A surge in production and prices boosted Qatar’s oil and gas sector by a staggering 63 per cent in the first quarter of 2010, sharply expanding the country’s GDP, according to official statistics.
From around QR32.99 billion (Dh33bn) in the first quarter of 2009, the country’s hydrocarbon sector shot up to QR53.79bn in the first quarter of this year, showed the figures by Qatar’s Statistics Authority.
The growth boosted Qatar’s oil and gas sector to its highest quarterly level in current prices and was a result of a sharp rise in crude prices and a steady increase in the country’s liquefied natural gas (LNG) exports.
The increase expanded Qatar’s nominal gross domestic product by nearly 22.7 per cent from around QR83.56bn in the first quarter of 2009 to nearly QR102.54bn in the first quarter of 2010.
The surge followed a contraction of around 11 per cent in the country’s full-year GDP in current prices to about QR357.8bn in 2009 from a record high of nearly QR402.9bn in 2008.
The nominal GDP surged in the first quarter despite a decline in some non-hydrocarbon sectors, mainly construction which dipped to around QR5.7bn in the first quarter of this year from QR7.3bn in the first quarter of 2009 because of lower activity after the global fiscal crisis.
Given its massive LNG exports, the largest in the world, Qatar has been among the fastest-growing economies over the past few years and is the only country in the Middle East to record high growth in the aftermath of the crisis.
Figures by the IMF and other establishments showed the Opec country’s real GDP jumped by an annual average of nearly 18 per cent during 2004-2009 and is projected to expand by a whopping 17.7 per cent this year.
But according to a key Saudi bank, growth is expected to sharply slow down in the following years when all LNG projects and completed and output stabilises.
“As the bulk of these projects will be completed by 2012, questions are being raised as to where longer-term growth will come from,” the Saudi American Bank Group (Samba) said in a recent study on Qatar.
“While the country’s extraordinary annual real economic growth rates of recent years are unlikely to be repeated, prospects for growth averaging around four per cent post 2012 appear promising.”
But the report noted that a surge in Qatar’s revenue due to the sharp rise in LNG exports would allow it to push ahead with major projects within its ongoing economic diversification strategy. It said the strategy is increasingly focused on infrastructure and human development with the aim of facilitating the expansion of its transport and services sector, including finance, tourism and health.
“Emphasis is being firmly placed on establishing a well regulated and liberal business climate within a stable macroeconomic environment,” it said.
“Over the next 3-5 years, the pursuit of this diversification agenda will itself generate strong growth momentum as large scale infrastructure projects are implemented – such as the new Doha airport and port, Qatar-Bahrain causeway, and integrated rail networks… however, as in other GCC states, challenges certainly exist. Competition in the region is strong in the financial, transport and tourism markets, and others have a head start.”
Estimates by the nation’s largest bank, Qatar National Bank (QNB) showed the surge in the country’s LNG production nearly tripled its gas income in three years, rising from around QR19.8bn in 2004 to about QR58.8bn in 2008. The income was earned from exports of 30.4 million tonnes of LNG in 2008, nearly 28 per cent of the country’s total exports.
QNB gave no figures for 2009 but said there was sharp rise in Qatar’s LNG export earnings because of higher output, which topped 44 million tonnes. It expected further growth this year as output continues to climb.
Official data showed LNG contribution to Qatar’s GDP overtook the oil sector for the first time last year following a surge in gas production as well as a sharp fall in oil prices and the country’s crude output.
Qatar launched mega LNG projects in early 1990s to tap its giant offshore North Field, the world’s largest reservoir of non-associated gas, formally estimated at more than 900 trillion cubic feet at the end of 2009.
The country is targeting LNG production of around 77 million tonnes by the end of 2011 but it has not ruled out more projects in the future, depending on demand.
The steady and rapid rise in LNG sales turned Qatar into one of the wealthiest nations in terms of GDP per capita income and allowed it to record large fiscal and current account surpluses.