IndianOil Capacity Plan: Why 98 MMT Matters

IndianOil plans to raise group refining capacity from about 80.75 to roughly 98 million metric tonnes per year by expanding Panipat, Gujarat and Barauni. The 17.3-million-tonne increase strengthens fuel-processing headroom, but returns will depend on commissioning, utilisation, refining margins and the company’s ability to sell more higher-value petrochemicals.

Key takeaways

• IndianOil says expansions at Panipat, Gujarat and Barauni will take group refining capacity from about 80.75 million metric tonnes per year to roughly 98 million.
• The three projects add about 17.3 million tonnes of annual capacity: 10 million at Panipat, 4.3 million at Gujarat and 3 million at Barauni.
• IndianOil reported a record standalone net profit of ₹36,802 crore for FY2025-26, but the profit is a result for the year—not a dedicated expansion budget.
• The strategy is about more than producing extra petrol and diesel. Petrochemical integration is intended to increase the value earned from each barrel processed.

IndianOil is moving towards roughly 98 million metric tonnes per annum (MMTPA) of group refining capacity as expansions at three refineries approach completion. The state-controlled energy company disclosed the target in its FY2025-26 annual report and highlighted it again around its 67th annual general meeting on August 31, 2026.

The number matters because the expansion is not a single new refinery. It is a three-site upgrade that adds capacity to existing industrial systems at Panipat in Haryana, Gujarat’s Koyali complex and Barauni in Bihar. IndianOil’s plan therefore combines higher crude-processing capacity with new petrochemical units, efficiency improvements and lower-carbon projects at the same sites.

Everyone else is reporting a 98 MMT target; we are explaining how the three projects add up, why group and standalone capacity should not be confused, and why utilisation and product mix will matter more than the headline number.

What exactly is IndianOil expanding?

IndianOil Corporation Limited is India’s largest state-owned refiner and fuel marketer. Refining capacity measures how much crude oil a refinery is designed to process in a year. MMTPA means million metric tonnes per annum; news reports sometimes shorten the unit to MMT, but the annual-rate meaning is essential.

The company’s FY2025-26 integrated annual report says ongoing additions at Panipat, Gujarat and Barauni are taking group refining capacity towards about 98 MMTPA. “Group” includes IndianOil’s own refineries and subsidiary Chennai Petroleum Corporation Limited, or CPCL.

That distinction prevents a common accounting mistake. The Petroleum Planning and Analysis Cell’s capacity table for April 1, 2026 lists nine IndianOil refineries with a combined 70.25 MMTPA. It separately lists CPCL’s Manali refinery at 10.5 MMTPA. Together, the two figures equal 80.75 MMTPA—the group base used by IndianOil.

IndianOil capacity: how the three projects add up

The largest increase comes from Panipat, where designed capacity rises from 15 to 25 MMTPA. Gujarat refinery moves from 13.7 to 18 MMTPA, while Barauni rises from 6 to 9 MMTPA. Those increments total about 17.3 MMTPA.

Refinery	Earlier capacity	Expanded capacity	Increase	Strategic role
Panipat	15 MMTPA	25 MMTPA	10 MMTPA	Largest capacity addition plus petrochemical integration
Gujarat (Koyali)	13.7 MMTPA	18 MMTPA	4.3 MMTPA	More fuels, polypropylene and speciality products
Barauni	6 MMTPA	9 MMTPA	3 MMTPA	Additional supply for eastern and northern markets
Total projects	34.7 MMTPA	52 MMTPA	17.3 MMTPA	Raises group capacity towards roughly 98 MMTPA

The projects are brownfield expansions, meaning IndianOil is enlarging existing complexes rather than building three entirely new refineries. Brownfield work can reuse land, pipelines, storage and utilities, although construction beside operating units creates its own execution and safety challenges.

The capacity increase also needs to be read as a designed ceiling, not a guaranteed output figure. Refineries stop for maintenance, adjust runs to product demand and process different crude grades. Actual throughput can therefore be above or below nameplate capacity over shorter periods.

Why the ₹36,802 crore profit is relevant—but not the budget

IndianOil’s official FY2025-26 results reported standalone revenue from operations of ₹8,86,224 crore and net profit of ₹36,802 crore. Net profit rose from ₹12,962 crore in FY2024-25, with the company attributing the improvement mainly to stronger refining and marketing margins.

The same results reported record crude throughput of 75.451 MMT, up from 71.564 MMT a year earlier, and capacity utilisation of 107.4%. Product sales reached 105.117 MMT, while combined liquid and gas pipeline throughput reached 105.556 MMT.

Those figures show that existing assets were working hard, but profit should not be described as money earmarked for the capacity plan. A company uses cash for capital spending, working capital, debt service, dividends and maintenance. IndianOil separately plans capital expenditure, and each expansion has its own approved cost and timetable.

Why build more refining capacity during the energy transition?

India’s transport system is electrifying, but oil demand does not disappear when electric-car sales rise. Diesel powers much of road freight; aviation turbine fuel supports expanding air travel; liquefied petroleum gas remains important for homes and industry; and petrochemical feedstocks enter packaging, textiles, tyres, appliances and construction materials.

India’s Petroleum Planning and Analysis Cell listed national installed refining capacity at 267.116 MMTPA on April 1, 2026. IndianOil’s roughly 17.3 MMTPA of planned additions are therefore material, but they are one part of a wider national build-out.

More domestic processing does not eliminate India’s reliance on imported crude. It changes what India can do after crude arrives: refine a broader mix, supply domestic markets, export selected fuels and direct streams into higher-value chemicals. That matters when India’s crude sourcing shifts between suppliers or when shipping disruptions raise costs.

The distinction between crude security and product security is important. A larger refinery cannot create crude oil, but it can give the country more flexibility over which finished products it makes. Recent concern about India’s exposure to disruptions near the Strait of Hormuz shows why feedstock routes, inventories, pipelines and refinery configuration must be assessed together.

Petrochemicals are the second engine of the plan

IndianOil’s annual report does not frame the 98 MMTPA plan as a fuel-only expansion. It repeatedly links refining upgrades with petrochemical integration. The economic logic is to turn more refinery streams into polymers and chemical intermediates instead of relying only on margins from petrol, diesel and LPG.

At Panipat, refinery expansion is paired with petrochemical projects. Gujarat’s upgrade includes facilities associated with polypropylene and speciality products. Barauni’s expansion also connects to downstream value addition. These investments matter because a refinery’s earnings depend on what it produces, not merely how many tonnes of crude pass through it.

That approach aligns with a larger national ambition for the Indian chemicals industry to scale sharply by 2040. It also changes the risk profile: chemicals can offer better margins, but demand cycles, project costs and competition from large Asian producers can still pressure returns.

The hard part is commissioning and utilisation

Investors should separate three milestones. Mechanical completion means construction is largely finished. Commissioning means systems are tested and brought into operation. Stable commercial production means the plant is running reliably and selling usable output. A project can cross these milestones months apart.

Execution risks include cost inflation, delayed equipment, integration problems and shutdowns needed to connect new units. After commissioning, margins determine whether higher output creates acceptable returns. A refinery can process more crude yet earn less if the gap between crude costs and product prices narrows.

Utilisation above 100%, like IndianOil’s 107.4% in FY2025-26, is possible because nameplate capacity is a design reference and efficient plants can temporarily run above it. But a single high-utilisation year should not be assumed forever. Maintenance cycles, crude availability and market demand can pull utilisation down.

The company must also manage emissions as capacity rises. IndianOil reports work on renewable power, energy efficiency, a 10,000-tonne-per-year green hydrogen plant at Panipat and sustainable aviation fuel initiatives. These do not erase refinery emissions, but they show how the company is trying to place lower-carbon projects inside a still-expanding oil system.

The same tension appears in India’s rollout of E20 petrol and other lower-carbon fuel blends: the transition changes refinery outputs and feedstocks before it eliminates the need for liquid fuels.

What should investors and policymakers watch?

First, watch project-specific commissioning disclosures. IndianOil’s rounded 98 MMTPA target is useful, but the market needs dates for stable operations at each refinery. Second, compare actual throughput with new capacity. A larger denominator without enough demand can reduce utilisation.

Third, track the product mix. Higher petrochemical sales, better distillate yields and lower fuel-and-loss rates can be more important to earnings than one capacity figure. Fourth, track capital employed and debt rather than treating FY2025-26 profit as a blank cheque.

Finally, watch policy and crude sourcing. Retail fuel pricing, exchange rates, shipping routes and environmental rules all affect refinery economics. IndianOil is expanding physical capacity, but financial returns will come from coordinating refineries, pipelines, marketing and petrochemicals as one system.

IndianOil’s move towards roughly 98 MMTPA is a 17.3-million-tonne brownfield expansion across three sites, not a single new refinery. Its strategic value lies in combining additional fuel supply with petrochemical integration; its financial value will depend on commissioning, utilisation, margins and capital discipline.

Frequently asked questions

What is IndianOil’s current refining capacity?

IndianOil reports group refining capacity of about 80.75 MMTPA, including subsidiary CPCL. The standalone IndianOil refineries listed by the government total about 70.25 MMTPA, while CPCL’s Manali refinery contributes 10.5 MMTPA.

How will IndianOil reach about 98 MMTPA?

Panipat is expanding from 15 to 25 MMTPA, Gujarat from 13.7 to 18 MMTPA and Barauni from 6 to 9 MMTPA. The three increases add about 17.3 MMTPA to the group base.

Did IndianOil earn ₹36,802 crore at the AGM?

No. The AGM discussed a result already reported for FY2025-26. IndianOil’s standalone net profit for that financial year was ₹36,802 crore, up from ₹12,962 crore in FY2024-25.

Does 98 MMTPA mean IndianOil will produce 98 million tonnes every year?

No. It is designed annual capacity. Actual throughput depends on maintenance, crude availability, demand, commissioning and how hard each refinery runs.

Primary sources: IndianOil’s FY2025-26 results release, the company’s FY2025-26 integrated annual report, and the PPAC installed refinery capacity table.