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Oil and gas PSUs carry out a third of annual capex in April-July
Public-sector oil and gas companies have spent over Rs 380.419 BILLION as capex in the first four months of the current financial year 2024-25, nearly 32.4% of the annual capex target of Rs 1200 billion, provisional data from the Petroleum Planning and Analysis Cell showed.
The capital expenditure during the period was driven by Oil and Natural Gas Corp, Indian Oil Corp, and Hindustan Petroleum Corp. While ONGC incurred a capex of Rs 117.10 billion constituting 38% of its annual capex target of Rs 308 billion, Indian Oil spent Rs 114.83 billion of its annual target of Rs 309.09 billion during Apr-July.
The robust capex pace maintained by these firms is at a time overall capital expenditure by the central public sector enterprises fell by 16% on year in April-July due to the disruptions caused by general elections. The decline in the CPSEs capex in the first four months of the fiscal was more prominent for the top two investors –Railways Board and the National Highways Authority of India (NHAI), where state-run companies have improved upon last year’s performance.
ONGC, in its earnings call earlier, has guided to a capex of Rs 320-330 billion each for FY25 and FY26.
The company is expected to invest a major portion of its capex towards increasing its oil and gas production particularly from KG 98/2 basin. The field currently produces 12,000 barrels per day of oil (from 4 wells) and ~0.4 mmscmd of gas. The company expects to start additional wells in the second and third quarter of the fiscal, which should help it reach oil production of 30,000 bbl/d in Q4 and 45,000 bbl/d in subsequent quarters, it had said.
Analysts believe that the major expansion projects announced by the oil marketing companies in the next two years, and robust volume growth for the city gas distribution companies are expected to lead to substantial growth for the Indian energy sector companies.
HPCL and Bharat Petroleum Corpspent Rs 35.21 billion and Rs 30.88 billion respectively in April to July. The country’s state-owned downstream companies intend to boost their refining capacity and strengthen their marketing infrastructure going ahead.
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