Oil and gas: MENA capital spending unlikely to reach pre-pandemic levels for years | ZAWYA MENA Edition

Oil and gas: MENA capital spending unlikely to reach pre-pandemic levels for years | ZAWYA MENA Edition

Capital spending on oil and gas in the MENA region is set to rise, in line with the global recovery from COVID-19 and the unwinding of the OPEC+ deal, said Fitch Solutions in a report.

However, it will be many years until capex can recover to its pre-pandemic highs.

Few of the region’s national oil corporations report on capital expenditure (capex), but regional giant Saudi Aramco has indicated that it will raise its spending by 30 percent in 2021, to around $35 billion. “That said, this remains far below the $40-45 billion that was its guidance prior to the coronavirus,” the report said.

Spending and production outlooks will continue to diverge within the region, as the core GCC countries increasingly outperform the rest of the region. Saudi Arabia, the UAE, Kuwait and Qatar boast large and low-cost resource bases.

In light of spending pullbacks elsewhere, the four are well-positioned to regain global market share over the coming decade, driving robust spending growth, according to Fitch.