Qatar - Economy

Oil formed the cornerstone of Qatar's economy well into the 1990s. In 1973, oil production and revenues increased sizably, moving Qatar out of the rank of the world's poorest countries and providing it with one of the highest per capita incomes. Qatar has one of the fastest growing economies in the world and has the highest per capita income in the world. In 2007, Qatar's per capita income of nearly $67,000 was the fifth-highest in the world. Qatar’s economy is projected to slow down sharply in 2013 after recording one of the world’s highest growth rates following the completion of major gas projects. Growth slowed down to an estimated 6.3 percent in 2012 and is expected to continue its downward trend to reach 4.9 percent in 2013

A significant part of Qatar’s surpluses have been invested abroad through the Qatar Investment Authority (QIA) whose aim is to strengthen the country’s economy by diversifying into new areas and reducing Qatar’s reliance on hydrocarbons revenue. The QIA, headed by the Prime Minister, Sheikh Hamad bin Jassim bin Jabor Al Thani, has a number of subsidiaries including Qatari Diar, which was set up in 2004 to invest in real estate projects both in Qatar and abroad. Government efforts to diversify the economy have led to the establishment of petrochemical, oil refining and fertiliser industries, as well as the growth of Doha as a regional conference center and the establishment of Qatar Airways and the Qatar Foundation.

Qatar's economy suffered a downturn from in the mid-1990s. Lower Organization of Petroleum Exporting Countries (OPEC) oil production quotas, a fall in oil prices, and the generally unpromising outlook on international markets reduced oil earnings. In turn, the Qatari Government cut spending plans to match lower income. The resulting recessionary local business climate caused many firms to lay off expatriate staff. With the economy recovering in the late 1990s, expatriate populations have grown again.

Before the discovery of vast oil and gas reserves, Qatar’s economy depended largely on the pearling industry. In 1935, a 75-year oil concession was granted to the Qatar Petroleum Company, a subsidiary of the Iraq Petroleum Company, which was owned by Anglo-Dutch, French, and U.S. interests. High-quality oil was discovered in 1940 at Dukhan, on the western side of the Qatari peninsula. However, the start of WWII delayed exploitation of Qatar's oil resources, and oil exports did not begin until 1949.

Qatar was the second-smallest crude oil exporter among OPEC members in 2012, ahead of only Ecuador. As of 2007, oil production was around 835,000 barrels a day (bpd), and was expected to reach 1.1 million bpd by 2009. Qatar produced nearly 1.6 million barrels per day (bbl/d) of liquid fuels (crude oil, condensates, natural gas plant liquids, gas-to-liquids, and other liquids) in 2013, of which 730,000 bbl/d was crude oil and the remainder was non-crude liquids. At the current production pace, oil reserves were expected to last more than 40 years. Moreover, Qatar's proven reserves of gas are the third-largest in the world, exceeding 900 trillion cubic feet (14% of the world's total proven gas reserves). Qatar shares with Iran the largest single non-associated gas field in the world, the North Field. Qatar is now the world's largest producer of liquefied natural gas (LNG), with a capacity of more than 31 million metric tons per annum (mmta), and it expected to reach 77.5 mmta of LNG exports by 2010. By 2010, Qatar accounted for one-third of the world's LNG supply.

Qatar was the world's fourth largest dry natural gas producer in 2012 (behind the United States, Russia, and Iran), and has been the world's leading liquefied natural gas (LNG) exporter since 2006. Qatar has invested heavily in world class Liquefied Natural Gas (LNG) facilities, including a deep-water port at Ras Laffan to exploit the North Dome gas field. This field is the world’s largest non-associated gas field, holding between 14 and 16% of world reserves. At current planned rates of extraction the field will last for over two hundred years. Qatar is already the leading global supplier of LNG and in December 2010 celebrated reaching its target of 77 million tonnes of output per year. There are two national gas companies - Qatargas and RasGas.

The 1991 completion of the $1.5-billion Phase I of the North Field gas development project strongly boosted the economy. In 1996, Qatar began exporting liquefied natural gas to Japan. Further phases of North Field gas development costing billions of dollars are in various stages of planning and development, and Qatar has concluded agreements with the U.A.E. to export gas via pipelines and to Spain, Turkey, Italy, the U.S., France, South Korea, India, China, Taiwan, and the U.K. via ship. However, the government has halted any further expansion of gas production until 2010, as it assesses its plans for future exploitation of the field.

Qatar's natural gas liquefaction facilities and related industries are located in Ras Laffan Industrial City, site of the world's largest LNG exports of more than 31 million metric tons per year. Qatar's heavy industrial base, located in Messaieed, includes a refinery with a 140,000 bpd capacity, a fertilizer plant for urea and ammonia, a steel plant, and a petrochemical plant, and several new petrochemical plants will be built in the coming years. All these industries use gas for fuel. Most are joint ventures between U.S., European, and Japanese firms and the state-owned Qatar Petroleum (QP). The U.S. is the major equipment supplier for Qatar's oil and gas industry, and U.S. companies are playing a major role in the development of the oil and gas sector and petrochemicals.

Historically, most of Qatar's LNG exports were part of long-term, oil-indexed contracts, but over the past few years the country began to shift to more short-term contracts and spot-market sales. In 2012, Qatar exported over one quarter of its LNG as short-term or spot-market sales (19.9 MMt according to QNB), accounting for more than a third of short-term and spot-market sales in the world.

While Qatar's overall natural gas production is still dwarfed by that of Russia, the flexibility of LNG will help Qatar emerge as a secondary source for Europe and an important swing supplier, thereby furthering the diversity and security of supply for the continent. Qatar's primary customers have been South Korea, Japan, and India, the three countries together accounting for almost 77% of total exports in 2008. Long-term contracts have tied up most of Qatar's current production, pushing Qatar to increase production as it looks to expand its market penetration. While the overwhelming majority of Qatar's LNG is now exported to Asia, Qatar's eventual goal is to sell about one-third of its LNG to each of the world's major consuming regions --Asia, Europe, and North America -- to diversify its customer base and hedge against a drop in demand in any one region. Qatar's use of tankers to supply LNG, as opposed to the Russian pipelines that have made Europe's LNG supply vulnerable to supply interruptions arising from political disputes, make Qatar an attractive alternative as a swing supplier. While the Nabucco gas pipeline in Turkey would make possible a new transit route for Iranian and Russian naural gas to Europe, it can also become an access point for Qatari LNG into Europe if proper LNG faclities are built.

From a technical point of view, Qatar is the only country that can theoretically supply enough gas to compensate for Gazprom in case of economic sanctions against Russia. However, there are several factors that make such a scenario virtually impossible. A big part of Qatar's exports are directed to the Asian markets where prices are 30-50 percent higher than in Europe. Redirecting those export flows will require some serious compensation from Europe and it is obvious that no European country will agree to pay 30 to 50 percent more for gas just to spite Russia. Moreover, Qatar can only deliver gas to Europe as LNG, making it quite expensive. The price is the reason why Qatar has failed to gain significant market share in Europe during the last several years. Any attempt to radically increase the amount of LNG imports will also require substantial investment in LNG terminals in Europe and significant refurbishment of the European gas transport system.

Qatar's food security policies and strategies reflect the rapidly growing intent by the Amir and Crown Prince to make food security a key national priority for Qatar, not just in terms of Qatar's own food security needs, but in terms of the food security needs of the Arab region. Qatar is investing in agricultural land or businesses in several countries, including Kenya, Camobdia, Vietnam, Pakistan, Sudan, Syria, Jordan, Malaysia, and Nigeria, according to press reports. These deals are often planned as quid pro quos; in Kenya, for example, press reports indicate that Qatar wants to lease 40,000 hectares of land in exchange for building a new port in Kenya. While Qatar's National Food Security Program's (QNFSP) short-term focus is on the State of Qatar and building the domestic agricultural sector to diminish reliance on imports, the strategic goal of QNFSP is to export the technologies developed in Qatar to countries throughout the MENA region, and other areas with arid climates.

The country's economic growth has been stunning. Qatar's nominal GDP, estimated to be $128 billion for 2010, has recently been growing at an average of 15%, and the 2010 growth rate was estimated to be 19%. Qatar's 2007 per capita GDP was $67,000, and by 2012 was the highest in the world. The Qatari Government's strategy is to utilize its wealth to generate more wealth by diversifying the economic base of the country beyond hydrocarbons.

Qatar pursues a vigorous program of "Qatarization," under which all joint venture industries and government departments strive to move Qatari nationals into positions of greater authority. Growing numbers of foreign-educated Qataris, including many educated in the U.S., are returning home to assume key positions formerly occupied by expatriates. In order to control the influx of expatriate workers, Qatar has tightened the administration of its foreign manpower programs over the past several years. Security is the principal basis for Qatar's strict entry and immigration rules and regulations.

South Asians from India, Sri Lanka, Nepal, Bangladesh, and Pakistan account for an estimated 800,000 to 900,000 of the expatriate population and work in a variety of sectors, including construction, import/export, labor, business, and information technology. The Indian expatriate community remains the largest in Qatar. The Nepalese community grew from 200,000 to 300,000 during 2008, and is now the second largest. Several Arab countries' nationals have a major presence in Qatar, including Egypt, Palestine (typically long-term residents), Yemen, Jordan, Lebanon, Sudan, and Syria. Expatriate Arabs constitute an estimate 300,000 to 400,000 of the population. They tend to work in engineering, accounting, import/export, education, energy, services, hotels, and beauty. An estimated 200,000 East Asians live in Qatar. They are mainly from the Philippines, Indonesia, Japan, South Korea, and China. East Asians are prominent in the fields of mechanical technology, energy, construction, engineering, housekeeping, and labor. There are an estimated 10,000 to 20,000 Iranians living in Qatar. There are as many as 40,000 Africans living in Qatar.

Europeans account for an estimated 20,000 to 25,000 of the expatriate population. They are generally citizens of the United Kingdom, France, Germany, Spain, and Turkey. Europeans work in energy, shipping, engineering, construction, management, education, finance, and investment. There are at least 10,000 to 12,000 expatriates from North and South America (excluding the U.S.) residing in Qatar. The American citizen population continues to grow, with the growth in the energy and educational sectors and with the increased U.S. military presence. There were approximately 8,000 American citizens registered with the U.S. Embassy in Doha in 2008, compared with only 1,500 in 2000. At any given time, the Embassy estimates that there are approximately 15,000 private American citizens present in Qatar.

The rights of noncitizen workers continue to be severely restricted. Some employers mistreated foreign domestic servants, predominantly those from South Asia, Indonesia, and the Philippines, by withholding wages or paying wages late. Some cases involved rape and physical abuse. Some foreign embassies provided temporary shelter to their nationals who left their employers because of abuse or disputes before transferring the cases to local government officials. According to these embassies, the majority of cases were resolved within 48 hours by their mediation efforts between employee and employer. Those not resolved within 48 hours were transferred to the Criminal Evidence and Investigation Department of the MOI for a maximum of seven days. Cases not resolved within seven days were transferred to the labor court, a special section of the first instance civil court.