Qatar: Pipelines to succes

Aired June 2006

Small in size but enormous in value… Qatar thinks big. It has achieved within decades what other countries has taken centuries to accomplish. .

Since 1995, Sheikh Hamad bin Khalifa al-Thani has been the ruler of Qatar. Sheikh Hamad has implemented several changes in policy, including a limited political liberalization creating an elected council and giving women the right to vote.

At the moment, Qatar is undergoing a period of gradual political change, set in motion by a referendum in 2003. This highlighted almost universal public support for the establishment of the country’s first permanent constitution.

Qatar is located in the hub of the gulf region, and being a peninsula gives it longer shorelines and, as a result, more maritime access routes to the world. The Qatari economy is market oriented; and the State continually enacts and updates legislation to bolster the trend of economic openness towards all countries of the world.

ECONOMY & COMMERCE

Over the past 10 years, Qatar has progressed substantially in various economic and social fields. Its national government policy has continually encouraged the principles of a free and market oriented nation. This is clearly reflected in the country's economic plan. It places international economic dynamics and political developments on as high a priority scale as the best interests of the national economy.

Because of its excellent relationships with its neighbors and it being recognized as a gateway to the wider business world, Qatar is increasingly becoming the major vessel for business flowing through the GCC.

In order to facilitate economic diversification, the State places the country’s infrastructure, such as roads, utilities, ports and telecommunications, high on its list of priorities. The long-term goal is to attract foreign investments and help increase and diversify the sources of national income.

Based on an Emiri decree, an Ocotber 2000 investment law now alleviates the region’s 49 percent foreign ownership restriction, allowing full shareholding of foreign investments in a multitude of sectors. This provides the investments geared to develop the industries or provide a public utility or service that serves the best interests of the community.

With the upward revision to the oil price forecast, the outlook for Qatar’s external position has strengthened from an already extremely robust one. Exports rose by approximately 30% in 2004, and another 45% in 2005 to reach an estimated $24.9 billion US dollars. Qatar’s trade account will continue to record substantial surpluses.

FINANCE

With Qatar successfully established as a promising business destination, creating a hub for financial services was the next logical step to growth.

The opening of the Qatar Financial Centre offers the world’s international financial services community an exciting new window. Through this they can participate in the generation of truly international business and share in the enormous wealth being created in the Gulf region.

Several elements make doing business in the Qatar Financial Centre a low risk proposition. The direct costs of the Qatar Financial Centre are designed to match and support the growth of the companies within.

Low political risk, coupled with excellent country and financing risk evaluations from major ratings agencies, mean that Qatar is unparallelled in terms of opportunities for generating revenue. With unprecedented levels of economic growth and a significant volume of committed investment in the immediate pipeline, the prospects for financial service companies to get involved range across the entire spectrum of financial service activities.

The government of Qatar has outstanding experience in key areas of financing, including sovereign debt issuance, issuance of Sharia’s compliant bond, known as Sukuk, and project financing.

ENERGY

Qatar has proven recoverable oil reserves of 15.2 billion barrels. In 2005, Qatar's average output of crude oil was estimated at 790 thousand barrels per day.

But another bigger and more lucrative source of energy lies beneath this tiny country. In 1971, Qatar discovered it was sitting on 6% of the world’s natural gas reserves. Since then, work has been in progress to exploit this newfound source of wealth.

Most of Qatar’s natural gas is located in the North Field, the largest unassociated gas field in the world. Spanning over an area of 3700 square miles, the field holds recoverable reserves of over 380 trillion cubic feet of natural gas.

QatarGas and RasGas are the two Qatar Petroleum subsidiaries, which share the North Field’s reserves for LNG production. Rasgas is Qatar's second LNG project, of which Qatar Petroleum and Exxon Mobil are the two majority shareholders.

With oil and LNG export levels secured for years to come, Qatar’s energy sector is exploring its options to the fullest.

The leadership’s policy for economic diversification has led to a surge in investment in projects for the export of LNG and petrochemicals. Developments in the non-oil energy sector will be the main contributor to economic growth, as continued rapid expansions of Qatar’s LNG and petrochemical industries result in steep increases in export volumes. Qatar’s original markets for its LNG exports were the world's two largest LNG importers, Japan and South Korea.

With such vast reserves of natural gas, Qatar has also been exploring the development of Gas-to-Liquids projects. Qatar Petroleum and South Africa’s Sasol joined forces to create ORYX GTL. Pearl GTL, another joint venture between QP and Shell, is an even bigger project in both size and capacity.

Generating economic diversification has set Qatar on the path. The global economic corridor may soon be fast tracking its way to the model economy that is Qatar.