UAE to make up for LPG shortfall from Saudi Arabia

United Arab Emirates (UAE) has agreed to supply extra cooking gas LPG to India to make up for the shortfall in supplies from its principal supplier Saudi Arabia.

New Delhi:Ahead of the festival season, United Arab Emirates (UAE) has agreed to supply extra cooking gas LPG to India to make up for the shortfall in supplies from its principal supplier Saudi Arabia.

While oil supplies from Saudi Arabia have not been impacted in the aftermath of a massive attack on the kingdom's crude oil facilities, LPG imports have been impacted. Saudi Arabia has deferred at least two shipments of LPG as it struggles to quickly recover the 5 million barrels per day of output that was lost in the attacks.

"Thank UAE Minister of State and Group CEO @AdnocGroup H.E. Dr. Sultan Ahmed Al Jaber for the supply of two additional LPG cargoes on an urgent basis to meet the incremental LPG demand in the upcoming festive season. The LPG cargoes will reach India over the next two weeks," Oil Minister Dharmendra Pradhan tweeted.

India buys around 2,00,000 tonnes of LPG every month from Saudi Arabia.

"This gesture of UAE ADNOC provides further momentum to our comprehensive strategic partnership. We look forward to collaborate and work together to strengthen our hydrocarbon engagements with an important partner like the UAE," Pradhan added.

Pradhan had last week spoken to his Saudi counterpart Prince Abdulaziz bin Salman on oil supply plans.

The Saudi Minister had assured of uninterrupted supplies of crude oil, officials said.

Saudi Arabia, which is India's second-largest oil supplier, sells close to 2 million tonnes of crude every month. Of this, 1.2-1.3 million tonnes of supplies for September have already been taken and the rest too has been assured.

However, Saudi has sought deferment of some LPG supplies, but has assured to make up for all the quantities, officials said.

They said Saudi Arabia has cut throughput at its refineries to meet its crude oil supply commitments, which has led to reduced LPG production.

Refineries process crude oil into fuel such as petrol, diesel and LPG. Saudi Arabia used some of the crude oil it produces at its refineries. By reducing such processing, fuel production at refineries has fallen.

India imports 83 per cent of its oil needs, with Saudi Arabia supplying a fifth of the purchases. Saudi Arabia is its second-biggest supplier after Iraq. It sold 40.33 million tonnes of crude oil to India in 2018-19 fiscal, when the country had imported 207.3 million tonnes of oil.

A massive drone strike on the world's largest crude-processing facility operated by Saudi Aramco drove oil prices to their highest level in nearly four months.

The attack had knocked out over half of Saudi Arabia's oil production as it cut 5.7 million barrels per day or over 5 per cent of the world's supply.

Abqaiq and Khurais are main processing centres for Saudi Arabia's Arab Extra Light and Arab Light crude oil.