UAE, Kuwait expand overseas storage to safeguard Asian supply chains

National oil companies across the Gulf are fundamentally restructuring their logistical architecture to shield vital commercial operations and protect critical international supply chains from geopolitical risks.

Faced with persistent transit threats through the Strait of Hormuz, a primary chokepoint controlling nearly a fifth of global petroleum flows, the UAE and Kuwait are expanding downstream storage footprints directly within major, high-growth Asian demand centres. This proactive decentralisation underscores a structural pivot within national energy strategies, where security of supply and customer reliability have superseded immediate operational cost considerations.

Reports from The Times Kuwait indicate that Kuwait Petroleum Corporation has established a strategic buffer in East Asia, holding between 7mn and 8mn barrels of unrefined crude across key client markets in the Far East. This offshore inventory includes 3.5mn barrels held via an agreement with Ineos in Japan, and 4mn barrels positioned at South Korea’s Ulsan facilities. The state-owned operator has treated recent maritime volatility as a catalyst for swift logistical shifts.

Kuwait Petroleum Corp. (KPC) CEO Sheikh Nawaf Al-Saud confirmed the swift implementation of contingency frameworks explicitly focused on “storing crude oil in East Asian markets, repositioning tankers outside Gulf waters and maximising tanker loading capacities to ensure continued supplies.” For international commodity buyers, this forward-deployed regional decentralisation substantially lowers the geopolitical risk premium associated with potential maritime transit disruptions.

In tandem with these Kuwaiti adjustments, Abu Dhabi National Oil Company is actively establishing a deeply integrated storage, supply, and trading corridor with India. Under newly signed frameworks with Indian Strategic Petroleum Reserves Ltd (ISPRL) and Indian Oil Corporation Ltd (IOC), ADNOC intends to “explore a range of opportunities spanning crude oil, LNG and LPG storage as well as strategic reserves.”

This strategy involves expanding ADNOC’s crude inventory in India up to 30mn barrels, utilising existing storage in Mangalore alongside potential new facilities at Vishakhapatnam and Chandikol. The framework also evaluates reciprocal Indian strategic crude reserves at Fujairah to enhance mutual supply resilience.

The South Asian country remains a primary priority for Abu Dhabi. Energy Institute data confirms India is the UAE’s largest single sovereign market for liquefied natural gas and refined petroleum products across Asia, taking 4.6bn cubic metres of LNG and 13.6mn tonnes of refined products in 2024. Commenting on the expansion, ADNOC managing director and chief executive Sultan Al Jaber noted that India’s growth trajectory rapidly makes it one of the defining energy markets of our time, stating that “as demand accelerates alongside a rapidly expanding population, the strength of the UAE-India energy partnership becomes ever more critical.”

This infrastructure strategy is tightly integrated with midstream gas assets. On January 19, ADNOC Gas announced a 10-year agreement valued between $2.5bn and $3bn to export 500,000 tonnes annually to Hindustan Petroleum Corporation Ltd (HPCL) from its Das Island liquefaction facility. By 2029, ADNOC Gas will operate 15.6mn tonnes per annum of LNG capacity, with 3.2mn tonnes contracted directly to major Indian energy firms. Industry analysts cited by a local Arabic daily note that while international storage, transport, and insurance premiums are substantial, they are increasingly framed as essential investments in regional energy security and economic sovereignty, granting producing nations enhanced control over global supply flows during systemic crises.