UAE to expand role in India’s strategic oil reserves; LPG deal likely during PM Modi's visit

The Prime Minister and the UAE President to discuss bilateral issues, in particular energy cooperation, as well as regional and international issues of mutual interest.

New Delhi: The Abu Dhabi National Oil Company (ADNOC) may commit to playing a larger role in expanding India's strategic petroleum reserves, as energy security is likely to be a focus when Prime Minister Narendra Modi meets President Sheikh Mohammed Bin Zayed Al Nahyan of the United Arab Emirates on Friday.  

As the war launched by Israel and the United States against Iran, and the larger conflict in West Asia brought India’s energy security under stress over the past couple of months, New Delhi is also expecting another memorandum of understanding (MoU) with the UAE on the supply of liquefied petroleum gas, a source told DH.

Indian Strategic Petroleum Reserves Limited (ISPRL) is likely to sign a new MoU with the ADNOC on the sidelines of the meeting between the Prime Minister and the UAE President in Abu Dhabi. The ADNOC is exploring the possibility of expanding its role in building India's strategic petroleum reserves, including potential participation in the Phase-II underground storage facilities at Padur in Karnataka and Chandikhol in Odisha, the source in New Delhi said.

Modi will leave New Delhi on Friday for a five-nation tour that will take him to the UAE, the Netherlands, Sweden, Norway and Italy. He will return to New Delhi on May 20.

The Prime Minister and the UAE President will discuss bilateral issues, in particular energy cooperation, as well as regional and international issues of mutual interest, Sibi George, Secretary (West) at the Ministry of External Affairs, told journalists in New Delhi on Wednesday. “They will also discuss ways to advance the bilateral Comprehensive Strategic Partnership, underpinned by strong political, cultural, economic and people-to-people links.”

Modi is visiting Abu Dhabi a fortnight after the UAE exited OPEC and the larger OPEC+. The move will allow the UAE to expand crude production without being constrained by output limits. New Delhi is keen to take advantage of the move to increase hydrocarbon imports from the UAE amid heightened volatility in global energy markets.

The UAE is among India’s top three LPG suppliers, along with Qatar and Saudi Arabia, accounting for around 26%-40% of the country’s imports. The UAE is also the fourth largest source of crude oil and the third largest source of liquefied natural gas to India.

The UAE has been an important partner in building India’s strategic petroleum reserves (SPRs), aimed at protecting the country against global supply disruptions and maritime security risks. India currently maintains 5.33 million metric tonnes (MMT) of SPR capacity in underground rock caverns at Visakhapatnam in Andhra Pradesh, and at Mangaluru and Padur in Karnataka, providing nearly 9.5 days of crude oil cover. Combined with storage facilities operated by oil marketing companies, the country’s total crude oil and petroleum storage capacity stands at around 74 days.

Amid concerns over disruptions in West Asia and the Strait of Hormuz, Petroleum Minister Hardeep Singh Puri recently said India currently has around 60 days of crude oil and LNG stocks, along with nearly 45 days of LPG reserves, adding that there was “no problem on the supply side”.

In July 2021, the government approved two additional commercial-cum-strategic SPR facilities with a combined capacity of 6.5 MMT — 4 MMT at Chandikhol in Odisha and 2.5 MMT at Padur in Karnataka — with construction work at Padur awarded in October 2025.

The ADNOC became the first foreign company to store crude in India’s SPRs in 2018 under an agreement signed with ISPRL in 2017, permitting the UAE firm to use the 750 TMT-capacity Cavern-A facility at Mangaluru.

The widening conflict in West Asia has renewed concerns in New Delhi over the vulnerability of energy supply to India, given the country’s heavy dependence on imports. Overseas purchases account for nearly 85% of crude oil consumption in India, while the Strait of Hormuz remains a crucial transit corridor for a significant share of energy supplies headed to the country. Nearly two-fifths of India’s crude imports move through the world's most critical maritime choke point between the Persian Gulf on one side and the Gulf of Oman and the Arabian Sea on the other, along with more than half of the LNG cargoes and nearly nine out of every 10 LPG shipments. The escalating tension in West Asia, particularly around the Strait of Hormuz, led to supply disruptions, higher shipping charges and volatility in global fuel prices, adding pressure on the energy import bill of India.