Mounting on top Qatar’s energy revenues, the World Cup organisers have said that they expect a $17 billion boost from hosting major football tournament.
Qatar’s budget surplus increased by a factor of 12 to reach QAR 47.3 billion (equivalent to $12.8 billion) in the first half of 2022, owing much of this boost to the surging energy revenues.
During the first half, oil and gas revenue climbed by 58% to QAR 150.7 billion, which countered a rise in government spending on salaries and wages.
The Gulf nation experienced a four billion Qatari riyal surplus in the first half of 2021.
Qatar has benefited from rising oil and gas prices brought on by the Covid-19 pandemic-induced slow down and the Russian invasion of Ukraine.
The Gulf country’s long-term contracts to deliver liquified natural gas (LNG), which are often pegged to the price of oil, are the main source of its flourishing revenues.
The country’s economy, forecasted by the International Monetary Fund, is set to expand by 5.4% in 2022 alone and produce a surplus of roughly $45 billion.
As EU countries move towards ending their reliance on Russian gas and intensifying their economic response to the invasion of Ukraine, they are keen on securing energy cooperation with the oil-rich Gulf country.
Europe receives 40% of its gas supplies from Moscow and almost a third of the shipments pass through Ukraine.
Qatar’s LNG supply amid energy crisis
During Amir Sheikh Tamim bin Hamad Al Thani’s visit to the United Kingdom in late May, a Memorandum of Understanding was signed between QatarEnergy and the Department for Business, Energy and Industrial Strategy. The agreement is aimed at strengthening energy cooperation between the Gulf country and the UK.
The move is seen as a means of expanding cooperation in the fields of energy security, renewable energy, and decarbonisation.
Regarding Qatar’s role in potentially alleviating LNG supply concerns, Qatar’s Energy Minister Saad Sherida Al Kaabi on 24 May noted: “Unfortunately, it’s a little bit painful because it will take time [and the price is] amplified by the Ukraine issue,” he said.
Qatar has the world’s third-biggest proven natural gas reserves, and is now one of the biggest providers of the fuel to the UK, shipping it in vast LNG tankers to Britain’s three LNG terminals.
During Sheikh Tamim’s visit to Berlin in May, the two countries agreed to expand their energy cooperation in a new signed declaration. The agreement focuses on LNG and hydrogen trade. It also entails arranging a Qatari-German working group that will meet regularly to develop trade of LNG and hydrogen.
Speaking to German news outlet, Handelsblatt, Qatar’s Foreign Minister Sheikh Mohammed bin Abdulrahman Al Thani said his country hopes to start sending gas from the US Golden Pass LNG plant in Texas, in which QatarEnergy holds a 70% stake, to Berlin in 2024.
Qatar’s energy sector
The Gulf country is likely to witness an expansion in its hydrocarbon dependence as its North Field projects begin production. The multi-billion plan is the largest of its kind, and seeks to boost Qatar’s annual LNG production capacity from 77 million metric tonnes to 126 million tonnes by the year 2027.
Qatar’s gross domestic product (GDP) is estimated to increase to 4.9% this year due to its boosted hydrocarbon exports of 10% as well as its multi-billion plan North Field expansion project.
The unforeseen economic ramifications unravelled by the Russian-Ukrainian War onto the world has particularly had a ‘positive’ effect on Qatar’s economy.
“The effects of the war in Ukraine on the commodity markets and of its associated economic sanctions are positive, on balance, for Qatar’s economy, the largest exporter of Liquid Natural Gas in the world,” an updated World Bank (WB) Global Economic Prospects report stated.
Qatar’s economy is projected to experience an expansion this year while attaining the position of being the fastest growing economy in the Gulf Cooperation Council (GCC) in the years 2023 and 2024, according to the World Bank.
The country’s GDP is expected to increase by 4.9% this year, followed by a 4.5% growth in 2023 and 4.4% rise in year 2024 respectively, the World Bank’s latest Global Economic Prospects report for June revealed.
The World Bank reported Qatar’s 2022 GDP growth of 4.9% against a backdrop of slow global GDP increase of 2.9%.