Key Report Points: Oil Prices Decline, Investment Plans Still "Rise"
S&P Global's latest report baseline assessment is: The collective capital expenditure of Gulf Cooperation Council (GCC) national oil companies (NOCs) will continue to rise. Their calculations show that the total capital expenditure of approximately $110 billion-$115 billion in 2024 may rise to an annual average of $115 billion-$125 billion during 2025-2027.
The report also emphasizes that even if a slight drop in oil prices squeezes cash flow, most companies' credit ratings remain resilient, supported by relatively stable demand expectations and project advancement pace.
Growth Drivers: Expansion, Maintenance, and the "Second Curve of Natural Gas"
Regarding driving factors, the report attributes the upward trend in capital expenditure mainly to three lines:
- UAE and Qatar are promoting capacity expansion;
- Saudi Arabia prioritizes capacity maintenance as a key expenditure;
- In terms of oil and gas structure, there is an increased investment in natural gas and LNG, while also enhancing overseas expansion.
Specifically, ADNOC plans to increase daily production capacity to 5 million barrels by 2027; Qatar Energy is gradually enhancing LNG capacity through the expansion of the North Field.
Contrast with International Oil Companies: One Side "Reducing the Balance Sheet," the Other Side "Increasing"
The report notes that over the past 12 to 18 months, some international oil companies have generally lowered capital expenditure guidance, seeking a balance between cash flow, shareholder returns, and financial discipline; while GCC state oil companies' investment curve leans more towards "counter-cyclical advancement."
However, this does not mean unconditional expansion. S&P Global states: Faced with high expenditure demands, GCC state oil companies are becoming more cautious about spending itself, emphasizing project prioritization and pace control.
Fund Flows: Upstream Remains the Main Battleground, Overseas and Trade Chains Extend Concurrently
Structurally, S&P Global expects over half of the capital expenditure by GCC state oil companies will still be directed upstream (exploration and production), with expansion remaining the core theme.
Meanwhile, overseas assets and the natural gas landscape are expanding rapidly. The report mentions that ADNOC's wholly-owned subsidiary XRG will complete the acquisition of a 10% interest in Mozambique's Block 4 in 2025 (for approximately $881 million); Qatar Energy is also searching for and acquiring stakes in Africa and South America.
These actions are collectively aimed at creating a longer trade chain around LNG and trade businesses, and improving the reliability and integration capability of raw material supply from upstream to downstream through trade departments.
Impact Analysis: Reevaluating the "Foundation" of Oil Services Prosperity, LNG Supply, and Credit Pricing
For the market, this outlook brings at least three insights:
- Oil Services and Engineering Chains: If the annual expenditure center of $115 billion-$125 billion is established, the "chassis" of Middle Eastern oil service, EPC, and equipment orders will be more stable, but the pace will be more project-oriented rather than a full sprint.
- LNG Supply Curve: The increased investments by Qatar and ADNOC in natural gas/LNG mean that global LNG new supply and trade flows may still be priced around Middle Eastern expansion in the coming years.
- Credit and Fiscal Buffers: The ability to maintain investment plans even under pressure on oil prices is often interpreted as a "confidence demonstration in fiscal and financing capabilities," and will also affect external investors' anchoring methods of sovereign and state enterprise credit spreads.
