State oil companies like ONGC, GAIL plan Rs 87,000 crore capex

NEW DELHI: State oil companies have planned a capex of Rs 87,000 crore, or $13 billion, in 2017-18 to develop oil and gas fields, expand refining capacity, and build pipelines.

Oil and Natural Gas Corp (ONGC) plans to invest Rs 30,000 crore, the maximum among all state oil firms. This is slightly higher than the company’s spending of about Rs 28,000 crore in 2016-17. GAIL, HPCL, Mangalore Refinery and Numaligarh Refinery have also planned to spend more this year than they did last year, but others will spend less, making the total capex nearly a fifth less than the last fiscal year’s Rs 106,000 crore.

The second-biggest investment has been planned by Indian Oil Corp. It aims to spend about Rs 20,000 crore this year, lower than Rs 22,000 crore last year. Oil India will be the third-highest spender with Rs 9,000 crore marked for the year. ONGC Videsh, Hindustan Petroleum and Bharat Petroleum will spend around Rs 7,000 crore each while GAIL aims to spend around Rs 3000 crore.

In April, state firms had already spent a combined Rs 3,600 crore. State refiners are spending heavily to upgrade facilities to produce fuel with higher emission norms. All petrol and diesel sold must meet BS-VI emission norms from April 2020, according to the government mandate. Refiners today sell BS-IV fuels. All state refiners are also adding capacity at their existing plants to raise output to meet growing fuel demand in the country that rose 5% in 2016-17.





Indian Oil, HPCL and BPCL are also spending significantly to augment their marketing and distribution infrastructure, including storage, pipeline and retail outlets ONGC and Oil India plan to drill new wells and build processing platforms for raising output, while GAIL intends to spend on some of its pipeline network.

India needs big investment in exploration and production to raise domestic crude output that fell for the fifth straight year in 2016-17. Lower output pushed up India’s import dependence to 82% of its requirement in 2016-17 from 81% in the previous year. The government is aiming to bring down import dependence to 67% by 2022.