Budget 2026: State-run upstream players may lower spending for FY27

The capital expenditure of ONGC, country's largest oil and gas exploration player, is seen declining over six per cent to Rs 30,000 crore in FY27

State-run upstream players, including Oil and Natural Gas Corporation (ONGC) and Oil India (OIL), plan to spend less in 2026-27 (FY27) compared to FY26, according to the Budget 2026 expenditure document.

 

The investment by ONGC, the country’s largest oil and gas exploration player, is seen declining over 6 per cent to ₹30,000 crore in FY27. This compares to ₹32,000 crore spent in the previous financial year.

 

Oil India’s spending for FY27 would also be lower by 1.7 per cent year-on-year (Y-o-Y) at ₹8,653 crore.

 

The lower investment budgeted by the upstream players comes despite the government’s increased focus on capital-intensive exploration efforts in deep-water and ultra-deepwater areas.

 

Two major state-run refiners, Indian Oil Corporation (IOCL) and Hindustan Petroleum Corporation (HPCL), have also budgeted lower spending for FY27 from last year.

 

IOC’s spending will fall 5.76 per cent Y-o-Y in 2026–27, while HPCL’s investment is set to drop 16.16 per cent to ₹9,641 crore.

 

In contrast, Bharat Petroleum Corporation (BPCL) plans to raise FY27 capital expenditure (capex) by 35.13 per cent to ₹25,000 crore. The higher spending by BPCL could be attributed to the company’s plan of setting up a greenfield refinery in Andhra Pradesh.

 

Investment by IOC’s subsidiary Chennai Petroleum Corporation (CPCL) would also see an uptick of around 43 per cent in FY27.

 

The spending by Mangalore Refineries and Petrochemicals Ltd (MRPL) and Numaligarh Refinery Ltd (NRL) is set to decline in FY27.

 

The total investment of Indian oil public sector undertakings (PSUs) budgeted for FY27 shows marginal increase to ₹1.34 trillion from ₹1.3 trillion last year.

 

The Budget data also showed that India underspent on building strategic petroleum reserves in 2025-26, spending merely one-sixth of the total budgeted amount.

 

The government allocated ₹5,876 crore in Budget 2025 (Budget Expenditure or BE 2025-26) for strategic oil reserves, of which ₹1,039 crore was utilised during the year (Revised Expenditure or RE 2025-26).

 

In this year’s Budget, allocation for the same has dropped to ₹200 crore.

 

The development of strategic petroleum reserves in India has come to the forefront to ensure energy security amid a turbulent geopolitical environment.

 

The country is dependent on imports for meeting around 90 per cent of its crude oil requirements and 50 per cent of its natural gas needs.

 

In 2025-26, the central government spent a higher amount on liquefied petroleum gas (LPG) subsidy and focussed on providing clean cooking fuel to the underprivileged families, than the budgeted amount. The government spent ₹15,120.51 crore in 2025-26 (RE), compared to the allocation of ₹11,100 crore (BE).