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How India, UAE are strengthening their strategic energy partnership
Daily Sun Report, Dhaka
Published: 10 Nov 2026, 09:34 PM
India-flagged tanker Desh Garima unloads crude oil at an offloading terminal after transiting the Strait of Hormuz, amid supply disruptions linked to the U.S.-Israeli conflict with Iran, in Mumbai, India, April 30, 2026. REUTERS
India and the United Arab Emirates (UAE) are looking to deepen their strategic energy partnership through proposed oil storage arrangements in Fujairah and India, building on years of crude oil trade and joint investments. The move is aimed at strengthening India's energy security amid growing concerns over disruptions to shipping through the Strait of Hormuz.
The proposed arrangement would allow India to store part of its strategic oil reserves in Fujairah, while Abu Dhabi National Oil Company (ADNOC) could store up to 30 million barrels of crude in India.
The partnership has evolved significantly since May 2018, when the tanker MT Inspiration delivered two million barrels of Abu Dhabi crude to an underground storage facility in Mangalore on India's west coast. The shipment was the first under an agreement allowing ADNOC to store 5.86 million barrels in India at its own expense to help build the country's emergency oil reserves.
Eight years later, the two countries are considering reversing the arrangement. In May 2026, India's Prime Minister's Office said New Delhi could hold part of its strategic oil reserves in Fujairah, where tankers can load crude without passing through the Strait of Hormuz.
The proposal reflects the growing importance of energy cooperation between the two countries. India had been purchasing billions of dollars' worth of UAE oil long before the Mangalore agreement. Indian companies have since acquired stakes in Abu Dhabi's oilfields, while the UAE has developed export infrastructure that allows crude shipments to bypass the Strait of Hormuz.
India invests in Abu Dhabi oilfields
India's oil imports have grown substantially over the past three decades. The country imported less than one million barrels a day in the 1990s, but the figure had risen to around 4.4 million barrels a day by 2018, according to an analysis of Indian Petroleum Ministry data by the King Abdullah Petroleum Studies and Research Center.
The UAE had already become an established supplier by the early 2010s. During the 2011-12 financial year, India imported $15.1 billion worth of UAE oil, accounting for 8.7 per cent of its total oil import bill, according to Indian trade figures compiled by the Institute for Defence Studies and Analyses.
As India's demand increased, state-owned companies moved to secure a direct stake in oil production in the Gulf.
In 2018, ONGC Videsh, Indian Oil Corporation and Bharat PetroResources jointly paid $600 million for a 10 per cent stake in Abu Dhabi's Lower Zakum offshore concession. India's Petroleum Ministry told Parliament that it was the country's first investment in Gulf oil production.
The ministry estimated that the investment would provide the Indian consortium with an average of 1.75 million tonnes of crude oil annually over the 40-year concession period.
The Mangalore shipment that year brought UAE crude into India's emergency oil reserve system, while the Lower Zakum investment gave Indian companies a share in future production.
By 2026, the UAE had become India's fourth-largest source of crude oil and its second-largest supplier of both liquefied natural gas (LNG) and liquefied petroleum gas (LPG), according to India's Ministry of External Affairs.
New storage opportunities in India and Fujairah
The May agreement could expand ADNOC's storage operations beyond Mangalore to facilities in eastern India.
India's Prime Minister's Office identified Visakhapatnam in Andhra Pradesh as a location where ADNOC could participate in an existing storage facility. The two countries also plan to explore the development of reserve facilities in Chandikol, Odisha.
Under the proposed arrangement, ADNOC could store a total of up to 30 million barrels of crude oil in India.
Fujairah would serve a different purpose, allowing India to hold part of its strategic oil reserves on the UAE's side of the Arabian Sea.
The memorandum of understanding also covers potential cooperation on storage facilities in India for LNG and LPG.
Fujairah already provides Abu Dhabi with an alternative export route that avoids the Strait of Hormuz. ADNOC operates a 406-kilometre pipeline carrying crude from its onshore oilfields to the port, where tankers can load supplies for international markets, including India.
The route became particularly important in 2026 as conflict in the Gulf disrupted shipping through the Strait of Hormuz. India's Finance Ministry highlighted the associated risks in its May economic report.
ADNOC is also developing another pipeline to the port. In May, the company said construction of its West-East Pipeline was under way, with operations expected to begin in 2027. The project is expected to double the company's export capacity through Fujairah.
India and UAE expand LNG and LPG cooperation
The May visit also resulted in a separate agreement between ADNOC and Indian Oil to explore long-term LPG supplies.
The two companies will examine opportunities to buy and sell the fuel, which is widely used for cooking in India, including the possibility of a long-term supply contract.
Their cooperation already extends to LNG. In August 2025, ADNOC signed a 15-year agreement to supply Indian Oil with up to one million tonnes of LNG annually, mainly from its Ruwais project.
ADNOC expects Indian Oil's total purchases under its long-term agreements to reach 2.2 million tonnes a year from 2029, making the Indian company the Abu Dhabi group's largest LNG customer.
In January 2026, ADNOC Gas signed a separate 10-year LNG supply agreement with Hindustan Petroleum Corporation. The contract is valued at between $2.5 billion and $3 billion.
ADNOC expects India to account for 20 per cent of the LNG it operates by 2029.
The proposed Fujairah reserve has yet to materialise. If implemented, however, the arrangement would mark another step in the two countries' energy partnership, potentially allowing India to maintain strategic oil stocks on both sides of the Arabian Sea.
The route that brought UAE crude to fill India's emergency reserves in 2018 could eventually provide India with access to strategic supplies stored in Fujairah as well.
Source: Gulf News