Economy of Qatar
The economy of Qatar is one of the highest in the world based on GDP per capita, ranking generally among the top ten richest countries on world rankings for 2015 and 2016 data compiled by the World Bank, the United Nations, and the International Monetary Fund. Qatar advocates for a mixed economy system. The country's economy has grown despite sanctions by its neighbors, Saudi Arabia and the United Arab Emirates. Mainly because the country exports primarily to Japan, South Korea, India and China, making the sanctions effectively redundant as neither Saudi Arabia nor the United Arab Emirates have imposed trading penalties such as tariffs or embargoes on any of these countries for trading with Qatar, or offering incentives such as discounts for their own energy exports to reduce Qatari exports.
Petroleum and natural gas are the cornerstones of Qatar's economy and account for more than 70% of total government revenue, more than 60% of gross domestic product, and roughly 85% of export earnings. Qatar has the world's third largest proven natural gas reserve and is the third-largest exporter of natural gas.
Energy sector
Before the emergence of petrol-based industry, Qatar was a poor pearl diving country. The exploration of oil and gas fields began in 1939. In 1973, oil production and revenues increased dramatically, moving Qatar out of the ranks of the world's poorest countries and providing it with one of the highest per capita incomes in the world.Qatar's economy was in a downturn from 1982 to 1989. OPEC quotas on crude oil production, the lower price for oil, and the generally unpromising outlook on international markets reduced oil earnings. In turn, the Qatari government's spending plans had to be cut to match lower income. The resulting recessionary local business climate caused many firms to lay off expatriate staff. With the economy recovering in the 1990s, expatriate populations, particularly from Egypt and South Asia, have grown again.
Oil production will not long remain at peak levels of 500,000 barrels per day, as oil fields are projected to be mostly depleted by 2023. However, large natural gas reserves have been located off Qatar's northeast coast. These offshore gas fields also may contain significant oil and condensate reserves. For example, the state owned QatarEnergy corporation found two offshore oil fields in the 1960s. At the time production was too expensive. However, technological development led to production over 30 years later.
The gas condensate can be refined to usual oil products in specialised refineries. The costs are a bit higher but it is normal today for companies to use the gas condensate too. Oil offshore production in 2008 for PS-2 and PS-3 blocks was about 31.1 million barrels. Joint Ventures facilities : Combined oil production from these three joint venture production facilities in 2008 was 57.4 million barrels. Like with gas fields there are more offshore blocks which need to be explored and could increase the oil output. So the 500,000 bpd peak and a depletion in 2023 is delayed. With higher oil prices it is expected that the offshore exploration of oil and/or natural gas fields will go on. Oil production in June 2016 seemed to be around 670,000 barrels per day, a bit down from February 2016 production of 692,000 barrels per day. Taking all liquids together Qatar is already far beyond a million barrels per day.
Qatar's proved reserves of gas are the third-largest in the world, exceeding 7000 km3. The economy was boosted in 1991 by completion of the $1.5-billion Phase I of North Field gas development. In 1996, the Qatargas project 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.
Qatar's heavy industrial projects, all based in Umm Said, include a refinery with a 50,000 barrels per day capacity, a fertilizer plant for urea and ammonia, a steel plant, and a petrochemical plant. All these industries use gas for fuel. Most are joint ventures between European and Japanese firms and the state-owned QatarEnergy corporation. 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 North Field gas development.
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.
Industry
The government considers industry to be an integral part of its plan to diversify the economy and maximize its huge natural gas reserves, which serve as the primary feed stock for the sector. Accordingly, careful planning has gone into industrial development. With an eye towards exports, development has been clustered around the ports of Ras Laffan Industrial City and Mesaieed Industrial Area, which are key centers of energy. The result has seen considerable growth over the years. Industries Qatar, a producer of petrochemicals, fertilizers and steel, is a regional powerhouse, surpassed only in size by Saudi Basic Industries Corporation, the Middle East's largest chemical producer. In 2007 the manufacturing sector made the third-largest contribution to GDP among non-oil and gas sectors, equivalent to about 7.5% of GDP. Industry in Qatar is regulated by the Ministry of Business and Trade.Petrochemicals and fertilizers supply make up a large portion of the industrial base, along with steel and other construction materials, through Qatar Steel and Qatar Primary Material Company. Indeed, over the past few years, demand for construction materials experienced a major surge as the development boom swept the Persian Gulf region. The 2008 financial crisis reduced demand in the region, as project credit lines dry up and investor sentiment remains cautious. The crisis impacted the whole of the industrial sector – IQ saw its net profit drop in the fourth quarter of 2008 more than 90% over the same period the previous year. But in relative terms, the sector has fared better than most and IQ still managed to post an annual profit of $2bn. Large profit chunks from years past have been channeled into capital investments, which should help the sector ride out the storm. IQ, for example, is pushing several major expansion projects, worth almost $6bn, ahead.
North Field LNG project
On 8 February 2021, the world's largest LNG supplier, Qatar Petroleum, signed an EPC-contract with Chiyoda and Technip for the North Field East expansion project to increase QE's annually LNG output by 40% until 2026. For the $28.7 billion NFE expansion project, QatarEnergy has partnered with five global energy companies that have acquired 25% stake in the project. These include Shell, TotalEnergies and ExxonMobil, each with 6.25%, and Eni and ConocoPhillips, each with 3.125% stakes. In a first phase, LNG export capacity is expected to increase from 77 million tons per year to 110 million tons per year by 2026.On 20 June 2022, Minister of State for Energy Saad Sherida Al-Kaabi said at a press conference at the QatarEnergy that the expected production increase from this project will be 32.6 million tonnes annually. Ethane produced from the project would be 1.5 million tonnes per year, LPG 4 million tonnes per year, 250.000 barrels of condensate and 5.000 tonnes of helium per day.
In a second phase, the North Field South project, Shell and TotalEnergies have each acquired 9.375% and ConocoPhillips 6.25% stakes. QatarEnergy plans to increase LNG production with the NFS project to 126 million tons per year beginning in 2028.
In April 2023, Sinopec acquired a 5% stake in an 8 million tonnes per year LNG train.
Financial sector
The Qatari banking sector managed to escape the direct impact of the global subprime fallout, but was not altogether unscathed by its aftershocks. Overall, it was the best performing of the Gulf Cooperation Council markets in the last quarter of 2008 and most banks posted substantial profits for 2008. But the sector is also facing issues of liquidity, declining customer confidence and a forced reluctance to lend. In a bid to strengthen the banks’ positions, the Qatar Investment Authority announced in early 2009 that it was willing to take a 10-20% stake in any interested local listed banks by way of a capital injection, although this was later reduced to 5% stakes and an additional 5% at the end of 2009.The Qatari government also announced in March 2009 that it was planning to buy the investment portfolio of the banks in the hope this would encourage them to continue lending. Cautious sector sentiment has also been compounded by the Qatar Central Bank's lending restrictions, which demand a loan-to-deposit ratio of 90%. Given the high level of integration between Qatar's economy and the Persian Gulf region, as well as the wider world, a slowdown in business and banking activity seemed inevitable. Nevertheless, Qatar's banking sector has been faring relatively well, considering the strife experienced in other countries, and insiders are confident that activity will return to its previous brisk pace in the second half of 2009 as confidence slowly rebuilds around the globe.
The International Monetary Fund in its spring assessment 2019 said that Qatar has "successfully absorbed the shocks" of the blockade imposed in 2017 and the dropped oil prices from 2014 to 2016. S&P Global had marked Qatar's outlook to negative in 2017, but changed it to stable in 2019.
In August 2019, Qatar Central Bank stated that the country's economic growth will see a boost over the next two years amid expectations of stable oil prices and continued strong exports. The GDP is expected to grow at an average rate of 2.8% between 2018 and 2020, with the budget surplus falling to 4.35 billion riyals in 2019, from a surplus of 15.1 billion riyals in 2018.
Qatar's GDP is anticipated to scale up to $208 billion in 2024 from $162 billion in 2022, according to a report by FocusEconomics. The World Bank has projected Qatar's economy to be the fastest growing in the GCC in 2023 and 2024.