The
Qatari Economy
1.
Gross Domestic Product (GDP)
2. Public Finance
3. Balance of Payments
4. The Oil Sector
5. The Natural Gas Sector
6. Other Industrial Sectors
Qatar’s
successful economic diversification program continues to expand
rapidly with the development of projects to produce and export
natural gas in the form of LNG (Qatargas and RasGas), piped gas
(Dolphin), GTL (Oryx and Pearl), and investments in petrochemicals,
fertiliser and various other industries. However, the oil and
gas sector currently maintains its prominence as the largest contributor
to the overall GDP. The government’s current economic diversification
policy emphasises the optimal utilisation of Qatar’s large
reserves of natural gas for downstream industries and/or as feedstock
and also to further attract investment in the non-oil sectors
of the economy. Qatar’s diversification efforts, coupled
along with a buoyant oil-sector has led to rapid economic growth
and the emergence of Qatar as one of the richest countries in
the world in terms of GDP per capita. In the year 2006, GDP per
capita reached a record $57,350 by estimates it could reach as
high as $68,467 by the year 2008.
1. Gross Domestic Product (GDP)
Qatar’s nominal GDP growth continues at an impressive pace,
averaging 25.0% over the past five years (2002-2006). The oil
and gas sector as mentioned earlier is the principal component
of Qatar’s GDP and in 2006 accounted for 62% of overall
GDP, amounting to QR 118,707 million ($32,612 million). The non-oil
sector encompasses a broad spectrum of industries ranging from
primary industries such as agriculture to finance, insurance and
real estate, among others. According to figures published by the
Qatar Statistics Authority, Qatar’s nominal GDP grew by
an estimated 24.2% in 2006 to reach QR 191,909 million ($52,722
million). The primary factors contributing to the GDP growth trend
in 2006 were the 21.7% increase in the price of Qatar’s
crude oil, from $51.7 p/b in 2005, to $62.9 p/b in 2006, and increased
LNG exports totaling 25.1 million tons in 2006. For 2007, by estimates
a nominal GDP growth of 20.7%, with oil prices averaging $64.6
p/b for the first three quarters of 2007, and LNG exports expected
to reach 31.0 million tons. Qatar has traditionally had a low
level of inflation, but this has changed in recent years due to
the sustained increase in housing costs and the weakness of the
US dollar, to which the Qatari Riyal is pegged. Inflation averaged
6.0% over the past five years (2002-2006), with inflation at a
high of 11.8% in 2006.
2.
Public Finance
The state budget plays a vital role in the Qatari economy, as
public expenditure represents a large share of the total effective
demand, which is the main factor in achieving the Government’s
economic development goals. Fiscal policy is considered the core
of the overall economic policy, which aims to achieve full utilisation
of economic resources and to raise standards of living in Qatar.
Qatar’s prudent fiscal policies continue to receive acclaim
from sovereign ratings agencies, with the most recent upgrade
given by Moody’s in July 2007, wherein it raised the ratings
of Qatar to Aa2 from Aa3. Qatar has achieved a budget surplus
in each of the past seven fiscal years, totaling QR 68.5 billion
($18.8 billion).
The 2007/08 State Budget was the largest in Qatar’s history
and forecasts revenues to increase by 27.3% to reach QR 72,457
million ($19,906 milion), while total expenditures are projected
to increase by 20.4% to reach QR 65,713 million ($18,053 million),
resulting in a budget surplus of QR 6,744 million ($1,853 million).
The budget was based on an oil price assumption of $40.0 p/b.
The allocations for major public projects in the 2007/08 state
budget increased by 14.4% to reach QR 22,880 million ($6,286 million).
3.
Balance of Payments
Qatar has been enjoying consecutive Balance of Payments surpluses
since 1999, totaling QR 100,428 million ($27,590 million). In
2006, Qatar’s Balance of Payments surplus reached QR 19,800
million, according to preliminary figures released by the Qatar
Central Bank. Qatar Statistics Authority figures show that Qatar’s
exports increased by a substantial 32.2% in 2006, to reach QR
123,945 million, from QR 93,774 million in 2005. Crude oil accounted
for the largest export item in 2006, totaling QR 63,875 million,
followed by natural gas with QR 47,329 million. Qatar’s
importsgrew by 63.4% in 2006, to reach QR 53,911 million, mainly
as a result of the various energy sector, infrastructure and industrial
projects that are ongoing. Services and private transfers were
QR 35,604 million ($9,781 million) in 2006, and capital transfers
were QR 14,630 million ($4,019 million).
4.
The Oil Sector
Qatar’s main oil operations are carried out by state-owned
Qatar Petroleum (QP). QP produces oil on its own account from
one onshore and two offshore fields and from other fields through
Exploration/ Development and Production Sharing Agreements (EPSAs/DPSAs)
between QP and major international partners. Qatar’s total
oil exploration area is divided into 22 blocks covering a total
surface area of 43,426 square kilometres. According to QP, Qatar’s
oil reserves (including condensates) currently stand at 26.2 billion
barrels.
5. The Natural Gas Sector
Qatar currently has the third largest natural gas reserves in
the world, after Russia and Iran, estimated at over 910 trillion
cubic feet (tcf). These reserves are located in the North Field
which lies towards the North-East of the main land, extending
over an area of approximately 6,000 square kilometres, predominantly
underlying the territorial waters of the State of Qatar. QP has
initiated and developed two major LNG projects with foreign shareholders
for the purpose of utilising the North Field gas for exports in
the form of LNG. These projects are Qatargas and RasGas. Expansion
of LNG facilities through RasGas II, Qatargas II, RasGas 3, Qatargas
3, and Qatargas 4 is being pursued to meet additional export opportunities.
QP has also entered into joint venture agreements for further
utilising the natural gas resources, in the form of globally marketable
liquids (GTL).
6.
Other Industrial Sectors
In addition to its roles as the basis for the LNG industry, and
as a fuel input for power generation, natural gas is used in a
wide range of industries as feedstock to produce various value-added
products for both domestic consumption and exports. These projects
among others inlcude QAFCO, QAPCO, QVC, QAFAC , Q-Chem, Qatofin,
Ras Laffan Ethylene Cracker, Linear Alkyl Benzene and Qatalum.
