India and the United Arab Emirates are exploring a new energy security arrangement that would enable India to store part of its strategic oil reserves in Fujairah, while expanding Abu Dhabi's access to storage facilities in India. This proposed deal, announced during a May 2026 visit, aims to strengthen energy security and reduce exposure to disruptions along one of the world's most important oil shipping routes. The partnership between the two countries has evolved from crude oil supplies to joint investments in oil production, strategic reserves, and long-term gas contracts.
The proposed arrangement would allow Abu Dhabi National Oil Company to store up to 30 million barrels of crude oil in India. In return, India could hold part of its emergency oil stocks in Fujairah, an important UAE export hub outside the Strait of Hormuz. This strategic location offers an alternative export route, connected to Abu Dhabi's onshore oilfields through a 406-kilometre pipeline, allowing crude to reach the Gulf of Oman and international markets while bypassing the strait. The route has gained significance amid disruptions to shipping in the Gulf.
The energy partnership between India and the UAE dates back to May 2018, when ADNOC stored two million barrels of Abu Dhabi crude in an underground storage facility in Mangalore, India. The deal allowed ADNOC to store up to 5.86 million barrels of crude oil in India at its own cost, while retaining the right to sell the oil commercially. This initial agreement marked the beginning of a growing partnership, with India investing in Abu Dhabi's oil industry, including a 10 per cent stake in Abu Dhabi's Lower Zakum offshore oil concession for $600 million.
India's dependence on imported energy has grown significantly, with oil imports increasing from fewer than one million barrels per day in the 1990s to approximately 4.4 million barrels daily by 2018. The UAE has become one of India's leading energy suppliers, ranking as India's fourth-largest source of crude oil and second-largest supplier of liquefied natural gas and liquefied petroleum gas by 2026. This growing partnership has led to further collaborations in the energy sector.
ADNOC is developing a second export route to Fujairah through its West-East Pipeline project, expected to become operational in 2027. The project aims to double ADNOC's export capacity through the port. In India, the proposed 30-million-barrel storage arrangement could involve existing facilities in Visakhapatnam, Andhra Pradesh, and the development of new reserve infrastructure in Chandikol, Odisha. The agreement also provides for possible cooperation in LNG and LPG storage facilities.
Beyond crude oil, India and the UAE are strengthening cooperation in natural gas and petroleum products. ADNOC and Indian Oil have agreed to explore long-term LPG supply arrangements, including opportunities for commercial purchases and sales. The companies already have a long-term LNG supply agreement, with ADNOC signing a 15-year contract to supply Indian Oil with up to one million tonnes of LNG annually in August 2025.
The proposed Fujairah arrangement would mark another step in the evolving energy partnership between India and the UAE, giving India greater flexibility in managing its strategic reserves while strengthening the UAE's position as a major energy supplier. The deal is expected to enhance energy security and provide a more stable supply of oil and petroleum products to India, while expanding Abu Dhabi's access to storage facilities in India.
Key points
- The proposed deal aims to strengthen energy security and reduce exposure to disruptions along one of the world's most important oil shipping routes.
- India and the UAE are expanding their energy partnership to include joint investments in oil production, strategic reserves, and long-term gas contracts.
- The arrangement would allow Abu Dhabi National Oil Company to store up to 30 million barrels of crude oil in India, while India could hold part of its emergency oil stocks in Fujairah.
