Strong oil prices will ally with a sustained rise in liquefied natural gas (LNG) exports to boost Qatar’s economy by nearly 14 per cent in 2010, one of the highest growth rates in the world, the Arab Monetary Fund (AMF) has said.
The Gulf country, a tiny oil producer but the world’s top LNG exporter, basked in a mammoth budget surplus of nearly QR43.5 billion in its 2009-2010 fiscal year ended March 31 thanks to high LNG exports, the Abu Dhabi-based AMF said in its quarterly economic and market bulletin for its 21 Arab member nations.
“The Qatari economy is expected to continue its strong growth this year and expand by nearly 14 per cent compared with nine per cent in 2009…this is because of higher oil prices and the steady expansions in gas exports as well as a sharp rise in capital expenditure,” the Arab League’s establishment said.
The report projected inflation in Qat5ar at as low as one per cent in 2010 compared to deflation rate of five per cent and a record rate of more than 14 per cent in 2008, when most Gulf oil producers reeled under high consumer prices.
Turning to the budget, the AMF noted that Qatar is pushing ahead with a massive post-crisis fiscal stimulus plan to keep its economy on track. It cited government data showing revenue during the 2010-2011 fiscal year, which started on April 1 this year, stood at QR127.5 billion and expenditure at QR117.9 billion, creating a surplus of QR9.7 billion.
“Expenditure was nearly 25 per cent higher than the budgeted spending for the previous fiscal year and this illustrates the government’s determination to pursue an expansionary fiscal policy and boost investment in infrastructure,” it said.
“The government budgeted a surplus of QR9.7 billion but the actual surplus is projected to be higher since oil prices have largely surpassed the $55 price assumed by the country for its current budget.”
As for the 2009-2010 budget, the AFM said it recorded an actual surplus of around QR43.5 billion, nearly 11.7 per cent above the previous surplus.
It said the surplus was achieved after revenue surged to a record high of about QR143.7 billion. Spending also grew by 8.9 per cent to around QR108.1 billion.
Qatar’s economy has recorded double digit growth rates in most of the past 10 years as a result of a rapid rise in its LNG exports.
According to the Saudi American Bank Group (SAMBA), LNG output surpassed Qatar’s oil production in the second half of 2009 and is expected to swell further when mega gas projects are completed by the end of next year.
“During the second half of 2009, LNG output overtook oil output, and production reached 850,000 bpd oil equivalent in January 2010…..according to official data, average LNG output rose 18.5 per cent in 2009 to 723,000 bpd,” SAMBA said.
It said further large gains are expected with output projected to average around 956,000 bpd this year, as another three 7.8 million tonnes a year capacity LNG mega trains start up, to add to those which came on stream last year.
Qatar, sitting up more than 25 trillion cubic metres of natural gas, is targeting an output of LNG of around 77 million tonnes by the end of 2011 and experts believe this will allow it to earn more from gas exports than from oil sales.
A steady rise in LNG exports over the past years have allowed the OPEC member to record large fiscal and current account surpluses despite a sharp increase in expenditure aimed at keeping high growth in its economy. Qatar has also become one of the richest nations in terms of GDP per capita income, which was estimated at more than $70,000 in 2009.
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 QR19.8 billion (Dh20 billion) in 2004 to about QR58.8 billion (Dh59.5 billion) in 2008. The income was earned from exports of 30.4 million tones 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.