Public-sector oil and gas companies have spent over Rs 38,419 crore as capex in the first four months of the current financial year 2024-25, nearly 32.4% of the annual capex target of Rs 1.2 lakh crore, 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 11,710 crore constituting 38% of its annual capex target of Rs 30,800 crore, Indian Oil spent Rs 11,483 crore of its annual target of Rs 30,909 crore during Apr-Jul
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 32,000-33,000 crore 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 Corp spent Rs 3,521 crore and Rs 3,088 crore 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.
GAIL Ltd, state-owned leading natural gas company, has spent 25% of its targeted annual capex in the Apr-Jul period. The company incurred a capex of Rs 2,033 crore during the period of its annual target of Rs 8,044 crore.
The company expects its 1,250 kilo tonnes per annum Mangalore petrochemical plant to be completed by June 2025, it had said in a conference call. The 60 ktpa polypropylene plant at Pata will also be commissioned in FY25.
“CGDs are optimistic about robust volume growth and margins, given that spot LNG prices are anticipated to stay stable. ONGC and OINL also forecast strong production growth due to KG-98 and NRL, respectively. Additionally, gas utility entities are anticipating continued strong transmission volumes, all setting the stage for substantial growth,” Motilal Oswal had said.
The country’s top oil producer’s overseas arm, ONGC Videsh Ltd (OVL) spent Rs 1,754 crores of its full year target of Rs 5,580 crores during the period. The company is expected to boost overseas oil and gas production and will be investing 71% more this year than the capex in FY24 which stood at Rs 3,262 crore.
Oil India incurred a capex of Rs 1,703 crore during Apr-Jul, accounting for almost 24.7% of its annual target of Rs 6,880 crore.
In FY24, state-owned oil companies cumulatively spent close to Rs 1.3 lakh crore, up 12% from the amount spent in FY23. During the last fiscal, ONGC, Indian Oil, BPCL, HPCL, GAIL and Oil India – all exceeded their initial annual capex target for the year.
From: financialexpress
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