Phillips 66 on Monday raised its 2026 capital budget to $2.4 billion in Houston, boosting spending on midstream and petrochemical projects to expand its natural gas liquids network and support long-term returns amid investor pressure.
Company Boosts Spending on Midstream and Joint Ventures
Phillips 66 said the 2026 capital plan includes $1.3 billion for growth projects and $1.1 billion for sustaining capital to maintain safe and reliable operations. The budget marks an increase from earlier projections as the refiner deepens investments across its integrated downstream portfolio.
Within midstream, the company allocated $1.1 billion, including $700 million for growth projects and $400 million for sustaining spending. The funds are aimed at expanding pipeline capacity, fractionation assets, and gas processing in key U.S. producing basins.
“These projects will organically advance our integrated NGL wellhead-to-market strategy,” the company said, referring to its effort to move natural gas liquids efficiently from production areas to end markets along the Gulf Coast.
A significant portion of growth capital will go toward Phillips 66’s share of joint ventures, including Chevron Phillips Chemical and WRB Refining. Those ventures are building large petrochemical facilities on the U.S. Gulf Coast and in Ras Laffan, Qatar, with operations expected to begin in 2026.
CEO Cites Capital Discipline and Shareholder Returns
Chairman and CEO Mark Lashier said the higher budget reflects a balanced approach to growth and discipline as the company targets higher returns from core assets.
“The 2026 capital budget reflects our ongoing commitment to capital discipline and maximizing shareholder returns,” Lashier said. “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.”
Phillips 66 has positioned itself as an integrated downstream energy provider, combining refining, midstream logistics, chemicals and marketing. The company has expanded its midstream footprint through acquisitions and new infrastructure, including gas processing plants and pipeline expansions linking major basins to the Gulf Coast.
In 2023, Phillips 66 completed the acquisition of the publicly traded stake in DCP Midstream, giving it full ownership of the natural gas liquids operator and strengthening its presence in the sector.
Renewable Fuels Push Continues Amid Activist Pressure
Alongside traditional energy investments, Phillips 66 continues to advance renewable fuel projects. The company recently began commercial operations at the Rodeo Renewable Energy Complex in the San Francisco Bay Area, converting a former refinery into a facility producing renewable diesel and sustainable aviation fuel.
The complex uses waste-based feedstocks such as used cooking oil, fats, and greases and includes an integrated solar facility, positioning it as one of the world’s largest renewable fuel sites of its kind.
The capital increase comes as Phillips 66 faces pressure from activist investor Elliott Management, which has built a significant stake in the company. Elliott has called for a strategic review, including the possible sale or separation of the midstream business, arguing such moves could improve financial performance and shareholder returns.
Phillips 66 has said it remains focused on executing its long-term strategy while evaluating ways to enhance value for shareholders through disciplined investment and portfolio optimization.
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