GCC ENERGY INVESTMENT OUTLOOK REMAINS RESILIENT IN 2026

Aggregate investment by national oil companies (NOCs) across the Gulf Cooperation Council (GCC) is set to remain elevated over the next two to three years, even as oil prices soften and global peers scale back spending, according to a new report by S&P Global Ratings.

In its GCC 2026 Energy Outlook: Capex, Capacity, Consolidation, S&P Global Ratings said GCC NOCs are expected to spend an average of $115bn–$125bn annually between 2025 and 2027, driven primarily by production capacity expansion and, to a lesser extent, investments in lower-carbon energy sources

While spending levels remain high, the pace of capital expenditure growth is expected to moderate compared with previous years, as production from major upstream and LNG projects begins to come on stream. This contrasts with international oil companies, where capex is forecast to remain flat or decline in 2026 amid lower oil prices and tighter capital discipline.

Capacity expansion remains the priority

According to the report, capacity expansion in the UAE and Qatar, alongside capacity maintenance in Saudi Arabia, remains the principal driver of spending. ADNOC is targeting an increase in oil production capacity to five million barrels per day by 2027, while QatarEnergy continues to expand LNG output through its North Field expansion programme.

Despite these commitments, S&P Global Ratings expects GCC NOCs to adopt a more cautious spending approach as mega projects move into the production phase. Even so, the agency does not expect this level of investment to materially strain free operating cash flows, given strong balance sheets and relatively low leverage across most GCC NOCs.

“We expect the ratings on most NOCs to remain resilient even if moderately lower oil prices reduce their cash flows, as global oil demand continues to rise steadily,” said S&P Global Ratings credit analyst Rawan Oueidat.

Beyond upstream oil, GCC NOCs are increasingly directing capital toward gas, LNG and less carbon-intensive energy sources, in line with national energy transition strategies and sustainability agendas. The report highlights growing investments in LNG capacity, international gas assets, renewable energy and low-carbon technologies, even though these still represent a smaller share of overall capex.

Strong cash generation from upstream operations is expected to continue underpinning these diversification efforts, allowing NOCs to expand clean-energy portfolios while maintaining credit quality.

Implications for oilfield service companies

While elevated capex supports overall activity levels, S&P Global Ratings cautioned that a more measured approach to spending by GCC NOCs could have downstream implications for oilfield service providers, particularly drilling companies.

The report noted that a moderation in spending growth is likely to reduce rig demand, rationalise average day rates, and weigh on the profitability of regional oil drillers, even as utilisation rates remain relatively high due to limited new rig supply.

“We think that oil drillers’ rating headroom could shrink as a result, but we do not expect any rating pressure in the short term. Industry consolidation could help balance rig supply and demand and subsequently support day rates,” Oueidat commented.

S&P Global Ratings added that earnings visibility, backlog strength and consolidation will remain key factors in assessing the credit profiles of regional drilling companies, particularly amid continued sensitivity to oil price movements.

Despite softer oil prices and slower capex growth, the report concludes that GCC NOCs are well positioned to absorb market volatility, supported by conservative financial policies and strong liquidity buffers. Even under a more challenging macroeconomic environment, their spending plans are unlikely to trigger credit stress in the near term.

However, for oilfield service providers, particularly drillers, the outlook remains more mixed, with weaker pricing power and heightened exposure to changes in upstream investment decisions likely to shape sector performance over the medium term.

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2026-01-20T02:09:41Z