Report: GCC national oil companies to boost capital expenditures by 5 percent in 2024
Date
4/16/2024 4:29:49 AM
(MENAFN) According to a report by S&P Global Ratings, the capital expenditures of national oil companies in the Gulf Cooperation Council (GCC) are projected to increase by 5 percent in 2024 compared to the previous year, reaching an estimated USD115 billion. However, this analysis does not factor in potential spending surges from recent expansion initiatives, such as the North Field West Project in Qatar, which could substantially elevate expenditures beyond current estimates.
The report underscores that while the anticipated growth in capital expenditure is moderate, Saudi Arabia's planned output reductions in alignment with the prevailing policy of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, are expected to dampen demand for drilling platforms, operational ratios, average daily production rates, and profitability within regional drilling firms, particularly in Saudi Arabia.
“We stress-tested the effect of a hypothetical 15-20 percent loss of total rig demand in the region on GCC drillers, and we estimate that the debt to EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of rated and publicly listed drillers based in GCC countries could increase by about 1x on average,” S&P Global Ratings Credit analyst Rawan Oueidat stated.
“At this point, we think that drillers’ rating headroom could shrink, but we don’t expect any short-term rating pressure,” he further mentioned.
The agency also expressed concerns regarding the future of capital expenditure in other oil and gas-producing countries within the Gulf Cooperation Council (GCC), especially following Saudi Aramco's decision to halt its proposed expansion of the Kingdom's maximum production capacity.
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