News

IOC, ONGC, 9 other oil PSUs on track to match $16 billion spending

India’s state-owned oil companies aim to sustain spending near a three-year high, encouraged by falling oil-services costs and expanding demand.

The country’s largest oil refiner Indian Oil Corp. will boost domestic spending by a quarter in the year to 31 March and smaller processor Hindustan Petroleum Corp. plans to invest about 17% more this year. Oil and Natural Gas Corp., the biggest explorer and top spender, plans to invest as much as last year. The 11 state-owned companies spent more than Rs1 trillion ($16 billion) in the year ended 31 March, the highest since 2014.

“Spending by Indian oil companies has further upside over the coming years because of opportunities at home and abroad,” said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London. “Low services costs make spending more attractive now.”

Investments in oil and gas fields globally are set to drop a third year after falling 24% to $450 billion in 2016, according to 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.

Brent crude, which has averaged almost $54 a barrel this year, was trading 0.2% higher at $52.59 as of 8:52 am 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% by 2022. The IEA also expects India to be the fastest-growing oil consumer through 2040.