State Oil Companies Report 22% Rise in Capex in Last Fiscal

State oil companies spent a record Rs. 129,000-crore in 2017-18 on acquisitions as well as expanding oil production, refining and distribution facilities. Capex was 22% more than the previous year and the companies plan to spend Rs. 88,000-crore in the current year.

In the last few years, state oil firms have been spending at a rapid pace on drilling wells, laying pipelines, upgrading refineries, expanding LPG bottling facilities and marketing infrastructure to meet growing domestic demand. The government’s focus on pushing up natural gas consumption has also prompted bigger investments in pipelines and LNG import terminals.

India’s oil demand expanded 5.3% in 2017-18, after rising 5.4% in 2016-17 and 11.6% in 2015-16. Growth in production of refined products lagged demand expansion in all three years. This has meant lower surplus available for export, and increased need to invest in expanding production and distribution infrastructure.

In 2017-18, ONGC’s capex more than doubled to Rs. 72,000-crore from Rs. 28,000-crore in the previous year. In 2016-17, ONGC Videsh, IOC, Oil India and BPCL had spent about $2.2-bn to acquire stake in Russia’s Vankor field. But their capex dropped sharply in 2017-18 since they made no acquisition. IOC’s spending dropped 7% to Rs. 21,300-crore.