The aggregate capital expenditure (capex) of national oil companies (NOCs) in the Gulf Cooperation Council (GCC) region is expected to increase to USD 115-USD 125 billion in 2025-2027, up from the 2024 ratio of USD 110-USD 115 billion, S&P Global said.
As per the credit ratings agency’s report titled “GCC 2026 Energy Outlook: Capex, Capacity, Consolidation,” the main drivers will be capacity expansion plans in the UAE and Qatar, as well as capacity maintenance in Saudi Arabia. However, this level of spending is unlikely to strain the energy giants’ free operating cash flows substantially, even with lower oil prices and a global economic slowdown.
“In the UAE, state-owned energy group ADNOC is targeting a five-million-barrels-per-day increase in production capacity by 2027, while QatarEnergy is expanding its LNG production capacity in phases through its North Field expansion project. We expect capex to taper toward the second half of the decade as the capacity expansion completion dates approach,” the study noted.
Although NOCs’ capex requirements will remain elevated, S&P believes NOCs will adopt a more cautious stance on spending. This will defy the trend among the international oil companies, which, over the past 12-18 months, have generally announced downward revisions to their capex guidance, mainly to balance cash flow generation with their financial policy commitments.
The report further expects that, on average, over half of the GCC-based NOCs’ capex will remain focused on upstream activities, namely exploration and production.
“Domestic oil typically remains the core focus of capex, but the regional NOCs are also increasing their focus on gas and international operations,” the report observed.
In March 2025, XRG, a wholly owned subsidiary of ADNOC, acquired a 10% stake in Area 4 Mozambique for USD 881 million. Similarly, QatarEnergy is actively seeking and securing interests in Africa and South America. As per the ratings agency, these moves by GCC NOCs are increasingly aligned with their ambitions to expand their LNG and trading businesses on a global basis.
“On the other hand, a more cautious approach by NOCs on spending is likely to reduce rig demand, rationalise average day rates and weigh on the overall profitability of the region’s oil drillers. We think that oil drillers’ rating headroom could shrink as a result, but we do not expect any rating pressure in the short term. In addition, industry consolidation could help balance rig supply and demand and subsequently support day rates,” the report remarked.
“In addition, NOCs are aiming to achieve greater integration along the value chain and are leveraging their trading arms to make the supply of feedstock from upstream to downstream operations more reliable. Aramco’s downstream operations (manufacturing, marketing, refining, and processing) utilise more than 50% of the crude oil it produces (53% as of end-2024),” S&P concluded.