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Oil India’s management reaffirmed its “Mission 4+” program, targeting production of 4mmt of oil and 5bcm of gas by FY27. FY25 was a challenging year, with an extended monsoon and more intensive drilling; however, ~60 wells were still completed, and this momentum is likely to continue. IGGL Phase 1 and DNPL expansion will be commissioned by Jul-2025 and Oct-2025, respectively, connecting Upper Assam to the rest of India. The classification of new wells gas (NWG) is pending government allocation, which is expected this year, as new pipelines connect OIL to mainland CGDs—who will be consuming this gas. 20-25% of current gas production can qualify as NWG. NRL expansion remains on schedule for completion by Dec-2025. While it may take 6-12 months to stabilize, the project is likely to deliver its full benefit by FY27-28. Associated pipelines are set to be commissioned before that. Stated capex for FY25 was Rs85bn but is expected to fall to Rs70bn in FY26. We maintain our constructive view on OIL with a BUY, retaining our estimates and TP of Rs495.

“Mission 4+” targets intact; 1mmscmd of Kumchai gas being monetized

‘Mission 4+’ program has been reiterated, aiming to achieve oil/gas production of 4mmt /5bcm by FY27. OIL has intensified drilling, EOR/IOR, and near-field exploration. It plans to drill 70-80 wells in FY26, using single pads for multiple adjacent wells. It has installed ~11 compressor stations and started storing gas to enable zero flaring. ~1mmscmd of previously flared gas at Kumchai is now being transported via a newly laid 60km pipeline to Duliajan, boosting both output and revenue.

NWG qualification likely by FY26 as new pipelines connect mainland

CGDs NWG allocation is determined by the government on a priority basis, with CGDs receiving the top rank, followed by other sectors. As CGD infrastructure in the northeast remains nascent and pipeline connectivity to rest of India is lacking, no NWG volumes have been allocated from OIL yet. However, with IGGL and DNPL pipelines set for completion by October, national grid connectivity will be established, enabling NWG determination and unlocking potential for 20% premium pricing. 20-25% of OIL’s total gas production could qualify as NWG. The company is prepared for a USD65/bbl oil environment and has initiated cost optimization measures to maintain profitability.

NRL expansion on schedule, with no time or cost overruns

NRL’s expansion project, with a Rs330bn capex, is on track to be completed by Dec-2025. The refinery is petchem-ready, with a 4% petchem intensity index. Further, project capex is not expected to increase as ~95% of contracts have already been awarded. The PP project is financially viable, with a projected IRR of 14.5%, and should be commissioned in 2028. Demand for plastics is strong in the northeast, but currently refinery feed is sent to Bengal and products are transported back, which entails significant logistics cost. The new setup is expected to reduce these costs and improve overall industry viability.

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