Qatar shifts its project spending plans

28 April 2015

Falling energy prices have forced Doha to focus on infrastructure programme

The cancellation of the planned Industrial Desalination Water Facility (IDWF) is the latest nail in the coffin for Qatar’s industrial projects pipeline, which has been reduced by more than $14bn in the past seven months.

The planned independent water project (IWP) was designed to provide a substantial industrial water supply for Ras Laffan Industrial City, with much of it to be used for multibillion-dollar petrochemicals schemes. The cancellation of two major petrochemicals projects in recent months has dissolved the requirement for the capacity. The shelving of the water scheme also indicates that Qatar is not planning any major petrochemicals projects at Ras Laffan in the short to medium term.  

In early 2013, Doha announced that developing its petrochemicals sector was to form the central pillar of its economic diversification plans, and set out an ambitious target of boosting petrochemicals production to 23 million tonnes a year (t/y) by 2020, from 9 million t/y currently. The abandonment of plans for the $7.4bn Tasjeel and $6.4bn Al-Karaana projects mean this target is now unachievable.

Doha’s reluctance to push ahead with major energy projects reflects the significant changes in the international economic sphere, particularly in the energy sector, over the past 12 months. The price of oil and gas has dropped sharply, and, as the world’s largest liquefied natural gas (LNG) exporter, Qatar’s economy will feel the brunt more than most in the short term.

While the fall in hydrocarbons prices will have undoubtedly played a part in Qatar’s current diffidence towards investing heavily in its energy sector, Doha has other pressing priorities.

Qatar was awarded the mandate to host football’s 2022 World Cup on a pledge to invest $70bn-plus on a wide-ranging infrastructure programme. After a slow start, progress has been made in the past couple of years, with major awards on metro, port and road projects. However, much more still needs to be done.

With government coffers beginning to feel the impact of lower energy prices, Doha appears to be consolidating its accounts and prioritising delivering its ambitious infrastructure programme.  

A MEED Subscription...

Subscribe or upgrade your current package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications