Oil Companies in the Gulf Set to Increase Capital Expenditures in 2024
In a recent report, it has been revealed that national oil companies in the Gulf Cooperation Council are projected to boost their capital expenditures by 5 percent in the year 2024, reaching a total of $115 billion.
The analysis conducted by S&P’s Global Ratings does not include potential spending increases from major projects like the North Field West Project in Qatar, which could significantly impact overall expenditures in the region.
Challenges Ahead for Saudi Arabia in Maintaining Production Levels
Saudi Arabia’s planned output cuts as part of the OPEC+ agreement may lead to a decrease in demand for drilling platforms and affect profitability for regional drilling companies, particularly in the Kingdom.
S&P Global Ratings Credit analyst Rawan Oueidat warned that a hypothetical 15-20 percent loss in rig demand could result in increased debt levels for GCC drillers, putting pressure on their credit ratings.
Uncertainty Looms Over Future Capital Expenditures in GCC
Following Saudi Aramco’s decision to halt its production capacity expansion plans, concerns have been raised about the future of capital expenditures in other oil-producing countries in the region.
Despite these challenges, oil capital expenditures are expected to remain high due to ongoing expansion projects in Qatar and the UAE, impacting oilfield service companies and drilling firms dependent on corporate spending.
Expansion Plans in UAE and Qatar to Drive Production Growth
Abu Dhabi National Oil Co. aims to increase its oil production capacity to 5 million barrels per day by 2027, while Qatar plans to boost its LNG output to 142 million tonnes annually by 2030.
Oil Prices and Geopolitical Factors to Influence Industry Outlook
The report forecasts oil prices to average $85 per barrel in 2024 and $80 per barrel in 2025, citing geopolitical tensions and OPEC+ production cuts as factors that will support prices and benefit oil companies in the Gulf region.