Oil Companies of India’s state owned aim to sustain the spending near a three-year high, encouraged by falling oil-services costs and expanding demand.
Indian Oil Corp the Country’s largest oil refiner, by a quarter in the year to 31Sst March will boost the domestic spending and smaller processor Hindustan Petroleum Corp. This year plans to invest about 17% and more. The biggest explorer and top spender Oil and Natural Gas Corp., plans to invest as much like last year. More than one trillion rupees the 11 state owned companies have spent in the year ended on 31st March, the highest since 2014.
"Spending by Indian oil companies has further upside over the coming years because of opportunities at abroad and home," said by a senior energy analyst at Interfax Energy's Global Gas Analytics Abhishek Kumar in London. "Low services costs make spending more attractive now."
After falling 24 percent to $450 billion in 2016, investments in gas and oil fields are to drop in third year, as per the International Energy Agency. Oil companies slashed spending, delayed projects and cut staff to cope with the crash in prices that started in 2014. The market is beginning to stabilize amid efforts by the Organization of Petroleum Exporting Countries to trim output.
Averaged Brent crude which has almost $54 a barrel this year, was trading 0.2 percent higher at $52.59 as of 8:52 a.m. in Singapore.
The Indian spending boom is being driven by the country's growing energy appetite and the need to meet Prime Minister Narendra Modi's goal of reducing dependence on oil imports by 10 percent by 2022. India also expects the IEA to be the fastest-growing oil consumer through 2040.
'No Let Up'
B. Ashok the Chairman of India Oil said that, "There's no let up on our capital expenditure." which is also the nation's biggest distributor of fuels, plans to spend more than 200 billion rupees ($3.1 billion) this year from 160 billion rupees on growing its local refining and fuel-retailing operations, he added.
To invest the Hindustan Petroleum as much as 70 billion rupees on expanding the refineries and marketing infrastructure this year, last year compared with the 60 billion rupees, said by the Director of Finance J. Ramaswamy at India’s third largest fuel retailer.
The Higher capital expenditures the one factor behind at the Indian refineries is the country’s move to upgrade the quality of fuel and lower emissions to the equivalent of Euro 6 standards by 2020, said Bhaskar Patel, managing director at Technip India, a unit of TechnipFMC Group.
The Explorers are not slowing down either,
‘We drilled out last year about 500 wells and this year also we are planning to maintain that number,’ the Chairman of ONGC Dinesh Kumar Sarraf said. "While the investment figure would be similar to that of last year, we will be able to do more jobs because cost of services is declining."
Last year’s financial capital expenditure was buoyed by acquisition of stakes in the two Rosneft PJSC blocks in Russia by the Indian Oil, Oil India, ONGC, and a subsidiary of Bharat Petroleum Corp.Capex of some major Indian oil companies in billion rupees:
Company Name FY18 capex FY17 capex FY16 capex Indian Oil 200 219.2 143.7 Hindustan Petroleum 70 60 54.6 Oil & Natural Gas Corp 280 280.1 295 Oil India 42.9 105.1 35.5 FY17 and FY16 figures from Petroleum Planning & Analysis Cell website Indian Oil FY18 capex plan for domestic market only.