the LNG project’s production capacity has been committed to international customers through long-term agreements, Adnoc said.