RIYADH: Gulf Cooperation Council, or GCC, energy players are expected to contribute marginally to the energy transition over the next five years, despite growing spending on sustainability, and a focus on environmental targets, according to S&P Global.
This comes as oil, gas, and chemical firms are more shielded from energy transition risks when compared to global peers, which results in a slower spending pace.
In addition, green and renewable projects are associated with low returns and overall profitability, which is also affecting the pace of spending.
While some GCC countries, such as the UAE, Saudi Arabia, and Bahrain, have announced commitments to net-zero carbon emissions, energy firms’ paths to meet those targets are less detailed and perspective, when compared to global peers.
Larger GCC players are expected to face the business and financial impact of the energy transition at a later stage, when compared to oil leaders in the market. This is attributed to those players’ abundant reserves, cashflow visibility, and cost-competitive profiles.
Moreover, these firms are partly owned by governments, and accordingly, are not urged to accelerate energy transition investments by active shareholders.
That said, even though green capital expenditure is rising, asset profiles are unlikely to shift soon, according to S&P Global.