New Delhi, November 21 - Neftegaz.RU. India’s Oil Marketing Companies (OMCs) are likely to invest between $35 billion and $40 billion over the next 5 years in capacity expansion and refinery upgradation to meet the new emission standards in 2020, Fitch Ratings said in a report.
Fitch said it expects the government’s move to lower retail fuel prices to hit the profitability of Indian Oil (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) in 2018-19, before being reversed the next fiscal. The 3 companies’ credit metrics are likely to weaken moderately in 2019 as a result of lower retail and refining margins and large ongoing capex.
Capex plans for downstream companies will be driven by capacity expansion and refinery upgradation to meet the new emission standards in 2020. The 3 OMCs together with HPCL-Mittal Energy (HMEL) are likely to invest about $35 billion-40 billion over next 5 years. We expect upstream investments to also remain high, given the strong crude prices and the need to arrest the falling domestic production and reserves, the agency said.
The expectations of a strong GDP growth in India over the next 2 years should support petroleum product consumption growth in a range between 4 % and 5 % and the focus on cleaner fuel together with strong growth plans in city gas distribution is likely to support stable consumption growth in natural gas, according to Fitch.
