Gulf national oil firms continue to ramp up spending, though with some refocusing: GCC national oil companies (NOCs) are expected to be bigger spenders than international oil firms over the next two years as they double down on renewables and downstream energy capacity, and continue to execute their diversification plans, according to an S&P Global report.

By the numbers: Gulf NOCs’ spending is estimated to average around USD 115-125 bn between 2025 and 2027, up from USD 110-115 bn in 2024, albeit with spending growth coming in at a more moderate rate than previous years.

Meanwhile, international oil players appear likely to rein in spending, continuing the downward trend seen over the past 18 months as weaker oil prices persist.

Gulf NOCs want to level up their value chain + upstream operations

The uptick in spending is coming primarily on the back of expansion plans in the UAE and Qatar, while the majority of Saudi Arabia’s spending is set to go toward maintenance costs. Gulf players’ focus is likely to stay on upstream activities, particularly production and exploration, as they pursue better value-chain integration through trading and a more reliable flow of feedstock from upstream to downstream operations.

REMEMBER- Adnoc recently signed off on a USD 150 bn capex plan through 2030, as it looks to expand production capacity to 5 mn bbl / d by 2027.

LNG + renewables are key for the next stage

Gulf players are increasingly directing investments toward gas projects and expanding their international footprint. Regional NOCs plan to continue increasing their renewables deployment and acquiring stakes in clean energy leaders, while expanding their low-carbon energy portfolios through increased low-carbon hydrogen capacity and LNG expansion. Diversification efforts will likely also involve boosting downstream activities through better integration and more investments in refineries.

REMEMBER- Adnoc has been a big spender on gas overseas: Adnoc’s low-carbon investment unit XRG acquired a 10% stake in Mozambique’s Rovuma basin and inked a production sharing contract for Turkmenistan’s Block I gas, and is planning to develop an LNG project in Argentina.

So, why is capex spending rising at a slower rate?

Major capacity expansion projects are nearing completion and production from recent megaprojects is set to come online soon. While overall capex will remain high due to investments in production capacity, moderating spending allows GCC NOCs to manage liquidity, protect credit quality, and reduce pressure on the oilfield services sector.

This reduction might negatively impact other elements of the industry: A tighter spending approach is expected to reduce rig demand, stabilize average day rates, and put pressure on oilfield service providers’ margins. On the other hand, industry consolidation may help rebalance rig supply and demand, providing support for day rates.

Looking ahead

GCC NOCs’ spending plans remain resilient to moderately lower oil prices in the short term, given adequate financial buffers to absorb price fluctuations while maintaining strong credit metrics.

For now, oil price forecasts are highly uncertain: Most analysts are expecting Brent to hover between USD 60 and USD 65 a barrel this year, though markets remain volatile amid geopolitical tensions and warnings of a potential supply glut.

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