Abu Dhabi National Oil Company (ADNOC) and Indian Oil Corporation Limited (IOCL) conducted the first crude oil transaction ever under the recently introduced Local Currency Settlement (LCS) system. The sale of roughly 1 million barrels of crude oil was a part of the deal.
According to a press release from the Indian Embassy in the UAE, both Indian Rupees and UAE Dirhams were utilised in the transaction.
The UAE is an important partner for India’s energy security and the two countries have a robust oil and gas cooperation. The mainstay of bilateral trade between India and the UAE is oil and petroleum products.
UAE is India’s second-largest supplier of LNG and LPG, as well as its fourth-largest supplier of crude oil. Petroleum goods accounted for USD 35.10 billion in commerce between the two nations last year, or 41.4% of all bilateral trade.
This will be the first-ever LCS in India, and it is anticipated that it will speed up transaction times, cut costs, and increase the use of local currencies. This will increase the benefits of CEPA’s preferential terms even more. Based on mutual agreement, traders might decide on the payment currency.
The local currency surplus balance can be invested in local assets such as corporate bonds, government securities, equity markets, etc. LCS is projected to have a transformative effect on global economic engagements as well as the bilateral economic relationship.
The exchanging of the MoU took place on July 15th, and today’s oil trade was the second significant transaction under the LCS. It involved the sale of 25 kg of gold to a buyer in India from a reputable UAE gold exporter, with an invoice value of roughly 12.84 crore Rupees.