World’s Third Biggest Oil Importer Sign Economic Partnership Agreement

• UAE, India sign economic partnership agreement
• India has complained to OPEC about oil price swings
• India is world’s third biggest oil importer and consumer

A recent news article published in the Platts states that UAE pledges to meet India’s growing energy needs amid oil price concerns.

Meeting India’s energy demand

The UAE, OPEC’s third biggest crude producer, said it is committed to meeting India’s energy demand as the growing oil consumer seeks to secure supplies with prices surging to near $100/b.

The commitment to supplying India is included in the Joint UAE-India Vision Statement, which follows the signing of the India-UAE Comprehensive Economic Partnership Agreement on Feb. 18, according to state run news agency WAM. India represents the UAE’s second largest oil customer.

“The UAE is one of India’s key energy providers and remains committed to meeting India’s growing energy demand and is proud to have been the first international partner to invest by way of crude oil in India’s Strategic Petroleum Reserves Program,” the statement said.

“Indian companies have steadily increased their participation across the entire UAE’s energy sector and represent some of Abu Dhabi’s key concession and exploration partners.”

New economic partnership agreement

The new economic partnership agreement between the UAE and India comes at a time when high oil prices are hurting oil consumers such as India, the world’s third-biggest crude importer and consumer, which meets around 85% of its domestic energy demand via imports.

The UAE energy ministry could not immediately be reached for comment on details of the agreement, and no specific volumes were specified.

Oil price swings

Crude prices are at near-eight-year highs, with S&P Global Platts assessing Dated Brent at $97.35/b on Feb. 18. Two days earlier, it had breached the $100/b threshold for the first time since September 2014.

India has complained several times to OPEC over the past year about rising prices and has in recent days been taking up the issue bilaterally with the bloc’s members, junior oil minister Rameswar Teli told the lower house of the Indian parliament on Feb. 7.

Indian oil demand was expected to reach 11 million b/d by 2045, compared with 4.9 million b/d in 2021, he said, referring to a projection of OPEC’s World Oil Outlook 2021.

India’s oil demand rose 3.7% year on year to 201 million mt, or 4.3 million b/d, in 2021, the oil ministry data showed, reflecting a rise in transportation fuel consumption after the delta variant hit its economy in 2020.

Lower crude imports

India has set a target to cut crude imports by 10% with a multi-prone strategy by increasing domestic crude production, focusing on renewables and ethanol blending program by 2025.

India’s crude imports rose 3.9% year on year to 209.6 million mt, or 4.2 million b/d, in 2021, oil ministry data showed, riding on recovery in domestic fuel demand after two years.

The UAE’s Abu Dhabi National Oil Co. is the only overseas company with any capacity in India’s strategic petroleum reserves, holding about 750,000 mt under a government-to-government deal that sees ADNOC supply crude to SPR locations at Padur and Mangalore in Karnataka in southern India.

India’s SPR has a combined capacity of 5.33 million mt, with Padur the largest at 2.50 million mt, followed by Mangalore at 1.50 million mt and a third location at Visakhapatnam at 1.33 million mt.

ADNOC has also previously invited Indian companies to invest in the UAE’s downstream sector.

Clean energy cooperation

Both India and the UAE are also cooperating in the energy transition field, including the production of green hydrogen, according to the Joint Vision Statement.

“Further work will be undertaken to identify new collaboration opportunities to support India’s energy requirements, including new energies, and ensure the provision of affordable and secure energy supplies to India’s growing economy,” the statement said.

“As the UAE and India collectively navigate the global energy transition, both countries remain committed to working together to create a just and equitable transition to a low-carbon future.”

The two countries will establish a joint Hydrogen Task Force, focusing on green hydrogen.

The UAE is targeting a 25% global market share of low-carbon hydrogen by 2030 with the launch of its “hydrogen leadership roadmap” at the UN Climate Change Conference.

The roadmap sets out support for domestic, low-carbon industries and aims to establish the country as a leading hydrogen exporter, WAM said Nov. 4.

The UAE already has seven hydrogen projects underway and is targeting a large share of key export markets, including Japan, South Korea, Germany and India, as well as other markets it identifies as being of “high potential” in Europe and East Asia.