Oil-and-gas project pipeline shrank as power investment accelerated

Oil-and-gas project pipeline outstanding investment declined from Rs 3.87 lakh crore across 246 projects in FY2021 to Rs 2.91 lakh crore across 241 projects in FY2025. Over the same period, power-sector outstanding investment increased from Rs 43.13 lakh crore to Rs 70.82 lakh crore, shifting the larger engineering, procurement and construction, or EPC, project pool towards power.

Why did the oil-and-gas project pipeline contract?

The oil-and-gas project pipeline contracted because the value and number of outstanding crude-oil and natural-gas projects were lower in FY2025 than in FY2021. Outstanding investment rose slightly to Rs 3.91 lakh crore in FY2022, before falling to Rs 3.64 lakh crore in FY2023, Rs 2.98 lakh crore in FY2024 and Rs 2.91 lakh crore in FY2025. The outstanding project count reached 269 in FY2023 before declining to 241 in FY2025.

New oil-and-gas investment did not provide a consistent offset to the reduction in outstanding projects. New investment was Rs 4,448 crore across four projects in FY2021, Rs 350 crore across 29 projects in FY2022, Rs 2,236 crore across 18 projects in FY2023 and Rs 911 crore across six projects in FY2025. The FY2025 outstanding pool was therefore Rs 95,600 crore below FY2021 despite continuing activity in pipeline and refining infrastructure.

The smaller project pipeline does not indicate that physical oil-and-gas infrastructure stopped expanding. India’s natural-gas pipeline network increased from 17,126 kilometres in FY2021 to 26,271 kilometres in FY2025, while petroleum-product pipelines grew from 18,465 kilometres to 24,130 kilometres. Crude-oil pipeline length changed only marginally, from 10,419 kilometres to 10,446 kilometres, concentrating network growth in gas and petroleum-product transport.

How much faster did power-sector EPC investment grow?

Power-sector EPC investment grew faster because outstanding investment rose 64% from Rs 43.13 lakh crore in FY2021 to Rs 70.82 lakh crore in FY2025. The number of outstanding power projects increased by 30, from 2,402 to 2,432, indicating that the increase in recorded project value was substantially greater than the increase in project count.

The divergence widened after FY2023. Power outstanding investment rose from Rs 50.84 lakh crore in FY2023 to Rs 59.87 lakh crore in FY2024 and Rs 70.82 lakh crore in FY2025. Oil-and-gas outstanding investment moved in the opposite direction over those years, declining from Rs 3.64 lakh crore to Rs 2.98 lakh crore and then Rs 2.91 lakh crore.

New power-project investment also increased from Rs 1.49 lakh crore across 226 projects in FY2021 to Rs 13.73 lakh crore across 317 projects in FY2025. New investment reached Rs 11.67 lakh crore across 620 projects in FY2024; its value increased in FY2025 even as the project count fell by 303. The data therefore shows larger recorded commitments in FY2025 additions rather than a higher number of schemes.

Power’s FY2025 outstanding value was about 24 times the oil-and-gas figure. EPC covers engineering, procurement and construction, including design, equipment sourcing, installation, testing and commissioning. The CMIE Capex data measures the value of projects remaining outstanding, rather than EPC contractor revenue, contract awards or project completions in a specific year.

What is driving power investment acceleration?

Power investment acceleration is associated with higher electricity demand, generation additions and policy-backed spending on generation, transmission and distribution. Installed electricity generation capacity rose from 379 gigawatts, or GW, in FY2021 to 475 GW in FY2025, while electricity generation increased from 1,382 billion units, or BU, to 1,824 BU. Thermal capacity represented 246.94 GW, or 52%, of FY2025 installed capacity, and renewable energy sources represented 172.36 GW, or 36%.

Energy requirement increased from 1,275.5 BU in FY2021 to 1,694 BU in FY2025, while energy supplied rose from 1,270.7 BU to 1,692.4 BU. The deficit narrowed from 4.8 BU to 1.6 BU over this period. Sustaining supply alongside demand requires continued additions to generation assets, transmission networks and distribution systems.

The Revamped Distribution Sector Scheme, approved in 2021, has a total outlay of Rs 3.03 lakh crore, including Rs 97,631 crore in budgetary support. Its mechanisms include smart metering, feeder separation, distribution-network strengthening and grid-reliability works. PM-KUSUM, extended until March 2026, targets 34,800 megawatts of solar capacity through decentralised solar plants, standalone solar pumps and grid-connected pump solarisation.

Renewable expansion also creates work across generation, evacuation and grid-balancing infrastructure. India added 29.52 GW of renewable capacity in FY2025, comprising 23.83 GW of solar and 4.15 GW of wind. As of June 30, 2025, 169.40 GW was under implementation and 65.06 GW was tendered, including hybrid, round-the-clock and peaking projects.

Can oil-and-gas infrastructure demand recover despite the smaller pipeline?

Oil-and-gas infrastructure demand can increase if disclosed refinery, pipeline and gas-network plans enter execution, although FY2025 new-project data does not show additions at power-sector scale. India had refining capacity of 258 million metric tonnes per annum, or MMTPA, in April 2025. Indian Oil Corporation stated that India needs to add 2 million barrels per day of refining capacity by 2030.

GAIL (India) plans to invest Rs 844 crore over three years to raise capacity in its Dahej-Uran-Dabhol-Panel gas pipeline network from 19.9 million standard cubic metres per day to 22.5 million. The Mundra-Panipat crude-oil pipeline is specified at 1,033 kilometres, with capacity of 17.5 MMTPA and a project cost of Rs 9,028 crore.

Refinery plans also have stated delivery dates. Indian Oil Corporation plans to expand Panipat from 15 MMTPA to 25 MMTPA by June 2026, Barauni from 6 MMTPA to 9 MMTPA by December 2025, and Gujarat Refinery from 13.7 MMTPA to 18 MMTPA by December 2025. Numaligarh Refinery plans to increase capacity from 3 MMTPA to 9 MMTPA by March 2027, including a crude-oil pipeline to Paradip Port targeted for December 2025.

These plans would need to add more projects than are completed or removed from the outstanding pool to reverse the FY2021-to-FY2025 decline. The source identifies land acquisition, regulatory approvals and technical issues as causes of pipeline-expansion delays. It also cites leakages, theft, sabotage and inadequate safety systems as constraints that can affect project timing and network operations.

Conclusion

The FY2021-to-FY2025 comparison shows different demand conditions across two EPC end-markets. Oil-and-gas outstanding investment declined by Rs 95,600 crore, whereas power outstanding investment increased by Rs 27.69 lakh crore. Rising electricity requirements, renewable additions and distribution programmes provide the disclosed basis for the larger power project pool.

The next measures to watch are conversion of oil-and-gas plans into projects ahead of deadlines in December 2025, June 2026 and March 2027. In power, the 169.40 GW under implementation, 65.06 GW tendered and Rs 3.03 lakh crore Revamped Distribution Sector Scheme outlay will indicate whether the FY2025 investment acceleration continues across generation, grid and distribution work.