Qatar is currently in the final stages of its long-term development strategy, which places natural gas and associated downstream industries as the bedrock of its economy by early next century, replacing oil. The financial cost of achieving this national goal has been considerable. The total costs of hydrocarbon projects, including development of downstream petrochemicals and other industries are put at $25 billion, equivalent to 255 per cent of the emirate's present gross domestic product (GDP).
Major foreign banks and export credit agencies in the OECD countries are playing a crucial role in Qatar's development. Prominent local banks like Qatar National Bank with assets of $5,354 million as of December 1998, or Doha Bank, are too small in global terms and lack the necessary expertise to arrange large and complex project syndicated loans.
Qatar possesses the globe's third-largest source of gas, after Russia and Iran, with proven reserves of 8.49 trillion cubic metres. This gives rise to a reserves-to-production ratio of 100 years. Covering an area of 6,000 square kilometres, as large as Qatar itself, the offshore North Gas Field represents the single largest reservoir of non-associated natural gas (equivalent to six per cent of total world reserves). However, by comparison to Saudi Arabia, the UAE, and Kuwait, the proven oil reserves of Qatar, at 4.3 billion barrels, are modest.
To offset the effects of weak oil prices, Doha has had to increase its production volumes from 475,000 barrels per day (b/d) in 1996 to a peak of 700,000 b/d last March. Qatar General Petroleum Corporation has invested heavily in expanding its output capacity (presently 750,000 b/d) and aims to boost total capacity to one million b/d by the year 2001. But the recent OPEC Hague Accord commits Qatar to curtailing its output in stages to 640,000 b/d at present and 593,000 b/d by March 2000. Its average output in 1998 was 670,000 b/d.
For the next five years at least, world oil markets will exert a major influence on government finances. The petroleum sector accounts for between 35-40 per cent of GDP, and generates 82 per cent of total exports and 70 per cent of annual budget revenue. Qatar has a vested interest in sticking to agreed OPEC quotas and thus preventing a new slump in oil prices.
Only a quarter of the total population of 570,000 are indigenous Qataris. The estimated 150,000 nationals enjoy annual per capita GDP incomes of over $65,000. They also benefit from the highest per capita public spending in the Middle East, with generous welfare services and hefty consumer subsidies. In the short-term, however, the government, which is locked into extensive capital investment projects such as Qatari Gas and Rasgas, is experiencing a liquidity-squeeze, caused by stagnating oil revenues since 1998 and escalating costs on external debt.
Economic growth has consistently been among the highest in the Gulf Cooperation Council (GCC) region, recording over 15 per cent in 1997. Between 1993 and 1997, nominal GDP had expanded over...