UAE-India energy ties poised to become stronger: Indian minister

Indian Minister of Petroleum & Natural Gas and Steel Dharmendra Pradhan on Sunday said the potential for partnerships in the country’s energy sector is huge. In an exclusive interview with Khaleej Times, the Indian minister welcomes more UAE investment while lauding the role played by Dr Sultan bin Ahmad Al Jaber, UAE Minister of Industry and Advanced Technology, and CEO of Abu Dhabi National Oil Company (Adnoc), in strengthening energy ties between the two countries. Excerpts from the interview:

How do you assess the present status of the India-UAE partnership in the energy sector? What are the possible areas of future expansion with Adnoc?

India and the UAE have elevated their relationship to the strategic partnership level, with energy as the key pillar during the last six years. India sees the UAE as a close trading and investment partner in oil and gas, as well as in the renewable sector.

The UAE has been one of the biggest partners in the hydrocarbon sector of India with a trade value of $19.9 billion during last year. Let me illustrate: The UAE has become India’s thirdlargest source for crude oil, accounting for 10 per cent of total crude oil imports; the second-largest source of LNG with 12.4 per cent of total LNG imports; the third-largest source of LPG with 22 per cent of total LPG imports; and second-largest source for petroleum products.

Indian companies are also participating in oil and gas exploration and production activities in two blocks in Lower Zakum and Onshore Block 1 in the UAE, with investments of over $706 million.

My deep appreciation to the UAE leadership and to Dr Al Jaber for the UAE joining India’s strategic petroleum reserves programme. Adnoc has already stored 5.86 million barrels of Adnoc crude in the Mangalore Strategic Petroleum Reserve. We have also agreed to improve the terms of storage by Adnoc, thus allowing greater quantities available for it to be traded in India and even outside.

Furthermore, we deeply appreciate the immediate support extended by the Adnoc CEO in supplying additional and timely supply of LPG and crude oil to India in April and May during the Covid-19 pandemic. These LPG supplies helped us supply cylindres to over 80 million beneficiaries.

Indian Prime Minister Narendra Modi recently pitched for ‘ responsible fuel pricing’ stating that for far too long global fuel prices have been on a ‘ roller coaster’...

The price should be profitable for producers as well as affordable for consumers. While we are not in favour of very low prices, we also do not support high prices, which dent our fiscal balance and undermine development process and deny energy access. Market fundamentals now do not support such high prices.

Crude price volatility is yet another major challenge that needs to be addressed as Indian consumers are highly price-sensitive. We also need to move to transparent and flexible markets for both oil and gas.

We also believe that the major producers from Opec should abolish the Asian premium on crude oil. This becomes even more urgent as the Covid-19 pandemic once again confirmed that Asia continues to be the main demand centre for crude oil.

Recently, in a virtual seminar with Modi, Dr Al Jaber said his company seeks Indian partners for its $45 billion petrochemical expansion plans. Any details?

Our refining capacities are expected to grow from about 250 mmtpa (million metric tonnes per annum) now to 450 mmtpa in the coming years to continue to meet our domestic demand and also for export of petroleum products. The expansion of refinery and petrochemicals capacities in India offers enormous investment opportunities for companies in the UAE, including from Adnoc.

Does India’s ties with Iran make it tricky for India to deal with the rest of the Middle East, especially when it comes to oil imports?

Iran has been an important source of crude oil for Indian refineries. We will continue to follow the developments in the Middle East. I am confident that Indian refineries would take appropriate decisions keeping their commercial interests in mind as they source crude oil from various countries in the Middle East.

I am confident that UAE companies will partner with their Indian counterparts for investments, infusion of technologies and innovation through digitalisation in our fastgrowing energy market Dharmendra Pradhan, Indian Minister of Petroleum & Natural Gas and Steel

There has been a criticism that India lacks a coherent energy security policy when it comes to the Middle East. Is it a fair criticism?

I would rather argue to the contrary. During the last financial year, Middle East countries remained our main supplier of hydrocarbons, with 60 per cent of crude imports, 57 per cent of our LNG imports and 91 per cent of LPG oil imports. In fact, the supplies of crude oil, natural gas and LPG have remained fairly stable over the years from the Middle East.

India has invested in the oil and gas sector in the Middle East, particularly in the UAE and Oman, and is also exploring other opportunities to increase its footprint in the region. Saudi Arabia and the UAE have also announced significant investment decisions in India’s energy sector.

With the Indian economy not growing as expected, how does India expect to attract international investment from countries like the UAE?

While we have seen a significant drop in the GDP growth rate during the last quarter, we are already seeing the green shoots in our economy. This is amply reflected in restoration of energy demand particularly of petroleum products in October this year to preCovid levels.

Given its huge and growing energy appetite, there is a huge potential for investments in India’s oil and gas sector, be it in the expansion of city gas distribution networks, natural gas pipelines, LNG terminals, over 5,000 compressed biogas plants, 2-G ethanol and bio-refineries and expansion of refinery capacity, to name a few. I am confident that UAE companies will partner with their Indian counterparts for investments, infusion of technologies and innovation through digitalisation in our fast-growing energy market.