2011: A Year of Milestone Achievements for Qatari Economy

Doha, December 31 (QNA) - 2011 was a record-breaking year for the Qatari economy, reaffirming Qatar's position as one of the world's fastest growing economy amid fears of the ongoing European sovereign debt crisis and the US budget deficit. In 2010 Qatar achieved a 16 percent growth rate, and is projected to reach 20 percent growth in 2011driven by Qatar National Vision 2030' (QNV 2030) aimed at cultivating a “knowledge-based economy." Qatar's nominal gross domestic is expected to jump from 547 billion riyals ($150 billion) this year to QR 775 billion in 2016, according the statistics announced by the first National Development Strategy (NDS) 2011-2016 meant to translate the QNV 2030 into specific actions and targets. The five year NDS predicts that the country's gross domestic investment will reach QR820bn. With record growth rates, the Qatari economy has pursued a path of development. In fact, Qatar's real GDP jumped by around 16.6 percent in 2010 while the GDP yearly growth reached 15.7 percent during 2006-2010. Qatar has developed a long-term programme of diversification into a more broadly based economy. Established as a key innovator in the global LNG market after achieving 77 million tonnes per annum (Mta) of liquefied natural gas (LNG) production capacity, Qatar succeeded during this year to launch a number of projects that would enhance its place as a major player in LNG and (Gas to Liquefied) GTL industries. Launched in November, the $10.3bn Barzan project, will able Qatar to produce 14 million tonnes of liquefied petroleum gas (LPG) yearly, four million tons more than current production average of LPG. The Barzan project will help meet growing domestic energy demand in the world's top liquefied natural gas exporter. Besides 1.4bn cubic feet a day of lean sales gas, which is mainly methane, Barzan s Ras Laffan facility will also produce about 29,000 barrels per day (bpd) of both field and plant condensates, 1,900 tonnes per day (tpd) of ethane, 860tpd of propane and 680tpd of butane,. The first Barzan gas production line is expected to become operational in 2014 with the second in 2015, with an initial production of 700 million cubic feet a day. Qatar achieved a great milestone in Gas to Liquids (GTL) industry where it reached a daily production capacity of 170,000 barrels of natural gas liquids by the time Pearl GTL project opened this year. Established at a cost of $19 billion, Pearl GTL is a world phenomenon in GTL technology as the biggest plant of that kind in the world. Pearl GTL has the largest capacity in the world to produce high-quality lubricating base oil in addition to being the world's biggest producer of normal paraffin that depends on GTL. The project can boast a daily production of 140,000 barrels of high-quality GTL, 120,000 barrels of LPG, capacitors and ethane in addition to the world's largest hydrocracking capacity in one place and the largest oxygen production volume in one place in the world. First phase of the project sees it daily producing about 70,000 barrels of GTL products and 60,000 barrels of natural gas liquids (NGLs) and ethane. Second phase of production is expected to start at the end of this year to take the project to its full production capacity by mid-2012. Creating a balanced industrial development is one of the significant goals of Qatar's energy sector. The country's energy sector is able to meet these goals by expanding and diversifying the industrial base and developing supportive industries as well as industries associated with basic ones in order to provide the state with diversified sources of income. Although the greater part of natural gas production is exported, expanding the production of value added materials is witnessing rapid growth with Qatar's annual petrochemicals production expected to to reach 19 million metric tons in the upcoming few years. Balanced industrial plans such as launching QAFCO-5 earlier this month were critical to getting closer to achieving that goal. The $3.2 billion project significance stems from the fact that reaching its full production capacity in 2012 will establish the facility as the world's largest producer of urea and ammonia in one location with QAFCO annual production of ammonia rising from 2.2 million metric tons to 3.8 million metric tons, and annual production of urea rising from 3 million metric tons to 4.3 million metric tons. Qatar's economic success story is a result of the country's commitment to formulating local and global partnerships and interpreting them to practical steps in a strategy based on enhancing partners' mutual benefit. A clear proof of the successful partnerships is the QR 11 billion deal Qatar Petroleum (QP) agreed with Barwa Real Estate for the sale of Barwa Financial District that is due to complete in 2015. One of the partnerships Qatari companies managed in 2011 is QP agreement with Royal Dutch Shell to establish a petrochemicals complex in Ras Laffan Industrial City (RLC). The project, worth $6.4 billion, includes a world-scale steam cracker with feedstock coming from natural gas projects in Qatar; a mono-ethylene glycol plant with annual production capacity of up to 1.5 million tons and 300 kilotons per annum of linear alpha olefins and another olefin derivative. Qatar has successfully managed national strategies and plans thanks to the continuous pursuit of partnerships that help transfer experiences through establishing giant projects locally and abroad to take advantage of Qatar's richness in gas and oil and guarantee a diverse economy for future generations. QP agreements with China National Petroleum Corporation (CNPC) and Royal Dutch Shell to build a refining and petrochemical complex in Taizhou, China stand out as a remarkable partnership. Economic feasibility studies started for the agreement that was signed in October. QP negotiated oil and gas projects abroad such as engaging in talks to take a stake in the Arctic LNG project of Yamal developed by second biggest Russian gas producer Novatek. Yamal project will develop the South Tambey field located in the Arctic area of Yamal peninsula. Qatari expansion in LNG field continued in 2011 with Qatari firms RasGas and Qatargas signing long-term deals with North American countries to supply them with LNG. Launching such a huge number of multi-billion USD projects is done according to well-advised economic feasibility studies that go in line with budgets, and put the projects away from investment risks according to the vision of HH the Emir. Qatar recorded its largest budget ever in 2011-2012 both quantitatively and qualitatively. On the quantitative side, Qatar's total estimated revenue increased to QR 162.474 billion, 27 per cent more than previous fiscal year, while total estimated expenditure was QR 139.93 billion, an increase of 19 per cent from figures of last fiscal year. Rises in expenses and revenues meant Qatar managed a surplus of QR 22.5 billion as price of a barrel of oil is set at $55 while calculating budgets of the two fiscal years. On the qualitative side, Qatar continued its steady progress towards sustainable development according to its developmental policy seen in finalizing LNG projects ahead of schedule to take the country's production capacity to 77 million cubic metric ton per annum compared to a total production capacity of 30 million cubic metric ton in 2008. Qatari government's backing of the banking system, and the increase in rates of public spending both helped push the qualitative side forward more. In addition to the familiar administrative division, budget for this year added functional division of public expenditure and distributed them to ten major sectors in order to enhance its current development to programs' budget based on a value-for-money principle, and focuses on outputs and outcomes. The budget took into consideration Qatar National Vision 2030 and NDS 2011-2016 as 41 per cent of it were assigned for public projects such as The New Doha Port Project, Qatar railways project, finalizing New Doha International Airport (NDIA), sewage and other infrastructure projects while giving priority to education and health sectors. According to statements by HE Minister of Economy and Finance Yousuf Hussein Kamal in October, Qatar's infrastructure spending is set to reach $150 billion in the upcoming five years. Non-oil-based infrastructure spending is expected to range from $120-140 billion and petroleum infrastructure spending being in the region of $30-40 billion with an annual average of $30 billion for expenses made in the two fields. One of the notable infrastructure projects currently underway is the new Mesaieed port which was launched in October. The project goes in line with the wise vision of HH the Emir who believes that comprehensive development is the main goal of achieving progress and prosperity for citizens. The QR 25.6 billion project, set to open in 2016, is considered one of the biggest seaports in the region and will be erected on approximately 26.5 square kilometers. The state works on strengthening existing facilities too with a new departure terminal, named Terminal B, opening last June at Doha International Airport. The new terminal was dedicated to foreign airlines while Terminal A was exclusively assigned for Qatar Airways. NDIA is set to open soon with an initial capacity of 24 million passengers annually and will increase to 50 million passengers at later stages of the $15 billion project. Last May, Ras Girtas Power Company launched as the biggest electricity generation project in Qatar. The Ras Laffan based project will produce 2730 megawatt of electricity and 63 million gallons of desalinated water, and will cost QR 14 billion (approximately $4 billion). Qatar General Electricity and Water Corporation (KAHRAMAA) awarded QR 3.6 billion worth of contracts to global firms in 2011 so as to develop and extend main electricity network and base stations. This comes as part of the tenth phase of developing electric transport in Qatar due to the increasing number of KAHRAMAA electricity clients who are estimated now at 272,000, 16 per cent more than 2010. In addition, Public Works Authority (Ashghal) signed six major consulting services contracts with global firms at a cost of more than QR 2 billion. Global firms will manage, design and supervise programs execution and redeveloping the internal roads network, sewage networks and infrastructure at a total cost of QR 40 billion. Qatar worked on expanding its global investments to establish a diversified economy. Qatar Holding LLC (QH) founded a subsidiary in Indonesia in 2011 with a capital of $1 billion in order to identify and assess investment opportunities particularly in commodities and natural resources among other sectors. QH acquired 9.9 per cent of European Goldfields in addition to future share options equal to 5 per cent of shareholders Aktor Construction International, which would take QH share in European Goldfields to 15 per cent. QH is expected to continue its investment, already considered an important investment portfolio in Qatar. QH major investments include China's Industrial Bank, Barclays PLC, Canary Wharf, Credit Suisse, Harrods, Iberdrola, Sainsbury, London Stock Exchange, Lagardere, Porsche and Santander (Brazil). Political and economic stability stimulated a positive atmosphere that encouraged foreign capital into Qatar. Meanwhile, Qatar's internationally acclaimed powerful banking system provided the capital needed to finance the projects. Qatar's classification increased in 2010 to AA to become the highest in the Middle East while it also continued to rank highly in business confidence index for investment in Qatar. This positive atmosphere has been reflected in encouraging foreign companies to open branches in Qatar, which led to increasing the number of companies affiliated with Qatar Money Center, which are licensed by the Authority for Qatar Money Center. The number of these companies reached about 128 foreign companies, including J.P. Morgan Chase & Co., which was licensed this year. The Authority for Qatar Money Center had announced the publication of its new system and tax regulations, where companies registered in the center are subjected to a 10 percent tax applied to profits gained from local sources. The Qatari economy s strength lies in stable banking and monetary bases and the governmental procedures taken by relevant entities to maintain a sound credit condition along with ensuring the availability of sufficient liquidity levels for banks while simultaneously trying to curb inflation through effective monitoring by Qatar Central Bank; inflation remained at around 2 percent throughout 2011 whilst the International Monetary Fund (IMF) had predicted inflation to be around 2.4 percent in 2011. The percentage of liquidity improved to a large extent in the Qatari banking sector during the first quarter of 2009, and remained at reasonable levels since then, as the sector managed to overcome issues of limited liquidity it faced in the second half of 2008. Qatar seeks to keep up with the developments such as to benefit the banking sector, as Qatar Central Bank issued a decision this year that mandates closing Islamic windows of commercial banks by the end of the year so as to enable monitoring and segregation of commercial and Islamic bank briefcases. In its decision-making, Qatar Central Bank keeps up with the international economic climate as it has intervened more than once this year to adjust the interest rate due to domestic considerations and international economic realities, and thus gradually reduced the primary interest rates during 2011. The government has taken several precautionary measures in order to minimize the impact of the world economic crisis on domestic banks through working to enhance banks liquidity and capital base, in addition to reducing financing costs and enhancing market confidence. Indeed, capital has been increased and assets purchased as precautionary preventive measures during the years 2009, 2010, and 2011 to enhance the banking system s strength, liquidity and flexibility. In 2011, Qatar Investment Authority purchased the remaining portion of the cost of banks shares, whose worth is 10 per cent based on what had been previously agreed upon, rendering the total purchase worth 20 per cent. Upon purchasing this portion, the gross amount of money transferred to banks reached 5.5 billion Qatari Riyals, which have been fully delivered to the banks involved, namely Commercial Bank, Doha Bank, National Bank, Qatar International Islamic Bank and Qatar Islamic Bank. The state of Qatar works to develop the financial sector as part of steps toward improving the performance of the Qatar stock market. And perhaps Qatar Central Bank’s announcement that procedures to float the national debt stocks for exchange within secondary markets of the Qatar stock market best testifies to that, as the floating of short-term bonds started last Thursday. During 2011, the Qatar stock market took a series of steps in order to enhance the development of the market infrastructure so as to meet the demands of Morgan Stanley corporation that the Qatari market’s designation as a developing market be reconsidered. Among the most prominent of these steps is the appointment of international nominee directors and applying the delivery-versus-payment (DvP) system, which was met with appreciation on the part of international investment corporations. The state of Qatar continues to support the private sector as it believes in partnership between public and private sectors in order to set in place a diverse economy that hinges on fixed bases. The most prominent step toward enhancing the private sector during the year 2011 was the founding of Qatar Development Bank last January and the Qatar agency for export development Tasdeer, the first of its kind nationwide as it contributes in a pivotal, effective manner to applying the policy of economic diversity and supporting private sector industries and exporting industries in the state of Qatar. It also helps guarantee the competitive ability of those industries; increase the export base; support Qatari exporters; and create a promising, unique opportunity for Qatari companies to proceed with their products and services toward new promising markets and to be open to the world with impunity vis-a-vis exportation risks. This is all for the sake of achieving sustainable development. Perhaps also among the most prominent steps in that arena have been starting workshops and training programs launched by Qatar Authority for Small and Medium Projects, whose budget allocation is 2 billion Qatari Riyals, and is part of the state’s direction toward developing the state’s business sector. This entity is considered an institutional pillar to advance small and medium projects in the state in order to provide for an appropriate environment that contributes to developing abilities of those who take innovative and creative initiatives to build various genuinely valuable projects that would be an added contribution to the national economy. The Qatari economy sparked international entities admiration, as the International Monetary Fund (IMF) noted in its report on results of discussing the fourth point, which relates to Qatar in 2011, that the year 2012 will present the Qatari economy with positive horizons. The IMF said that Qatar-related large investments in infrastructure projects and increasing the production of the conversion industries sector will pay for the growth of the real GDP without hydrocarbons, raising the figure to about 9 percent in 2011, while its growth will continue between nine and ten per cent after 2011. The IMF report expected that the real GDP growth rate will increase from 17 per cent in 2010 to 19 per cent in 2011. The report also noted the profits garnered by the Qatari banking sector, saying that this sector enjoys a good level of capital and remains profitable and strong, as capital sufficiency reached 22.3 per cent, while the average return on base reached 2.7 per cent and bad loans were at 2.3 per cent by the end of June 2011. And perhaps a testament to progress has been Qatar s hosting of international events and proceedings this year, as it hosted the 20th World Petroleum Conference (WPC). The first time to take place in the Middle East, it lasted five days and featured more than 6,000 participants, among whom were 30 ministers along with a number of executive officers and managers within the petroleum and gas industry sector. Also among notable events was the first summit for the Gas-Exporting Countries Forum, which was held to set in place dialogue between gas-producing and consuming countries and to enhance gas production worldwide. (QNA)