Oil PSUs spend 98% of annual capex target by December amid rising energy demand

The oil PSUs spent Rs 1.16 lakh crore in the Apr-Dec period, out of the total targeted capex of Rs 1.18 lakh crore for the fiscal 2024-25 (FY25).

Indian public sector oil companies have spent 98 percent of their total annual capital expenditure target in the current financial year up to December 2024, indicating likely overspending with three months remaining.

Oil PSUs spent Rs 1.16 lakh crore during the April-December period out of the total targeted capex of Rs 1.18 lakh crore for fiscal 2024-25 (FY25), according to oil ministry data.

The increased spending comes as oil PSUs are setting up new petrochemical facilities, ramping up efforts to boost exploration activities and improving gas infrastructure to cater to India’s rising energy consumption.

The Indian oil PSUs include ONGC, GAIL (India) and oil marketing companies (OMCs) including Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL), among others.

ONGC, EIL exceed targets

ONGC has already exceeded its annual target of Rs 30,800 crore as its capex reached Rs 45,335 crore in the April-December period.

The state-run oil and gas exploration company is spending on its existing blocks such as Krishna Godavari (KG) basin and Mumbai High among others to increase oil and gas production while also bidding for new blocks as they come up in the OALP (Open Acreage Licensing Program) rounds.

Also Read: Major E&P push in India as largest OALP bidding gets underway with 19 offshore blocks on offer

Engineers India Ltd (EIL), an oil and gas EPC company, surpassed its annual capex plan of Rs 50 crore, spending Rs 60 crore during the April-December period.

OMCs expanding capacities

State-run oil marketing companies are also spending heavily this fiscal, expanding the capacities of existing refineries while setting up new ones. IOCL, the biggest OMC, spent Rs 28,131 crore in April-December 2024, against the capex target of Rs 30,909 crore for FY25.

BPCL and HPCL have spent Rs 11,085 crore and Rs 9,006 crore in the period, as against the annual capex target of Rs 13,000 crore and Rs 12,500 crore, respectively, for FY25.

BPCL has announced setting up a new refinery in Andhra Pradesh and it's currently working on the detailed feasibility report (DFR). Meanwhile, HPCL is setting up a new oil refinery in Rajasthan’s Barmer with a capacity of nine MMTPA, which is expected to be commissioned in 2025.

IOCL, which has the largest refining capacity in the country, is expanding the capacity of its refinery in Panipat, Haryana, to 25 MMTPA, from 15 MMTPA.

ALSO READ: BPCL, Saudi negotiating crude oil deal for Andhra refinery

The companies had exceeded the capex target in the previous fiscal as well, spending Rs 1.28 lakh crore, about 20.75 percent higher than the target of Rs 1.06 lakh crore. The oil companies spent Rs 89,151 crore in the April-December period last year (FY24).

India’s oil consumption is expected to drive global demand until 2035 even outpacing Chinese oil demand, according to a report by International Energy Agency. The report estimates that India's daily oil demand will increase by nearly 2 million barrels over this period.