Qatar takes the long view as its economy booms

01 February 2010

Most of Qatar’s present energy industry investment programme will be completed this year. The next challenge is defining a long-term strategy for Qatar’s economy as a whole

Speaking at MEED’s Qatar Projects 2010 conference on 26 January, Qatar’s deputy premier and Minister of Energy & Industry Minister Abdullah al-Attiyah said that oil and gas production would rise from the equivalent of 2.5 million barrels a day (b/d) now to 5 million b/d in the future.

This will put Qatar among the world’s top 10 oil and gas producing nations. But it is already a heavy-hitter in global energy. When QatarGas 4 starts operating later this year, its total annual LNG capacity will be lifted to 77 million tonnes. This will underline Qatar’s position as the world’s largest LNG exporter and raise its share of the LNG market to more than 30 per cent.

The most significant start-up will be at the Pearl gas-to-liquids (GTL) plant, also in Ras Laffan. With capacity of 260,000 b/d capacity, it will be the world’s largest GTL plant by far. Shell’s $19,000 million investment in the project is the largest element of its massive commitment to Qatar. It is a 30 per cent shareholder in QatarGas and has joint ventures with Qatar in China and Singapore.

Other megaprojects to be completed this year include the Qatalum, the largest aluminium smelter ever launched, the 1.4 million tonne-a-year Ras Laffan olefin cracker and QChem II petrochemical complex in Mesaieed.

At the end of this year, Qatar will have completed since the start of 2009 one of the greatest energy investment programmes the world has ever seen, involving more than a dozen huge projects costing at least $50 billion.

Delegates at MEED’s conference were most interested in hearing what happens next. Al-Attiyah and other speakers provided clues. The North Field moratorium, which is designed to allow time for detailed studies of the true capacity of the world’s largest non-associated oil field reservoir, will continue until 2014. Qatar will in the meantime focus on debottlenecking of existing oil and gas facilities. The single new energy megaproject that has been recently announced is for a $6 billion joint venture petrochemicals complex in Ras Laffan with Exxon, partner with Qatar Petroleum (QP) in RasGas.

Qatar is now focusing on creating the domestic infrastructure necessary to support an economy that is projected to double to about $150 billion in not much more than five years. On present trends, Qatar’s dollar GDP in 2015 will be no less than 18 times larger than it was in 1995. This is the most explosive and sustained rate of growth recorded by any economy in history.

The first challenge is dealing with an extraordinary increase in population. Official figures show almost 1.6 million now live in Qatar. This is more than three times the figure 15 years ago. Almost half are construction workers who will return to their home countries in due course. The Qatar national masterplan is being prepared on the assumption that Qatar’s population in 2032 will rise to 2.4 million-2.6 million. Only a fraction will by then be construction workers.

Qatar, therefore, has to deal with a massive short-term population increase that is largely due to the need to import foreign labour on a temporary basis whilst simultaneously catering for the steady, long-term growth in the number of people who will mainly work in non-oil services.

The second long-term challenge is creating employment for Qatari nationals in non-oil sectors. The Qatar government is now looking at ways to stimulate light industry, IT and finance.

The third challenge is deciding how to manage economic development outside Doha. More than 80 per cent of Qatar’s total population lives in the capital. The number living in Dukhan, Qatar’s oil city; Ras Laffan, which mainly supports the gas industry and Mesaieed, Qatar’s principal industrial city, is expected to grow robustly. The government is also planning to address the needs smaller and older settlements like Wakra and Al Khor is now being recognised.

The need for a coherent national economic strategy is moving up the agenda. It will be addressed in the Qatar national development framework which should be published later this year. Much will depend upon what it contains, though it is not expected to answer every question. But good news is that Qatar is not only thinking big. It is thinking long-term too.

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