ISLAMABAD: The United Arab Emirates has increasingly oriented its energystrategy towards India, driven by the need to capitalise on its substantialhydrocarbon reserves while India emerges as one of the world’s largestconsumers of oil and gas. With bilateral trade surpassing $100 billion inthe 2024-25 fiscal year, recent agreements underscore a strategic pivotwhere the UAE seeks reliable, high-volume buyers to offset risks from theglobal energy transition. India’s position as the third-largest oilimporter and a rapidly growing gas market aligns perfectly with Abu Dhabi’sambitions to maximise export revenues before fossil fuel demand potentiallydeclines in coming decades.
The UAE possesses significant proven reserves, including over 100 billionbarrels of oil and growing natural gas resources, positioning it as a keyglobal supplier. Abu Dhabi National Oil Company initiatives focus onexpanding production and liquefaction capacity to meet rising Asian demand.India’s energy needs have surged with economic growth, industrialexpansion, and urbanisation, making it an ideal long-term partner. Therecent $3 billion liquefied natural gas agreement between HindustanPetroleum Corporation Limited and ADNOC Gas exemplifies this convergence,committing to 0.5 million tonnes of annual LNG supplies starting in 2028over a decade.
This deal not only secures India as the UAE’s largest LNG customer but alsocontributes to India’s goal of raising natural gas share in its energy mixto 15 per cent by 2030. The UAE has become India’s second-largest LNGsupplier after Qatar, reflecting deliberate efforts to diversify exportdestinations away from traditional markets facing volatility. By locking inlarge-scale contracts, the UAE mitigates exposure to fluctuating prices andensures steady cash flows to fund its ambitious economic diversificationunder Vision 2030 and related plans.
India’s consumption patterns provide a compelling rationale for the UAE’sfocus. As the world’s third-largest energy consumer after China and theUnited States, India imports nearly 85 per cent of its oil and increasingvolumes of gas to fuel power generation, transportation, and manufacturing.Bilateral non-oil trade has also grown robustly since the 2022Comprehensive Economic Partnership Agreement, but energy remains thecornerstone, accounting for a substantial portion of exchanges. Leadersfrom both nations recently set an ambitious target to double overall tradeto $200 billion by 2032, with energy cooperation central to achieving thismilestone.
The UAE’s strategy reflects broader geopolitical and economic calculationsin a changing global landscape. As the world transitions towardsrenewables, major exporters like the UAE face the imperative to monetisereserves efficiently while investing proceeds into non-hydrocarbon sectorssuch as technology, logistics, tourism, and renewable energy. Partneringwith India offers stability, given New Delhi’s consistent demand growthunaffected by some Western decarbonisation timelines. This alignmentsupports the UAE’s shift from oil dependency, with non-oil sectors nowcontributing significantly to GDP.
Defence, space, and technology pacts signed alongside energy deals furtherdeepen ties, indicating a comprehensive strategic partnership. The UAEviews India as a gateway for investments in infrastructure and advancedsectors, while India gains from secure supplies amid global supply chaindisruptions. Cumulative UAE foreign direct investment in India has reachedbillions, focusing on energy, real estate, and finance, reinforcing mutualeconomic interdependence.
Challenges persist, including global oil price volatility and competitionfrom other suppliers like Russia and the United States. However, thelong-term LNG commitment provides predictability for both sides. The UAE’sproduction expansions and India’s infrastructure developments, such as newregasification terminals, facilitate increased flows. This partnershipexemplifies how resource-rich nations and high-consumption economies forgealliances to navigate the energy transition era.
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Experts note that such arrangements benefit both parties economically andstrategically. For the UAE, India represents a massive, growing market thatsustains export volumes; for India, diversified sources enhance energysecurity. As bilateral engagements intensify, including in criticalminerals and nuclear cooperation, the relationship is poised to evolvebeyond traditional energy trade into a multifaceted alliance.
Source:https://www.reuters.com/world/india/india-uae-agree-boost-trade-defence-ties-finalise-lng-deal-leaders-meeting-2026-01-19
Economic Partnership Agreement
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