India-UAE energy pact: PM Modi secures LPG, oil reserve deals as Hormuz crisis threatens 20% of global crude flows

Prime Minister Narendra Modi on Friday strengthened India’s energy security framework by signing two critical agreements with the United Arab Emirates (UAE), covering long-term Liquefied Petroleum Gas (LPG) supplies and the expansion of strategic petroleum reserves (SPR).

The agreements come amid mounting concerns over disruptions in the Strait of Hormuz — the narrow maritime corridor that carries nearly 20% of global crude oil shipments. Any prolonged blockade or military escalation in the region threatens to sharply raise freight, insurance and crude procurement costs for energy-import dependent economies such as India.

During the visit, Modi underlined the growing strategic partnership between the two nations in a post on X, stating: “The friendship between India and UAE is very strong! Our nations will keep working together with the aim of building a better future for our planet.”

In another post, the Prime Minister said: “I extend my thanks to my brother, His Highness Sheikh Mohamed bin Zayed Al Nahyan, President of the United Arab Emirates, for his gracious gesture in receiving me at Abu Dhabi Airport. And I look forward to our discussions aimed at strengthening the ties between India and the UAE across key sectors, such as energy, investment, supply chains, and more.”

The first pact, signed between Indian Oil Corporation Ltd (IOCL) and Abu Dhabi National Oil Company (ADNOC), will expand long-term LPG supplies to India. The UAE currently accounts for nearly 40% of India’s total LPG imports, making it the country’s single-largest supplier of the cooking fuel.

Cushioning India’s fuel vulnerability

The latest agreement assumes significance at a time when India’s domestic energy basket remains heavily import-dependent. India imports over 85% of its crude oil requirement and nearly half of its natural gas demand, leaving the economy exposed to external supply shocks and volatile freight routes.

India has simultaneously emerged as one of the UAE’s largest LNG buyers, with long-term contracts currently pegged at 4.5 million metric tonnes per annum (MMTPA).

Strategic reserves gain fresh momentum

In a parallel move, Indian Strategic Petroleum Reserves Ltd (ISPRL) and ADNOC agreed to deepen cooperation on underground crude storage infrastructure. The agreement builds on the 2018 partnership under which ADNOC stored over 5 million barrels of crude at ISPRL’s Mangaluru strategic reserve facility.

The expanded framework is expected to strengthen India’s emergency crude stockpiling capacity and improve energy resilience during geopolitical disruptions or shipping bottlenecks. Furthermore, Abu Dhabi has been aggressively scaling production capacity and is targeting output of 5 million barrels per day by 2027, allowing it greater flexibility in bilateral energy partnerships.