Gulf Oil Corporations: Capital Spending Trends and Forecasts
The Gulf Cooperation Council (GCC) national oil corporations are projected to spend USD 115 billion in capital expenditures in 2024, marking a 5% increase from 2023. However, S&P Global Ratings’ research doesn’t consider potential major spending boosts like Qatar’s North Field West Project. Saudi Arabia’s planned output cuts, aligned with OPEC+ policies, may decrease demand for drilling platforms and impact regional drilling companies’ profitability. S&P predicts a potential 1x increase in debt to EBITDA for GCC drillers due to stress-testing against a 15–20% rig demand loss. Despite concerns about future investments post-Saudi Aramco’s capacity enhancement halt, capital spending in the region is expected to remain high, driven by Qatar and the UAE’s expansion plans.
Meanwhile, the rate and extent of investment could affect drilling companies and the oilfield service sector. UAE’s Abu Dhabi National Oil Co. aims to increase oil production capacity to 5 million barrels/day by 2027, while Qatar targets a rise in LNG production capacity to 142 million tonnes by 2030. The estimated oil price is USD 85/barrel for 2024 and USD 80/barrel for 2025, with OPEC+ production cuts and geopolitical factors likely to bolster prices and enhance Gulf oil corporations’ cash flows.