ONGC, IOC and other oil PSUs will invest over Rs. 985.21 billion in the coming fiscal starting April 1 in exploring for oil and gas, refineries, petrochemicals and laying pipelines to meet needs of the world's fastest-growing energy consuming nation. The investment proposed in 2020-21 is almost 4 per cent higher than Rs. 949.74 billion spending by the state-owned oil firms in the current fiscal year that ends on March 31, according to Budget 2020-21 documents.
Oil and Natural Gas Corp (ONGC) leads the pack with a 19 per cent rise in its capital spending at Rs. 325.01 billion. The company is investing in finding new reserves of oil and gas and bringing to production discoveries it has already made. It is developing discoveries on both east and west coast of the country. The top oil producer’s overseas arm, ONGC Videsh Ltd (OVL) will invest almost 10 per cent more at Rs. 72.35 billion in oil and gas operations abroad.
Indian Oil Corp (IOC), the country's top oil refiner, will see a 17.4 per cent rise in spending to Rs. 262.33 billion with the bulk of it in expansion and upgrade of its seven refineries that produce fuel. IOC will also see investment in petrochemical business almost double to Rs. 33.875 billion while its exploration spends quadruples to Rs. 21.50 billion. Privatisation-bound Bharat Petroleum Corp Ltd (BPCL) has proposed a 14 per cent higher capital spending at Rs. 90 billion, two-third of which will be in its core refining business.
Gas utility GAIL India Ltd will not see any major increase in its investments at Rs. 54.12 billion as most of its pipeline grid expansion projects are nearing completion. Hindustan Petroleum Corp Ltd (HPCL), a subsidiary of ONGC, will invest Rs. 115.00 billion in FY21, the same as the previous year. Oil India Ltd, the nation's second-largest oil producer, will invest Rs. 38.77 billion next year as compared to Rs. 36.75 billion in current fiscal.
In her second budget, Finance Minister Normal Sitharaman laid down plans for expansion of national natural gas pipeline network to 27,000 km from the present 16,200 km and pricing reforms as the government looks at boosting the use of environment-friendly fuel. The government has set a target of raising the share of natural gas in primary energy basket to 15 per cent by 2030 from current 6.2 per cent. Connecting gas sources to consumption hubs is key to achieving this.
Presently, most of the gas pipelines are concentrated in the western and northern part of the country with a few lines in the east and south. "To deepen gas markets in India, further reforms will be undertaken to facilitate transparent price discovery and ease of transactions," she had said. Presently, the price of natural gas produced domestically is fixed by a formula that averages out rates in gas surplus nations such as Russia and the US. "Further, it is proposed to expand the national gas grid from the present 16,200 km to 27,000 km," she said without giving a timeline.