GCC National Oil Companies' Strong Finances Enable Net-Zero Transition, Says S&P Global
S&P Global reports that national oil companies (NOCs) in Gulf Cooperation Council (GCC) countries have the financial capacity to make the necessary investments for a net-zero transition while maintaining strong credit ratings.
Despite facing similar energy transition risks as global counterparts, the strong financial positions of GCC NOCs will help mitigate these impacts.
According to Rawan Oueidat, a credit analyst at S&P Global Ratings, GCC NOCs have sufficient financial buffers and competitive advantages to absorb the additional investments required to keep up with global peers and preserve their credit ratings over the next five years.
The text discusses the findings of a report by S&P Global that suggests Gulf Cooperation Council (GCC) National Oil Companies (NOCs) need to invest between $15 billion and $25 billion annually in low-carbon projects to keep pace with their global listed peers.
Despite these investments, the NOCs' debt to EBITDA ratio is expected to remain below 2.0x on average.
The report also indicates that most of these projects can be funded internally by the NOCs without relying on external financing sources.
S&P Global also mentioned that banks and capital markets will contribute to funding the energy transition in the regional countries, with the GCC banking systems having the capacity to cater to the NOCs' funding needs for low-carbon investments.
The report reveals that while NOCs (National Oil Companies) in the GCC countries have robust balance sheets, they are mostly financed outside local banking systems.
The firms need to be cautious about investment needs versus dividend distributions.
Major NOCs like Saudi Aramco and Abu Dhabi National Oil Co. have set net-zero targets for 2050 and 2045, respectively.
S&P Global also mentioned that oil firms in the region have made progress in ESG (Environmental, Social, and Governance) disclosures, but they still trail behind global counterparts, particularly in reporting scope 2 emissions.
The report reveals that many NOCs (National Oil Companies) in the Gulf Cooperation Council (GCC) region have not disclosed their scope 3 emissions.
Scope 2 emissions are those generated from purchased energy, while scope 3 emissions are indirect emissions in a company's value chain.
Reporting scope 3 emissions is considered complex and challenging due to their indirect nature.
According to Rawan Oueidat, a credit analyst at S&P Global Ratings, GCC NOCs have sufficient financial buffers and competitive advantages to absorb the additional investments required to keep up with global peers and preserve their credit ratings over the next five years.
The text discusses the findings of a report by S&P Global that suggests Gulf Cooperation Council (GCC) National Oil Companies (NOCs) need to invest between $15 billion and $25 billion annually in low-carbon projects to keep pace with their global listed peers.
Despite these investments, the NOCs' debt to EBITDA ratio is expected to remain below 2.0x on average.
The report also indicates that most of these projects can be funded internally by the NOCs without relying on external financing sources.
S&P Global also mentioned that banks and capital markets will contribute to funding the energy transition in the regional countries, with the GCC banking systems having the capacity to cater to the NOCs' funding needs for low-carbon investments.
The report reveals that while NOCs (National Oil Companies) in the GCC countries have robust balance sheets, they are mostly financed outside local banking systems.
The firms need to be cautious about investment needs versus dividend distributions.
Major NOCs like Saudi Aramco and Abu Dhabi National Oil Co. have set net-zero targets for 2050 and 2045, respectively.
S&P Global also mentioned that oil firms in the region have made progress in ESG (Environmental, Social, and Governance) disclosures, but they still trail behind global counterparts, particularly in reporting scope 2 emissions.
The report reveals that many NOCs (National Oil Companies) in the Gulf Cooperation Council (GCC) region have not disclosed their scope 3 emissions.
Scope 2 emissions are those generated from purchased energy, while scope 3 emissions are indirect emissions in a company's value chain.
Reporting scope 3 emissions is considered complex and challenging due to their indirect nature.
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