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Tuesday, May 30, 2023

GCC countries can manage energy transition, report says

S&P Global Ratings said the Gulf Cooperation Council (GCC) economies have time to manage the global transition away from hydrocarbons, as the competitive advantage of its low-cost production compared to other producers should delay demand for its oil peak.

The region’s national oil companies (NOCs) are gradually aligning their strategies with national sustainable development goals and net-zero targets, according to a report published on Monday, “GCC National Oil Companies Can Now Absorb Energy Transition Impacts.” .

The report tests the impact of the energy transition on the credit quality of national oil companies, under what-if scenarios that overstate the incremental capex required by Gulf state oil companies.

It finds that credit metrics for NOCs (including both rated and unrated but publicly listed entities) remain resilient, with debt-to-EBITDA ratios averaging below 1x until at least 2025.

Rawan Oueidat, credit analyst at S&P Global Ratings, said: “The GCC NOCs are likely to be slower to adapt to the transition than their globally listed peers. We think their generally solid financial position will help them if needed. respond to higher spending.”

The second report, “Energy Transition: Competitive Advantage Protecting GCC Sovereignties”, focuses on the impact of changes in hydrocarbon prices on GCC economies, using simplified scenarios to test sovereign credit quality.

The results suggest that the GCC sovereigns will prove resilient for at least the next decade due to low production costs and the potential to increase production, which will make the region an attractive supplier even as oil plays an important role in the global energy mix. share fell.

Of the six GCC sovereigns included in the scenario, key ratios for the UAE, Qatar and Saudi Arabia show more stability in both price scenarios, while Kuwait, Oman and Bahrain show greater volatility. –TradeArabia News Service

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