International RelationsImportant2026-01-19

India-UAE Sign 10-Year LNG Supply Agreement

In News

What Happened

In January 2026, during UAE President Sheikh Mohamed bin Zayed Al Nahyan's visit to India, Hindustan Petroleum Corporation Limited (HPCL) and Abu Dhabi National Oil Company (ADNOC) Gas signed a 3 billion dollar energy pact. The 10-year Liquefied Natural Gas (LNG) supply deal guarantees 0.5 million metric tonnes per annum (MMTPA) starting in 2028. Additionally, a Letter of Intent was signed between IN-SPACe and the UAE Space Agency to collaborate on joint space missions.

Why It Matters

This agreement strengthens India's energy security by locking in long-term LNG supplies, mitigating vulnerability to volatile global spot market prices. It also advances India's strategic goal to increase the share of natural gas in its energy mix to 15 percent by 2030, while deepening ties with a core Middle Eastern ally.

Background

History & Context

India and the UAE signed a Comprehensive Economic Partnership Agreement (CEPA) in 2022, which significantly elevated bilateral trade and strategic cooperation. Both nations are also founding members of the I2U2 grouping (established in 2021 alongside Israel and the USA), which focuses on joint investments in critical sectors like energy and space. In recent years, India has actively sought to diversify its energy imports, shifting away from heavy reliance on short-term spot purchases toward stable, long-term contracts.

What Changed

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BEFORE: India's state-owned refiners like HPCL relied more heavily on short-term spot markets or intermediaries for LNG supplies. NOW: HPCL has secured a direct, long-term 10-year supply contract with ADNOC Gas, ensuring price stability.
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BEFORE: Bilateral energy trade between India and the UAE was overwhelmingly dominated by crude oil transactions. NOW: There is a structural pivot toward transition fuels like LNG, formalized by a major multi-billion dollar commitment.
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BEFORE: India-UAE space cooperation was largely foundational. NOW: A specific Letter of Intent between IN-SPACe and the UAE Space Agency establishes a formal framework for advanced joint space missions.

Prelims Angle

NCERT Connection

This event directly connects to Class 12 Geography Chapter 7 - Mineral and Energy Resources, which details conventional energy sources and their distribution. The agreement illustrates the real-world geopolitical strategies India utilizes to secure natural gas resources, emphasizing the national shift toward cleaner transitional fossil fuels discussed in the curriculum.

Practice Questions

Q1

Correct Statement(s)

Which of the following statements regarding recent India-UAE bilateral agreements is/are correct? 1. The 10-year LNG supply agreement signed in 2026 was between Hindustan Petroleum (HPCL) and ADNOC Gas for 0.5 MMTPA. 2. India and the UAE are both members of the I2U2 grouping, which aims to encourage joint investments in water, energy, transportation, and space.

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