Chennai Petroleum Corporation Ltd (CPCL) is ramping up its annual capital expenditure to ₹700–800 crore over the next two years—nearly double its usual outlay. The increased investment will fund both regular operations and major capacity upgrades as the company pivots toward high-margin growth areas.
Lube Oil Unit Upgrades Take Center Stage
Out of the planned capex, CPCL will allocate ₹250–300 crore for routine maintenance and smaller projects, while it will earmark ₹400–500 crore for the critical upgrade of its Lube Oil Base Stock (LOBS) units 2 and 3. The company is modernizing these units to produce Group II/III premium base oils by converting naphtha and high-speed diesel.
The upgrade project is in its final planning phase. During its Q4 FY25 earnings call, CPCL’s management stated, “It’s a very profitable project, and we’re ready to execute it quickly once the necessary approvals are in place.”
Nagapattinam Refinery Expansion Progresses, Awaits Key Approval
Simultaneously, CPCL is advancing its major nine MMTPA refinery expansion project in Nagapattinam, Tamil Nadu. CPCL has already acquired over 1,200 acres of land for the project, which it is developing as a joint venture with Indian Oil Corporation (IOCL).
The project’s updated capital cost stands at ₹36,354 crore, with IOCL holding a 75% stake and CPCL retaining 25%. However, the venture is currently awaiting final clearance from the Cabinet Committee on Approvals (CCA).
Focus on Petrochemicals and Value-Added Products
Designed with a petrochemical intensity index of 6%, the upcoming refinery will focus on high-value products like polypropylene while deliberately excluding naphtha from its output mix. CPCL expects to adopt a 1:2 debt-equity structure for the project, though final financing arrangements are still under discussion.
Strategic Shift Towards High-Margin Operations
With significant investments in both refining capacity and premium product development, CPCL is clearly positioning itself for long-term growth. As reported by projectstoday.com, the capex commitments underscore a strategic shift toward more integrated, value-driven operations that align with evolving market demands.
