Phillips 66 Hikes 2026 Capex To $2.4 Billion

Houston, Texas-based refiner Phillips 66 (NYSE:PSX) has increased its 2026 capital budget to $2.4 billion, including $1.3 billion for growth capital and $1.1 billion for sustaining capital. In the Midstream segment, the capital budget of $1.1 billion includes and $700 million for growth projects and $400 million for sustaining projects. These projects will organically advance the company’s integrated NGL wellhead-to-market strategy by expanding pipeline and fractionation capacity in key basins as well as increasing gas processing. A significant portion of the growth capital is expected to fund Phillips 66’s proportionate share of joint venture projects, particularly with Chevron Phillips Chemical (CPChem) and WRB Refining. These joint ventures are constructing world-scale petrochemical facilities on the U.S. Gulf Coast and in Ras Laffan, Qatar, with operations anticipated to begin in 2026.

“The 2026 capital budget reflects our ongoing commitment to capital discipline and maximizing shareholder returns. We are investing growth capital in our NGL value chain and high-return Refining projects, while also investing sustaining capital to support safe and reliable operations,” said Mark Lashier, Phillips 66’s chairman and CEO.

Phillips 66 is executing a strategy to become a leading integrated downstream energy provider by investing heavily in both traditional energy infrastructure and renewable fuel initiatives, while also facing pressure from activist investors. Phillips 66 is growing its midstream natural gas liquids (NGL) business through strategic acquisitions (such as the full acquisition of DCP Midstream’s public stake in 2023) and new infrastructure projects, including new gas processing plants and pipeline expansions to connect key basins to the Gulf Coast. The company’s joint venture with Chevron (NYSE:CVX), Chevron Phillips Chemical Company (CPChem), is also constructing world-scale petrochemical facilities in the U.S. Gulf Coast and Qatar.

Meanwhile, Phillips 66 is converting its San Francisco-area refinery into the Rodeo Renewable Energy Complex, which is expected to be one of the world’s largest facilities of its kind, producing renewable diesel and sustainable aviation fuel from waste feedstocks like used cooking oil, fats and greases. This project recently started commercial operations with an integrated solar facility.

Phillips 66 is currently navigating pressure from activist investor Elliott Management, which has built a significant stake in the company and is pushing for a strategic review, including the potential sale or spin-off of the midstream business, to improve financial performance and shareholder returns.

By Alex Kimani for Oilprice.com

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