Chennai Petroleum Corporation (CPCL) is set to nearly double its annual capital expenditure to Rs 700-800 crore over the next two years. This includes Rs 250–300 crore for regular maintenance and small-scale projects, and Rs 400-500 crore allocated to upgrading its lube oil base stock (LOBS) units 2 and 3.

The Group II/III LOBS upgrade, which aims to convert naphtha and high-speed diesel into premium lube base oils, is nearing final planning stages. Management affirmed during the Q4/FY25 earnings call, “It’s a very profitable project, and we’re ready to execute it quickly once the necessary approvals are in place.”

Meanwhile, CPCL's nine MMTPA refinery expansion project in Nagapattinam, Tamil Nadu, is progressing, having acquired over 1,200 acres of land. However, the project still awaits a key clearance from the Cabinet Committee on Approvals (CCA). The refinery, a joint venture with Indian Oil Corporation (IOCL), has an updated capital cost of Rs 36,354 crore. IOCL will hold a 75 percent stake, with CPCL retaining 25 percent.

Notably, the new facility will have a petrochemical intensity index of six percent and focus on producing polypropylene, without including naphtha in its product slate. The venture is expected to adopt a 1:2 debt-equity ratio, although final decisions are still under review. As CPCL positions itself for expansion, both in refining capacity and value-added products, these investments signal a strategic pivot toward high-margin operations.