Qatar Economic Review October 2009

Qatar Economic rEviEw octoBEr 2009

QatarEconomic rEviEwQatar Economic Review is a publication of QNB Capital.

All the information in this review has been carefully collated and verified. However, QNB Capital accepts no liability whatsoever for any direct or consequential losses arising from its use. Where an opinion is expressed, unless otherwise cited, it is that of the authors which does not coincide with that of any other party, and such opinions may not be attributed to any other party.

Qatar Economic Review is distributed on a complimentary basis to valued business partners of QNB Capital. It may not be reproduced in whole or in part without permission.

4 QAtAR ECoNomIC REvIEW

contEntsSovereign Ratings 05

overview of the State of Qatar 06

the Economy of Qatar 10

Key Economic Sectors 14

Inflation 31

Balance of Payments 33

monetary Policy 38

Banking Sector 40

Domestic Credit Facilities 43

Public Finance 45

Qatar Exchange 47

Investment Incentives 51

Qatar National Bank (QNB) 53

QNB Ratings 54

Appendix 55

QnB caPitaL LLcPo Box 1000 Doha, Qatartel. (+974) 496 8111 Fax (+974) 496 8110www.qnbcapital.com.qa

© QnB Qatar Economic review

QAtAR ECoNomIC REvIEW 5

sovereign ratings: State of Qatar

Qatar stands among the highest rated GCC countries along with UAE and Kuwait (table 4), and is currently rated by Capital Intelligence, moody’s, and Standard and Poor’s.

Foreign Currency Local Currency Outlook

Long-term Short-term Long-term Short-term

AA- A1+ AA- A1+ Stable

on January 30th, 2008 Capital Intelligence (CI) raised the sovereign long-term foreign and local currency ratings to AA- from A+, and the short-term foreign and local currency ratings to A1+ from A1 (table 1). the outlook for Qatar’s ratings is stable. Capital Intelligence stated that the upgrade reflects the increasing strength and flexibility of the government’s balance sheet and Qatar’s external finances, which in turn are underpinned by the sheer scale of hydrocarbon production relative to the small size of the population and supported by the high level of energy prices. CI further stated that the ratings also take into account the good progress made in diversifying the economy and the expanding role of the private sector.

Government Bonds Foreign Currency Outlook

Foreign Currency Domestic Currency Bonds and Notes Bank Deposits

Aa2 Aa2 LT : Aa2 ST : P-1 LT : Aa2 ST : P-1 Stable

on July 24th, 2007 moody’s upgraded the long-term foreign and domestic currency government bond ratings and the country ceiling for long-term foreign currency bank deposits to Aa2 from Aa3 (table 2). moody’s mentioned that the upgrade reflects the significant ongoing strengthening of public and external finances. moody’s also noted the prudent use of oil and gas export receipts as compared with previous oil booms. Earlier on may 24th, 2006 moody’s had implemented a new approach to its ratings wherein Qatar’s sovereign country ceilings were upgraded to Aa2 from A1 and the long-term foreign and local currency ratings were raised to Aa3 from A1.

Foreign Currency Local Currency Outlook

Long-term Short-term Long-term Short-term

AA- A-1+ AA- A-1+ Stable

on march 6th, 2007 Standard and Poor’s (S&P) raised the sovereign long-term foreign and local currency ratings to AA- from A+, and the short-term ratings to A-1+ from A+ (table 3). the outlook on the ratings is stable. S&P mentioned in accompanying statements that the ratings upgrade reflects the Qatar government’s acceleration of reforms and Qatar’s strong financial performance.

Sovereign Moody’s Standard and Poor’s Fitch Capital Intelligence

Bahrain A2 A A A

Kuwait Aa2 AA- AA AA-

oman A2 A N/R A

Qatar Aa2 AA- N/R AA-

Saudi Arabia A1 AA- AA- AA-

UAE Aa2 N/R N/R AA-

Table 2:moody’s ratings for Qatar

Source: moody’s.

Table 1:Capital Intelligence ratings for Qatar

Source: Capital Intelligence.

Table 3:Standard and Poor’s ratings for Qatar

Source: Standard and Poor’s.

Table 4:GCC Ratings long-term foreign currency rating

Source: moody’s, Standard and Poor’s, Fitch and Capital Intelligence.

Qatar Stands Among the Highest Rated in the GCC


1. overview of the state of Qatar

1.1 Location, arEa and HistoricaL Background

Qatar is an independent state in the Southern Arabian Gulf surrounded by Saudi Arabia, Bahrain, the United Arab Emirates and Iran. the country is situated midway along the western coast of the Arabian Gulf between latitudes 24.27° - 26.10° North and longitude 50.45° - 51.40° East.

Qatar’s area is 11,437 square kilometres, projecting northward about 160 kilometres into the Gulf. the coastline is 563 kilometres long and bounds the country to the west, north and east.

1.2 PoPuLation

the population of Qatar as per the 2004 census is 744,029 showing a 42.5% increase from the 1997 census of 522,023 and translating into an average annual increase of 5.3% during 1997-2004.

In December 2008, Qatar Statistics Authority announced the results of the new population numbers as per the sample labour force survey conducted. According to the 2008 survey, Qatar’s population reached 1,552,820 increasing by 108.7% from the 2004 census of 744,029 (table 1.1). As per the 2008 survey, 50.2% of the total population resided in Doha, while 25.5% of the population resided in Al Rayyan. the percentage of people residing in Doha has increased from 45.7% in the 2004 census to 50.2% in the December 2008 survey.

Recent estimates from the Qatar Statistics Authority shows total population to have reached 1,597,552 as at August 2009, with the male population accounting for 78% of the total population. the total population as at year-end 2008 was 1,552,820. the rapid increase in population over the last few years is attributed to the strong performance of the economy, which has resulted in a large number of projects coming online, thereby leading to the influx of professionals, service and contracting sector staff and others.

2004 Census 2008 Survey

Municipality Population % of Total Population % of Total

Doha 339,847 45.7% 779,645 50.2%

Al Rayyan 272,860 36.7% 395,887 25.5%

Al Khor 31,547 4.2% 180,893 11.7%

Al Wakra 31,441 4.2% 105,392 6.8%

Al Daayen 31,814 4.3% 40,791 2.6%

Umm Slal 31,605 4.2% 40,516 2.6%

Al Shamal 4,915 0.7% 9,696 0.6%

Total 744,029 100% 1,552,820 100%

Table 1.1:Geographical Distribution of Population

Note: As per Act of 2004 Qatar is divided into 7 municipalities, from the earlier 10.

Source: Qatar Statistics Authority.

Qatar’s Total Population Reached 1.60 Million in August 2009


PoPULAtIoN By GENDER

the 2008 sample labour force survey of the population by gender shows that males accounted for 77.5% of the total population (table 1.2). this major gender imbalance is due to the growing number of expatriates, especially single males.


Population by Gender Population % of Total % of Total % of Total

males 496,382 66.7% 1,203,363 77.5%

Females 247,647 33.3% 349,457 22.5%

Total 744,029 100.0% 1,552,820 100.0%

PoPULAtIoN By AGE GRoUPS

the population between the Age Groups 20-44 reached the 1 million mark as at year -end 2008, accounting for 66% of the total population. the population between the Age Group 25-29 witnessed a growth of 168.7% to reach 292,648 compared to 109,125 in the 2006 survey (table 1.3). the population between the Age Group 20-24 increased by 141.6% to reach 197,720 compared to 81,828 in the 2006 survey. the percentage of population below 20 years is 17.6%, numbering 272,626.

Age Group 2004 Census 2006 Survey 2008 Survey

0-14 167,618 168,245 212,081

15-19 42,191 45,071 60,545

20-24 59,567 81,828 197,720

25-29 84,053 109,125 292,648

30-34 94,809 108,854 217,625

35-39 85,397 95,028 186,225

40-44 75,877 82,762 132,322

45-49 59,119 63,786 108,417

50-54 37,353 41,667 77,291

55-59 19,875 20,407 38,058

60+ 18,170 17,981 29,888

Total 744,029 834,754 1,552,820

Table 1.2:Population by Gender


Table 1.3:Population by Age Groups and Gender (2008 Survey)


45% of the Total Population are Between Age Groups 25 -39


ECoNomICALLy ACtIvE PoPULAtIoN By GENDERAND EmPLoymENt StAtUS

the economically active population increased by a substantial 167.0% as per the 2008 Survey to reach 1,168,081 compared to the 2004 Census of 437,561 (table 1.4). the male population accounted for 89.5% of the total economically active population, while females accounted for 10.5% as per the 2008 Survey.


Males Females Total Males Females Total

Employer 2,932 61 2,993 2,300 46 2,346

own Account 2,042 22 2,064 1,249 0 1,249

Employee 368,129 64,375 432,504 1,041,719 122,767 1,164,486

Total 373,103 64,458 437,561 1,045,268 122,813 1,168,081

ECoNomICALLy ACtIvE PoPULAtIoN By ECoNomIC ACtIvIty

there has been a rapid growth in the economically active population in all major economic sectors, with the most noticeable segment being the construction sector which accounts for 46.6% of the total economically active population. the economically active population in the construction sector grew by 365% as per the 2008 Survey to reach 544,644 compared to the 2004 Census of 117,049 (table 1.5). the wholesale and retail trade forms the second largest economic actvity category, accounting for 9.1% of the total economically active population.

Economic Activity 2004 Census 2008 Survey

Agriculture, Hunting & Forestry 10,200 14,192

Fishing 1,825 3,638

mining and Quarrying 17,997 60,100

manufacturing 40,039 87,377

Electricity and Gas 4,364 7,643

Construction 117,049 544,644

Wholesale and Retail trade 54,438 106,151

Hotels and Restaurants 10,280 23,992

transport, Communication & Storage 15,218 53,465

Financial Intermediation 4,766 10,275

Real Estate, Renting and Related Activities 11,859 41,138

Public Administration 53,438 58,380

Education 19,877 31,679

Health and Social Work 11,554 28,505

other Community Social Services 10,130 15,930

Domestic Services 53,356 79,007

Extra-territorial organizations and Bodies 1,171 1,965

Total 437,561 1,168,081

Table 1.5:Economically Active Population by Economic Activity


Table 1.4:Economically Active Population by Gender and Employment Status


Total Economically Active Population reached 1.2 Million as at Year-End 2008


1.3 constitution and LEgaL systEm

the National Constitution Committee, established by an Emiri decree in July 1999 to draft a new permanent constitution, presented a final draft to HH the Emir in July 2002. one of the main provisions in the new constitution is the establishment of an elected parliament. the draft constitution received an overwhelming majority vote in the referendum held in April 2003, and became effective in June 2005.

the Judiciary in Qatar was expressly established as an independent body by the provisional constitution and was formerly divided into two court systems; the Civil, Commercial and Criminal system and the Shari’a Court system which administers Islamic laws.

the Civil and Commercial system was formerly divided into the minor and major courts. the minor court had jurisdiction to consider only disputes not exceeding QR30,000 presided by a single judge. All civil and commercial disputes in excess of that value were heard by the major courts, comprised of a panel of three judges. Appeals from the minor courts were raised to the major courts, and from the major courts to the Court of Appeal, which is the highest court of appeal in the country.

In october 2004, the judicial system underwent a radical change with the establishment of the new Judiciary Law issued in 2003, which became effective in 2004. According to the new Judiciary Law, the previous two-court system has merged into one. A Higher Court called the Court of Cassation (Supreme Court) has been established. Appeals from the Court of Appeal can be raised to the Court of Cassation, which will be considered the highest court of appeal in the country.

1.4 ForEign rELations and intErnationaL organizations

Qatar is a member of the Gulf Cooperation Council (GCC), whose other members are Bahrain, Kuwait, oman, Saudi Arabia and the United Arab Emirates. Qatar is a member of the United Nations and currently holds a non-permanent member seat at the Security Council, and is also a member of the organization of Petroleum Exporting Countries (oPEC), and other international and multilateral organizations such as the International monetary Fund, the International Bank for Reconstruction and Development and the World trade organization.

During the GCC summit held in December 2001, the supreme council of the GCC approved the establishment of a GCC customs union by 1st January 2003, which is currently in place. this agreement has accelerated the proposed customs union by two years, setting unified customs tariffs at 5% for all imported goods into the region.

Qatar and Bahrain signed a memorandum of Understanding (moU) in February 2005 for the setting up of a causeway between the two countries. the construction of the estimated $3 billion 40 kilometre causeway between the two countries is expected to start in the first quarter of 2010, and will also include a railway link between the two countries. the causeway is expected to be completed by the middle of 2014 and will have a great impact in further enhancing bilateral ties.

Qatar-Bahrain Causeway to be Completed in 2014


2. the Economy of Qatar

Qatar’s economy reached a significant milestone in 2008 with the Gas sector overtaking oil as the largest contributor to the economy, accounting for 30.8% of overall Gross Domestic Product (GDP), according to data released by the Qatar Statistics Authority. the Gas sector contributed QR112.6 billion to overall GDP, while the oil sector contributed QR100.2 billion (table 2.1). Qatar’s nominal GDP growth reached a high of 40.9% in 2008, supported by the successful economic diversification into gas, which will be a key economic growth driver in the coming years.

the oil and gas sector accounted for 60.8% of overall GDP in 2008, with the non-oil and gas sector accounting for 39.2%. However, the non-oil and gas sector has been witnessing impressive growth in recent years, with a growth of 26.9% in 2008, a growth of 27.6% in 2007 and a growth of 41.6% in 2006. In the coming years, the non-oil and gas sector will continue to grow and contribute significantly to the overall GDP, as major initiatives (Qatar Financial Centre, Education City, Qatar Science and technology Park, Energy City Qatar, tourism, Construction and Real Estate, Sports, Conferences etc.) continue to diversify the economy. Qatar’s rapid economic growth has seen it reach the top ranks of wealthiest countries in the world, as measured by GDP per capita. In 2008, Qatar’s GDP per capita reached a record level of $64,661.

2.1 gross domEstic Product (gdP)

Qatar’s nominal GDP growth moves from strength to strength averaging an astonishing 33.7% over the past five years (2004 - 2008). the main drivers for this rapid growth comes from the ongoing increase in production and exports of LNG, oil, petrochemicals and related industries, coupled with high product prices. the non-oil and gas sector has also witnessed significant growth in recent years, averaging 32.9% over the past five years (2004 - 2008).

For the first quarter of 2009, preliminary data from the Qatar Statistics Authority shows GDP declining by 17.5% to QR70.9 billion, from QR85.9 billion during the first quarter of 2008 (table 2.1). During the first quarter of 2009, the oil and gas sector witnessed a decline by 41.4%, while the non-oil and gas sector grew by 19.9%.

(QR Million) 2006 2007 2008 QI 2008 QI 2009*

1. oil & Gas Sector 118,168 146,475 222,127 52,345 30,662

% Change 28.3% 24.0% 51.6% - -41.4%

- Gas N/A 61,936 112,612 25,661 17,401

- oil N/A 80,374 100,165 24,862 11,439

- Services incidental to oil and Gas N/A 4,165 9,350 1,822 1,822

2. Non-oil & Gas Sector 88,476 112,936 143,356 33,532 40,221

% Change 41.6% 27.6% 26.9% - 19.9%

- Agriculture & Fishing 233 250 268 65 67

- manufacturing 16,150 19,179 25,390 4,902 4,009

- Electricity & Water 3,513 4,329 5,456 1,305 1,469

- Building & Construction 11,991 14,634 18,166 4,182 5,047

- trade, Restaurants and Hotels 9,452 12,002 13,311 3,081 3,368

- transport and Communications 7,159 9,803 12,274 2,509 3,007

- Finance, Insurance & Real Estate 21,392 31,865 37,019 7,639 10,389

- other Services** 18,586 20,874 31,472 9,849 12,865

Total GDP 206,644 259,411 365,483 85,877 70,883

% Change 33.7% 25.5% 40.9% - -17.5%

total GDP ($ million) 56,770 71,267 100,407 23,593 19,473

GDP per capita ($) 54,496 58,120 64,661 - -

Table 2.1:Gross Domestic Product at Current Prices by Economic Sectors (2006 - QI 2009)

* Preliminary.

** Includes social services, imputed bank service charges, government services, household services and import duties.


Qatar’s Nominal GDP Growth witnessed a High of 40.9% in 2008


146

119

113

88

222

143145

2008 2009* 2010*20072006

202

162

292

Oil & Gas GDP Non-Oil & Gas GDP

300

275

250

225

200

175

150

125

100

75

50%

40%

30%

20%

10%

0%

25.5%

40.9%

2009* 2010*200820072006

-5.0%

31.0%33.7%

-10%

Figure 2.1:GDP Growth Rate (%)

Figure 2.2:oil & Gas GDP / Non-oil & Gas GDP (QR Billion)

* QNB Capital Forecasts.

Source: Qatar Statistics Authority and QNB Capital.

Table 2.2:Gross Domestic Product(2008 - 2010)

* Preliminary** QNB Capital Forecasts*** QNB Capital, IIF & EIU Forecasts.

Source: Qatar Statistics Authority and QNB Capital.

For 2008, data from the Qatar Statistics Authority shows nominal GDP growth at 40.9%. the following were the main factors behind this growth:• the price of Qatari crude oil increased by 36.0% in 2008 to reach $95.2 p/b,

compared to $70.0 p/b in 2007 according to figures obtained from the middle East Economic Survey (mEES).

• Qatar’s crude oil production averaged 837,000 bpd in 2008, compared to 819,000 bpd in 2007, according to mEES.

• LNG exports increased by 10.9% to reach 30.4 million tons, from 27.4 million tons in 2007.

• Higher oil and gas prices and production resulted in the oil & Gas sector GDP showing an increase of 56.8% in 2008 to reach QR229.7 billion, compared to QR146.5 billion in 2007.

• the Non-oil and Gas sector GDP grew by 27.2% in 2008 to reach QR142.7 billion, compared to QR112.1 billion in 2007.

For 2009, QNB Capital forecasts nominal GDP to witness a contraction by 5.0%, mainly due to the following factors:• the price of Qatar’s crude oil is expected to average $55p/b in 2009, from

95.2 p/b in 2008.• Qatar’s crude oil production is expected to drop by 37,000 bpd to average

800,000 bpd in 2009, due to quota restictions put in place by oPEC.• Non-oil and Gas GDP is expected to grow only by 1.1% to reach QR145.0 billion.

However, the strong growth in the Gas sector with LNG exports set to reach 44.0 million tons in 2009, from 30.4 million tons in 2008, will ensure an underlying strength and support to the economy.

(QR Million) 2008* 2009** 2010**

Nominal oil and Gas GDP 222,127 202,138 292,297

% Growth 51.6% -9.0% 44.6%

Nominal Non-oil and Gas GDP 143,356 145,000 162,400

% Growth 26.9% 1.1% 12.0%

Total Nominal GDP 365,483 347,138 454,697

% Real GDP Growth*** 13.5% 6.0% 18.5%

QNB Capital Forecasts Qatar’s Nominal GDP to Contract by 5.0% in 2009 and Grow by 31.0% in 2010


tHE NoN-oIL AND GAS SECtoR

the Non-oil & Gas sector contributed 39.2% of total GDP in 2008, recording a growth of 26.9% over 2007. the main components of this sector are the following:

a. Finance, Insurance and Real Estate In 2008, the Finance, Insurance and Real Estate sector made the largest

contribution to GDP among the non-oil and gas sectors. this sector is comprised of five sub-sectors: banking, insurance, financial intermediation services, real estate and business services. In terms of relative contribution to GDP, this sector contributed QR37,019 million, and grew by 16.2% at current prices in 2008. this sector represented 10.1% of Qatar’s GDP in 2008.

b. Other Services In 2008, the other Services sector, which includes government services,

social services, household services, imputed bank service charges and import tariffs, made the second largest contribution to GDP of the non-oil and gas sectors. this sector grew by 50.8% in 2008, contributing QR31,472 million, which represented 8.6% of total GDP.

c. Manufacturing Industry the manufacturing sector made the third largest contribution to GDP among

non-oil and gas sectors in 2008. this sector grew by 32.4% at current prices, contributing QR25,390 million, which represented 6.9% of total GDP. this sector is strongly supported by the Government as a part of a general policy to diversify income sources and to maximise the utilisation of Qatar’s natural resources.

the major sub-sectors of the manufacturing sector are petroleum refining, industrial, petrochemicals, fertilisers and steel, which utilise natural gas as feed-stock and/or fuel. other important activities include the production of flour, cement, concrete, plastics, textiles and footwear, household articles and paint.

d. Building and Construction the rapid pace of developments in the Building and Construction sector is

quite evident around Doha in recent years, and as such this sector continues to be a major contributor to the GDP and employment of labour force. this sector witnessed a growth of 24.1% in 2008, contributing QR18,166 million to overall GDP. Credit facilities extended by commercial banks to the land, housing and construction sector increased by 60.0% during the year 2008 to reach QR44,733 million, compared to QR27,967 million in 2007.

Public expenditure is a very important factor affecting the prospects for the building and construction sector, and the realisation of budgetary surpluses in the last seven fiscal years has increased the level of public spending. Allocation for major public projects in the 2009/10 Budget was at QR37.9 billion, which covers the areas of public services, infrastructure, social and health services, education and youth welfare.

e. Trade, Restaurants and Hotels the trade, Restaurants and Hotels sector contributed QR13,311 million to

Qatar’s overall GDP in 2008, representing 3.6% of total GDP. this sector grew by 10.9% in 2008 and will be one of the most promising in the coming years, as business, cultural, sports, education and tourism events aimed at promoting Qatar, gather even more momentum. Qatar’s hotel room capacity (3-5 Star Hotels) is expected to increase by an additional 13,624 rooms in the coming years as a result of up-coming projects such as

Qatar’s Non-Oil & Gas Sector Contributed 39.2% of Total GDP in 2008


the Pearl-Qatar’s - Four Seasons, the Qatar Airways Hotel, the Hilton Doha, the Shangri-La, Swiss-Belhotel Doha, the marriott Courtyard and the Rotana amongst others. the Qatar tourism Authority which was established in the year 2000, is actively promoting Qatar as a tourist destination.

f. transport and Communications this sector contributed QR12,274 million to the overall GDP in 2008, and

witnessed a growth of 25.2%. Qatar Airways is the principal airline operating from Qatar, designated as the “National Carrier”, and is a joint public and private sector enterprise (being 50% owned by the Government). Qatar Airways currently flies to over 84 destinations in the middle East, North Africa, Europe, North America, the Indian sub-continent and the Far East. Qatar Airways currently operates a fleet of 68 aircraft, comprising of 8 Boeing aircraft and 60 Airbus aircraft. Qatar Airways will increase its fleet to 110 by 2013.

the Supreme Council for Information and Communications technology (ictQatar) is the telecommunications regulating authority in Qatar as per Law No. (34) of 2006. Prior to the new law, Qatar telecom (Q-tel) under licence was the sole owner and operator of all national and international services. With the opening up of the telecom sector in early 2007, a new mobile operating licence has been issued to vodafone Qatar, who has successfully started full mobile operations in July 2009. As at the end of the first quarter of 2009, Qatar had a mobile subcriber base of over 1.8 million.

g. Electricity and Water the Electricity and Water sector witnessed a growth of 26.0% in 2008,

contributing QR5,456 million to Qatar’s overall GDP. most of Qatar’s electricity generation capacity comprises of gas turbines, which are fuelled by natural gas. Water desalination is achieved in tandem with electricity generation. Qatar currently has an electricity generation capacity of 3,888 mW and a water generation capacity of 205 million gallons per day.

A number of industrial companies, such as QAPCo and QAFCo, have their own electricity generating facilities. Qatar’s first independent water and power project (IWPP) located at Ras Laffan has a capacity of 750 mW of power and 40 million gallons of water a day. the Ras Laffan B IWPP was commissioned in march 2008 and has a capacity of 1,025 mW of power and 60 million gallons of water a day. the Independent Power Project - 2, located at mesaieed is currently under construction and will add another 2,007 mW of power to Qatar’s grid, when completed during the last quarter of 2009. Qatar’s power generation capacity will exceed 9,000 mW in the coming three years with new plants in mesaieed and Ras Abu Fontas, while the water generation capacity is set to touch 400 million gallons per day.

h. Agriculture and Fisheries the Agriculture and Fishing sector has traditionally played only a minor role in

the modern Qatari economy because of unsuitable weather and environmental conditions. Cultivable land accounts for only approximately 0.7% of Qatar’s total surface area. this sector grew by 7.2% in 2008, contributing QR268 million to Qatar’s GDP.

Qatar’s Electricity Generation Capacity to Exceed 9,000 MW by 2012


3. key Economic sectors

3.1 tHE oiL sEctor

the State of Qatar conducts its principal oil operations through State-owned Qatar Petroleum (QP), which manages Qatar’s oil, gas, fertiliser, petrochemicals and refining enterprises in Qatar and abroad.

the Government’s oil policy has the twin aim of replenishing proven reserves within currently producing fields and identifying additional new reserves. Qatar’s oil reserves as at December 2008 stood at 25.9 billion barrels (table 3.1). Qatar’s oil reserves have substantially risen since 1999 when it was at 3.7 billion barrels, to 25.9 billion barrels as at December 2008. Given an average production of 801,000 barrels per day (bpd) over the past five years, proven reserves would last approximately 89 years.

(Billion barrels) Dec. 2008

Crude oil 3.2

Condensates 22.7

Total 25.9

QP has in its new five-year plan (2009 - 2013), budgeted an overall QR145.9 billion for projects in crude oil, natural gas, gas-to-liquids, refining, petrochemicals, industrial cities and others (table 3.2).

Projects QR Billion

Crude oil 33.4

Natural Gas 61.8

GtL & Refining 15.9

Petrochemicals 16.1

Industrial Cities and others 18.7

Total 145.9

QP has embarked upon an investment programme with the intention of expanding oil production from its onshore and offshore fields from the current 844,000 bpd, to around 1,055,000 bpd by year-end 2010 (table 3.3).

Field (bpd) OperatorCurrent Production

Dec. 2008Projected Production

Dec. 2010

Dukhan QP 256,000 256,000

Bul Hanine QP 49,000 37,000

maydan mahzam QP 36,300 27,000

Idd Al-Shargi North Dome occidental 109,000 115,000

Idd Al-Shargi South Dome occidental 4,100 19,000

Al-Shaheen maersk oil 330,000 525,000

Al-Khalij totalFinaElf 37,500 45,000

Al-Rayyan occidental 8,600 10,000

Al-Karkara QPD 6,200 8,000

El-Bunduq BoC 7,300 13,000

Total 844,000 1,055,000

Table 3.1:Qatar - Proven oil Reserves

Source: Qatar Petroleum.

Table 3.2:QP Five-year Plan (2009 - 2013)


Table 3.3:Qatar’s Current Crude oil Production and Projected


Qatar Petroleum’s New Five-Year Plan (2009 - 2013) Budget’s an OverallQR146 Billion for Projects


QP PRoDUCtIoN

QP produces oil on its own account from one onshore and two offshore fields and from other fields through Exploration/Development and Production Sharing Agreements (EPSAs/DPSAs) with major international partners (Figure 3.1).

QP operates exclusively the Dukhan Field, which is Qatar’s oldest field with a current production capacity of 256,000 bpd. the field comprises of three reservoirs for crude oil and one reservoir for non-associated gas. the Dukhan Field is Qatar’s only onshore field and has estimated reserves in excess of 2 billion barrels of oil, equivalent to around 22 years’ production at present production levels. QP also produces offshore crude oil for its own account from two fields within Qatar’s territorial waters: maydan mahzam and Bul Hanine, which currently have production capacities of 36,300 bpd and 49,000 bpd. QP’s oil production accounted for 41% of Qatar’s total oil production as at December 2008.

ExPLoRAtIoN/DEvELoPmENt AND PRoDUCtIoN SHARING AGREEmENtS (EPSAS/DPSAS)

Qatar’s total oil exploration area is divided into twenty two hydrocarbon “blocks” covering a total surface area of 43,426 square kilometres. Since the early 1990s, QP has entered into a number of EPSAs/DPSAs. Under an EPSA agreement the contractor is granted the right to explore for oil in the relevant block and, if oil is discovered, to develop the fields. Under a DPSA agreement the contractor is required to cover appraisal and development of already discovered structures or further development of existing fields. Key aspects of major EPSAs/DPSAs include the following ventures:

IDD AL SHARGI (oFFSHoRE)

occidental Petroleum has been exploring, operating and developing both the North Dome of this field since 1994 when it signed a DPSA with QP, and the South Dome since December, 1997 following a separate DPSA. occidental aims to increase production of Idd Al Shargi Field (for both North and South Domes) from the current production of 113,100 bpd, to 134,000 bpd by 2010.

AL SHAHEEN FIELD - BLoCK 5 (oFFSHoRE)

Al Shaheen is currently Qatar’s highest yielding field with a production capacity of 330,000 bpd. the development of this field is based on extensive use of horizontal drilling and water injection, applying state-of-the-art technology developed by maersk oil. QP signed a deal with maersk oil Qatar in early 2001, which increased the production capacity to the current level. QP and maersk further in April 2004 signed an EPSA for an extention area of Block 5, located Northwest of the Al Shaheen Field. Further to this, a new estimated $5 billion development plan was signed in march 2006 which involves the drilling of an additional 160 wells and raise production levels to 525,000 bpd by year-end 2010.

AL KHALIJ FIELD - BLoCK 6 (oFFSHoRE)

totalFinaElf Qatar operates this field under a DPSA with QP. Production at this field stood at 37,500 bpd as at year-end 2008.

AL RAyyAN FIELD (oFFSHoRE)

occidental Petroleum currently operates the field with a 92.5% stake, along with marubeni Corporation with a 7.5% stake. BP was the field operator until June 2002, after which Anadarko acquired its stake in Blocks 11,12 & 13, and in 2007 it was acquired by occidental Petroleum. Production from this field is currently at 8,600 bpd.

Al Shaheen Field is Currently Qatar’s Highest Yielding with a Production Capacity of 330,000 bpd


AL KARKARA FIELD (oFFSHoRE)

Qatar Petroleum Development Company (QPD) operates the field under a DPSA signed with QP in 2003. QPD is a Japanese consortium (Cosmo oil Co., Nissho Iwai Corp., and United Petrleum Development Co.). Production at this field started in the first quarter of 2006 and is currently at 6,200 bpd.

BLoCKS 1, 4, 4N, 7, 8 AND 14 (oFFSHoRE/oNSHoRE)

Block 14 was awarded to Wintershall in the last quarter of 2008. Block 4 was awarded to occidental Petroleum in the last quarter of 2008, while Block 4 North was awarded to Wintershall. Block 1 is likely to go for bidding in 2010, while Block 7 and Block 8 are expected to go for bidding in 2011.

BLoCK 2 (oNSHoRE)

In march 1998, QP and Chevrontexaco signed an EPSA for the onshore Block 2 oil concession, which covers an area of approximately 10,900 square kilometres. In 2001, Canadian firm EnCana and Swedish firm Svenska acquired a stake in Block 2 from Chevrontexaco and now the block is operated through a consortium.

Figure 3.1:Qatar’s oil and Gas Areas Situation map


Block 4 was Awarded to Occidental Petroleum while Blocks 4 North and 14 were Awarded to Wintershall during the Last Quarter of 2008


oIL PRoDUCtIoN, PRICE AND ExPoRtS:

Qatar’s oil production averaged 797,000 bpd during the first half of 2009. Qatar’s oil production increased by 2.2% in 2008 to average 837,000 bpd, compared to 819,000 bpd in 2007 (Figure 3.2). Qatar’s oil production increased marginally in 2007 to average 819,000 bpd, compared to 810,000 bpd in 2006. Qatar’s oil production has increased by 17.2% since 2003 when production averaged 714,000 bpd, to an average production of 837,000 bpd in 2008, according to figures obtained from middle East Economic Survey (mEES).

Qatar’s oil prices averaged $52.4 p/b during the first half of 2009. Qatar’s oil price increased by 36.0% in 2008 to average $95.2 p/b in 2008, compared to an average of $70.0 p/b in 2007 (Figure 3.3). Qatar’s oil price has more than trebled to average $95.2 p/b in 2008, compared to an average of $27.9 p/b in the year 2003 , according to mEES. Qatar’s crude oil price increased by 11.3% in 2007 to average $70.0 p/b in 2007, compared to $62.9 p/b in 2006. Qatar’s oil prices are based on the average of a basket of two crudes, mainly Dukhan and marine.

Qatar’s crude oil exports are directed mainly towards the Asian markets, with the region accounting for 90.0% of the total oil exports in 2008. In 2008, Japan received 54.0% of Qatar’s total oil exports, followed by Singapore with 16.0%, South Korea with 9.0%, thailand with 7.0%, taiwan with 2.0%, and India with 2.0% (table 3.4).

Country % Share

Japan 54.0%

Singapore 16.0%

South Korea 9.0%

thailand 7.0%

taiwan 2.0%

India 2.0%

other Countries 10.0%

Total 100.0%

Table 3.4:Destination of Qatar’s Crude oil Exports (2008)


Figure 3.2:Qatar’s crude oil production (000 bpd)

Figure 3.3:Qatar’s crude oil price ($ p/b)

Source: middle East Economic Survey.

100

90

80

70

65

60

55

50

45

40

35

30

25

20

51.7

35.2

62.9

70.0

95.2

52.4

2008 Jan - Jun 200920072004 2005 2006

837

810

819

779

880

810

740

670

600

2006 2007 2008

797

Jan - Jun2009

2004 2005

Qatar’s Oil Production Averaged 797,000 bpd during the First Half of 2009 while Oil Prices Averaged $52.4 p/b


3.2 tHE naturaL gas sEctor

Qatar’s North Gas Field, discovered in 1971, is the largest non-associated gas field in the world, with proven reserves currently estimated at over 902 trillion cubic feet (tcf), which is equivalent to about 162 billion barrels of oil. these reserves would translate into 14.4% of the world total and will be sufficient to support planned production of natural gas for over 200 years. the North Field extends over an area of approximately 6,000 square kilometres, predominantly underlying the territorial waters of the State of Qatar (Figure 3.1). Associated gas reserves are currently estimated at 11 tcf. Within the middle East, Qatar has the second highest proven gas reserves after Iran.

QP has initiated and developed two major LNG projects with foreign shareholders for the purpose of utilising the North Field gas for exports in the form of LNG. these projects are Qatargas and RasGas which currently operate LNG facilities with a combined production capacity of around 38.6 million tons per annum (mtpa). these facilities are undergoing major expansions to meet additional LNG export opportunities. Sales and Purchase Agreements (SPA) have been reached with a number of countries, which at their peak in 2011 will reach 76.4 mtpa (table 3.5). the Qatar Gas transport Company (Nakilat) was established as a QE listed company in early 2005, to meet the transportation needs of the various LNG export deals. QP has allocated QR61.7 billion in its five-year plan, starting 2009, to meet the rapidly expanding needs of the Natural Gas sector.

Destination (Supplier)

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Sales & Purchase Agreements

Japan1 (Qatargas 1) 6.3 6.3 6.3 6.3 6.4 6.6 6.6 6.6 6.6 6.7 6.7

Korea2 (RasGas) 4.9 4.9 6.8 8.8 8.8 8.8 8.7 7.0 7.0 7.0 7.0

India3 (RasGas II) - - 2.5 3.8 5.0 5.0 5.0 5.6 7.5 7.5 7.5

Italy4 (RasGas II) - - - - - - - 4.7 4.7 4.7 4.7

Spain5 (Qatargas 1) 1.2 1.1 1.3 2.2 2.6 2.9 2.9 2.9 2.9 2.9 2.1

Spain6 (Qatargas 1) - 0.1 0.8 0.7 0.5 - - - - - -

Spain7 (RasGas II) - - - 0.6 0.8 0.8 0.8 0.8 0.8 0.8 0.8

Belgium8 (RasGas II) - - - - - 2.6 3.4 3.4 3.4 3.4 3.4

Belgium9 (RasGas II) - - - - - - 2.1 2.1 2.1 2.1 2.1

taiwan10 (RasGas II) - - - - - - 1.2 2.5 3.0 3.0 3.0

UK11 (Qatargas II) - - - - - - - 4.0 7.6 7.6 8.0

France/UK/USA12 (Qatargas II) - - - - - - - 3.0 7.6 7.6 8.0

USA13 (Qatargas 3) - - - - - - - - 7.6 7.7 7.7

USA14 (RasGas 3) - - - - - - - 2.1 7.7 9.2 9.2

USA15 (Qatargas 4) - - - - - - - - 1.8 5.3 5.3

Japan16 (Qatargas 4) - - - - - - - - - 0.9 0.9

Grand Total 12.4 12.4 18.1 23.1 24.8 27.4 30.7 44.7 70.3 76.4 76.4

Table 3.5:Qatar’s Contracted LNG Exports (mtpa)

1SPA’s with 8 Japanese Companies.

2SPA with KoGAS of Korea.

3SPA with Petronet of India.

4SPA with Edison Gas of Italy.

5SPA with Gas Natural Group of Spain.

6SPA with BP.

7SPA with Endesa Generacion SA of Spain.

8SPA with Fluxys LNG of Belgium.

9SPA with Distrigas of Belgium.

10SPA with Chinese Petroleum Corporation.

11SPA with Exxonmobil.

12SPA with total/Exxonmobil.

13SPA with ConocoPhilips.

14SPA with Exxonmobil.

15SPA with Shell.

16SPA with marubeni.

Source: Qatargas, RasGas, and QNB Capital.

Qatar’s Natural Gas Reserves of Over 902 tcf will Support Production for Over 200 Years


QAtAR’S LNG PRoJECtS

1. Qatar LiQuEFiEd naturaL gas comPany (Qatargas)

Qatargas was established in 1984, with the first sales agreement being signed in 1992. the main activities of Qatargas are divided into two main projects with separate shareholder groups: the upstream joint venture (offshore production and the onshore receiving facilities) and the downstream joint venture (onshore LNG Plant).

the Qatargas upstream joint venture has equity held by QP (65%) and four major energy and trading companies, totalFinaElf (20%), Exxonmobil (10%), mitsui (2.5%) and marubeni (2.5%). the Qatargas downstream joint venture has equity held by QP (65%), totalFinaElf (10%), Exxonmobil (10%), mitsui (7.5%) and marubeni (7.5%). the first output from the plant in the form of condensate was shipped to Japan in october 1996, with the first LNG shipment to Chubu Electric Power following in December of the same year. the production capacity of Qatargas’ existing three trains are 10.2 mtpa, whose output is destined to Japan (Chubu Electric Power and seven other Japanese customers).

In 2008, Qatargas exported a total of 9.7 million tons (mt) of LNG, with contracted exports reach 38.7 million tons by 2011 (table 3.6). Qatargas produced 10.1 mt of LNG and around 21,500 bpd of condensates in 2008.

(In million tons per annum) 2004 2005 2006 2007 2008

Actual (SPA’s and Spot) 8.9 9.9 9.5 9.4 9.7

(In million tons per annum) 2009 2010 2011 2012

Contracted (SPA’s) 16.5 34.1 38.7 38.7

Japan is the main importer of Qatargas’ LNG and in 2008 imported 6.9 million tons, followed by Spain with 2.7 mt (table 3.7).

Destination Country 2004 2005 2006 2007 2008

Japan 6.8 6.2 6.4 6.4 6.9

Spain 2.0 2.9 2.6 2.7 2.7

USA - - 0.4 - -

others 0.1 0.8 0.1 0.3 0.1

Total 8.9 9.9 9.5 9.4 9.7

Qatargas has completed its debottlenecking process which began in 2001, and current production capacity of its three existing trains has increased from 6.6 mtpa to 10.2 mtpa in 2006. the debottlenecking project was completed by a joint venture partnership between Chiyoda Corporation of Japan and technip of France.

Table 3.6:(a) Qatargas Actual LNG Exports

(b) Qatargas Anticipated LNG Exports

Source: Qatargas, QP and QNB Capital.

Table 3.7:Qatargas’ LNG Exports (mtpa)

Source: Qatargas and QP.

Qatargas Contracted LNG Exports to Reach 38.7 mtpa by 2011


2. Qatar LiQuEFiEd naturaL gas comPany 2 (Qatargas 2)

In June 2002, QP and Exxonmobil announced the setting up of a joint venture, provisionally referred to as Qatargas 2, with the primary aim of supplying up to 14 mtpa of LNG to the UK market. Project costs are estimated at $12.8 billion. QP has a 70% equity stake in the venture, with Exxonmobil holding the balance of 30%. Qatargas 2 was set up as part of Qatargas’ expansionary plans to add trains 4 and 5. the two new super-trains will each have a capacity as large as 7.7 mtpa, with train 4 having started production in march 2009 and train 5 to commence production in the second half of 2009.

In December 2004, the EPC contract for trains 4 and 5 was awarded to a joint venture of France’s technip and Japan’s Chiyoda. In march 2005, France’s total acquired a 16.7% equity stake in train 5, with an investment plan estimated at $3.5 billion. train 5 will also have QP as a 65% equity stakeholder and Exxonmobil holding the remaining 18.3%. A $550 million loan syndication consisting of 18 banks was signed in June 2005 for trains 4 and 5.


In July 2003, QP and ConocoPhillips signed a Heads of Agreement for a joint venture project to construct train 6, referred to as Qatargas 3. the agreement outlines that the project will have an ownership structure of QP (70%) and ConocoPhillips (30%). the Qatargas 3 project envisages the construction of an LNG train with a capacity of around 7.7 mtpa, scheduled for completion by 2010, with the output mainly destined for the US market.


In February 2005, QP and Shell signed a Heads of Agreement to launch Qatargas 4. the Qatargas 4 project involves the construction of a 7.7 mtpa LNG train, scheduled for completion in 2011, with exports destined for North America and Europe. the Qatargas 4 joint venture will have QP holding a 70% equity stake, with Shell holding the remaining 30%. In April 2007, a Heads of Agreement was signed with marubeni Corporation for the supply of 0.9 mtpa of LNG to Japan, with the option for marubeni to take a stake in train 7.

5. ras LaFFan LiQuEFiEd naturaL gas comPany (rasgas)

RasGas was established in 1993 as a $3.3 billion grassroots LNG and related products venture, owned by QP (63%), Exxonmobil (25%), Koras (5%), Itochu Corporation (4%), and LNG Japan Corporation (3%).

Production from RasGas’ first and second LNG trains began in June 1999 and April 2000 respectively. Each of the first two trains has a capacity of just over 3.3 mtpa.

RasGas began producing field condensates in April 1999, with an initial production volume of around 15,000 bpd, and current capacity of around 45,000 bpd for combined plant and field production from the two trains. RasGas also has a production capacity for solid sulfur of about 300 tons per day.

LNG production from RasGas companies reached 20.7 mt in 2008, compared to 20.1 mt of LNG produced in 2006. RasGas companies currently has an LNG production capacity of 20.7 mtpa. Contracted LNG exports are expected to reach 37.7 mt by the year 2011 (table 3.8).

(In million tons per annum) 2004 2005 2006 2007 2008

Actual (SPA’s and Spot) 9.5 12.3 15.6 18.0 20.7

(In million tons per annum) 2009 2010 2011 2012

Contracted (SPA’s) 28.2 36.2 37.7 37.7

Table 3.8:(a) RasGas Actual LNG Exports(b) RasGas Anticipated LNG Exports

Source: RasGas, QP and QNB Capital.

RasGas Contracted LNG Exports to Reach 37.7 mtpa by 2011


In 2008, RasGas group of companies exported 20.7 mt of LNG, compared to 18.0 mt of LNG exported in 2007 (table 3.9). RasGas group of companies exported 8.5 mt of LNG to South Korea, which accounted for 41% of total LNG exports, followed by India which received 7.5 mt (36%).

Destination Country 2004 2005 2006 2007 2008

South Korea 5.9 6.2 6.7 8.2 8.5

India 2.0 4.5 5.0 6.2 7.5

Belgium - - - 1.7 2.2

Spain 1.2 0.8 1.1 0.8 0.8

others 0.4 0.8 2.8 1.1 1.7

Total 9.5 12.3 15.6 18.0 20.7

6. ras LaFFan LiQuEFiEd naturaL gas comPany 2 (rasgas 2)

RasGas 2 was formed primarily to execute the planned expansion of RasGas. An Emiri decree issued on 26th march 2001 announced the setting up of Ras Laffan LNG Company 2 (RasGas 2). the project involved the construction of three LNG trains (trains 3, 4 & 5), each having a capacity of 4.7 mtpa and was initially aimed at providing Petronet of India with 7.5 mtpa of LNG. RasGas 2 was established with a capital of $5 billion, owned by QP (70%) and Exxonmobil (30%).

trains 3, 4 & 5 were constructed by a consortium consisting of Japan’s Chiyoda Corporation, mitsui, Italy’s Snamprogetti and Qatar’s Almana Group. train 3 became operational in January 2004, while trains 4 & 5 became operational in october 2005 and November 2006 respectively.

7. ras LaFFan LiQuEFiEd naturaL gas comPany 3 (rasgas 3)

In July 2005, QP and Exxonmobil announced the incorporation of RasGas 3, a joint venture company between QP (70%) and Exxonmobil (30%), with an authorised capital of $8 billion. An agreement was reached for the supply of 15.6 mtpa of LNG to the US, with deliveries set to start by 2010. total project costs, including ships and downstream developments are estimated at $14 billion. the project envisages the construction of two LNG trains with a capacity of 7.7 mtpa each, with train 6 set to be commissioned in the third quarter of 2009, while train 7 will be commissioned during the second half of 2010. the onshore EPC contract for the two LNG trains (6 & 7) were awarded in September 2005 to a joint venture of Japanese firm Chiyoda Corporation and French firm technip. the offshore EPC contract was awarded to J Ray mcDermott middle East.

QP and Exxonmobil as mentioned earlier are also working together at arranging the necessary transportation of the LNG to the US and thereafter at setting up regasification facilities in the US.

November 2008 marked the 12th anniversary for Qatar as an LNG producer. LNG production capacity was around 31.0 mt in 2008. Actual LNG production in 2008 was 30.8 mt, compared to 30.0 mt in 2007. With the various expansion projects currently under way and expected in the coming years, production capacity will increase to about 77.1 mtpa by 2011 (table 3.10). Qatar has established itself as the Gulf’s leading gas exporter, delivering since 1997 around 187 million tons of LNG to customers in the Far East, Europe and the US. In 2008, Qatar exported 30.4 million tons of LNG.

Table 3.9:RasGas LNG Exports (mtpa)

Source: RasGas and QNB Capital.

Qatar Emerged as the World’s Biggest LNG Exporter in 2008 with 30.4 Million Tons Going to Customers in the Far East, Europe and US


Qatargas

Year Production Capacity

Production Capacity Increase From

Contracted LNG Exports

Actual LNG Exports

1997 4.4 trains 1 & 2 (Qatargas) 4.4 2.2

1998 6.6 train 3 (Qatargas) 4.4 3.6

1999 6.6 -- 5.9 5.9

2000 6.6 -- 5.9 6.6

2001 7.5 Debottlenecking 6.0 7.5





2006 10.2 -- 9.0 9.5

2007 10.2 -- 9.5 9.4

2008 10.2 -- 9.5 9.7

2009 25.6 trains 4 & 5 (Qatargas II) 16.5 --

2010 33.3 train 6 (Qatargas 3) 34.1 --

2011 41.0 train 7 (Qatargas 4) 38.7 --

2012 41.0 38.7 --

RasGas

Year Production Capacity

Production Capacity Increase From

Contracted LNG Exports

Actual LNG Exports

1999 6.6 trains 1 & 2 (RasGas) 0.6 0.7

2000 6.6 -- 3.3 3.9

2001 6.6 -- 4.2 5.3

2002 6.6 -- 4.9 6.0

2003 6.6 -- 5.0 6.4

2004 11.3 train 3 (RasGas II) 10.5 9.5

2005 16.0 train 4 (RasGas II) 14.6 12.3

2006 20.7 train 5 (RasGas II) 15.8 15.6

2007 20.7 17.9 18.0

2008 20.7 21.2 20.7

2009 28.4 train 6 (RasGas 3) 28.2 --

2010 36.1 train 7 (RasGas 3) 36.2 --

2011 36.1 37.7 --

2012 36.1 37.7 --

Qatargas and RasGas

Year Production Capacity Contracted LNG Exports Actual LNG Exports

1997 4.4 4.4 2.2

1998 6.6 4.4 3.6

1999 13.2 6.6 6.6

2000 13.2 9.2 10.5

2001 14.1 10.2 12.8

2002 14.6 12.4 13.5

2003 15.1 12.4 14.4

2004 20.2 18.1 18.4

2005 25.2 23.1 22.2

2006 26.2 24.8 25.1

2007 30.9 27.4 27.4

2008 30.9 30.7 30.4

2009 54.0 44.7 --

2010 69.4 70.3 --

2011 77.1 76.4 --

2012 77.1 76.4 --

Table 3.10:LNG Summary (mtpa) Qatargas

Source: QP, Qatargas, and QNB Capital.

LNG Summary (mtpa) RasGas

Source: QP, RasGas and QNB Capital.

LNG Summary (mtpa) Qatargas and RasGas

Source: QP, Qatargas, RasGas and QNB Capital.

Qatar’s LNG Production Capacity will Reach 77.1 mtpa by 2011


tHE DoLPHIN PRoJECt

the Dolphin Project is the first export oriented pipeline project in the GCC region and paves the way for the creation of a GCC gas grid originating in Qatar. Promoted by the UAE Government’s offsets Group (UoG), the Dolphin project has already received outline commitments from UAE for up to 2 billion cubic feet per day (bn cf/d) of gas. In June 2000, UoG announced the formation of a company ‘Dolphin Energy Ltd’ (DEL), to manage the project on its behalf. the ownership structure of the company is 51% UoG and 24.5% each by totalFinaElf and occidental Petroleum. France’s totalFinaElf and occidental of the US were selected as strategic partners for the project, with totalFinaElf responsible for the upstream part of the project and occidental for the midstream and downstream marketing. two upstream moUs have been signed, one with Exxonmobil and the other with totalFinaElf.

the Dolphin Project is scheduled in two phases. the first phase of the project valued at $3.5 billion involved production and distribution of 2 bn cf/d of gas, through a sub-sea pipeline which extends over 400-km from Qatar’s North Field to taweelah in Abu Dhabi and Jebel Ali in Dubai.

DEL and QP signed the final field development plan for the Dolphin Project in December 2003. the main EPC contract for the gas processing and compression plant was awarded in January 2004 to Japan’s JGC Corporation, with platform package awarded to J Ray mcdermott middle East, and the gas turbines to be supplied by UK’s Rolls Royce. Construction on the Dolphin project is complete with current gas deliveries having reached 2 bn cf/d.

the second phase of the project involves increased volumes of piped gas to the UAE.

Figure 3.4:Dolphin Project Location and Pipeline map

Source: UoG Publications.

Qatar Currently Exports 2 bn cf/d of Piped Gas to UAE


AL KHALIJ GAS PRoJECt

A Development and Production Sharing Agreement (DPSA) to tap additional North Field gas for domestic projects and regional exports was signed in may 2000 by QP and Exxonmobil middle East Gas marketing Limited, a subsidiary of Exxonmobil Corporation.

Under the Al Khalij Gas Project, additional North Field gas will be developed through a new upstream gas development, with power generation (Ras Laffan IWPP), the oryx GtL project, and the mesaieed Industrial Complex representing initial major users. the first phase of the project (AKG-1) began production in November 2005. Exxonmobil will extend the Al Khalij Gas Project to meet the domestic demand relating to electricity, petrochemical, and other Qatari industrial uses.

BARzAN GAS PRoJECt

A memorandum of Understanding has been signed between QP and Exxonmobil to utilise North Field Gas for domestic purposes. QP will hold a 90% stake in the project with Exxonmobil holding the remaining 10%. the Barzan Gas Project will involve the processing of 1.4 bn cf/d of gas.

NAtURAL GAS LIQUIDS (NGL)

NGL-1: the first NGL plant, commissioned in 1974, was established with the aim of utilising onshore associated gas from the Dukhan field. this facility provides for the NGL’s stripped from the Fahahil Plant (degassing, compressing and NGL stripping plant located along the Dukhan field) to be separated into ethane rich gas, propane, butane, and condensate.

NGL-2: the second NGL plant, commissioned in 1980, was established with the aim of utilising offshore associated gas. this plant obtains NGL’s stripped from three offshore crude oil production platforms and separates it into methane rich gas, ethane rich gas, propane, butane, and condensate.

NGL-3: Also referred to as the North Field Gas Plant (NFGP), this plant was commissioned in 1991 and debottlenecked in 1997, to process an additional 240 mn cf/d of gas from Qatargas. the NFGP was originally designed to process raw gas and unstabilised condensate, separated from the North Field Alpha offshore field.

NGL-4: the NGL-4 project is designed to increase the recovery of Natural Gas Liquids from the Dukhan Arab D reservoir and the North Field. the plant more than doubles QP’s NGL capacity and is dedicated both to export markets and to domestic demand which includes demand from the QAPCo and Q-Chem projects.

NGL-4 increases Qatar’s recovery of Natural Gas Liquids from North Field Phase 1 of Ethane (875,000 tpa), Propane (735,000 tpa) and Butane (490,000 tpa) to meet growing demand for these products as a petrochemical feed-stock.

GAS-to-LIQUIDS PRoJECtS (GtL)

QP continues to research other avenues for the utilisation of the country’s natural gas resources. technologies for the direct conversion of natural gas into globally marketable and more easily transportable liquid products have evolved significantly in recent years and are of particular interest as a potential adjunct to direct exports of LNG and natural gas. QP has allocated QR15.9 billion in its five-year plan, starting 2009 for GtL and refining projects. QP’s aim of progressing rapidly on GtL projects can be seen through the following oryx GtL project, and the Pearl GtL project.

Qatar’s Aim to Utilise the Country’s Natural Gas Resources have Led to the GTL Projects


oRyx GtL PRoJECt

oryx GtL, the world’s largest GtL plant became operational in June 2006, with first export shipments commencing in April 2007. In July 2001, QP and South Africa’s Sasol Synfuels International (Sasol) signed a joint venture agreement to develop a GtL project at Ras Laffan with estimated costs of $1 billion. the project which is based on Sasol’s slurry phase distillate technology, converts natural gas into 34,000 bpd of high grade fuels from two trains. the GtL plant uses as feed-stock about 330 mn cf/d of gas from the Al Khalij Gas Project, and has a capacity to produce around 24,000 bpd of high purity diesel, 9,000 bpd of naphtha and 1,000 bpd of LPG. the project gets its power requirements from the Ras Laffan IWPP, and its cooling requirements from the Ras Laffan common sea water intake.

PEARL GtL PRoJECt

In July 2004, QP and Shell signed a DPSA for a GtL plant that will eventually have a capacity of 140,000 bpd. the project is based on Shell’s proprietary technology and is planned for a two-phase implementation, wherein the first phase will involve the construction of a plant with a 70,000 bpd capacity, that will come on-stream in 2010. Construction has started, with current project costs being estimated well in excess of $15 billion, from the earlier estimates of $6 billion in 2004.

3.3 gas-BasEd and otHEr major industriaL ProjEcts:

In addition to its roles as the basis for the LNG industry, and as a fuel input for power generation, natural gas is utilised in a wide range of industries as a feed-stock to produce various value-added products for both domestic consumption and export. these projects include the following:

QAtAR FERtILISER ComPANy (QAFCo)

QAFCo is a joint venture between yara International of Norway, with a 25% stake and Industries Qatar (QP - 70%, Qatari Shareholders - 30%), with the majority 75% stake. It was established by an Emiri Decree in 1969 to produce Ammonia and Urea. Currently, the QAFCo complex in mesaieed comprises of four completely integrated trains; QAFCo-1 (1973), QAFCo-2 (1979), QAFCo-3 (1997), and QAFCo-4 (2004), with each train being made up of two units, one for the production of Ammonia and the other for Urea. QAFCo’s production capacity now stands at 6,150 tons per day (tpd) of Ammonia and 8,700 tpd of Urea. the company is now the largest producer of fertiliser in the middle East, with total production in 2008 reaching 2.30 million tons (mt) of Ammonia and 3.00 mt of Urea (table 3.11).

Product 2004 2005 2006 2007 2008

Ammonia 1.78 2.14 2.20 2.20 2.30

Urea 2.24 2.99 2.91 2.96 3.00

Total 4.02 5.13 5.11 5.16 5.30

QAFCo’s Ammonia is mainly directed to India, Jordan, and South Korea, while Urea exports are destined mainly for USA, thailand, Australia, and South Africa. Further expansion plans at QAFCo, referred to as QAFCo-5, will see the addition of 3,500 tpd of Ammonia and 3,500 tpd of Urea to existing capacity. the $3.2 billion project is currently under construction and is set to start in the first quarter of 2011.

In July 2006, QAFCo and Qatar Intermediate Industries Holding Company (QH), signed an agreement for establishing the $250 million Qatar melamine Company (QmC). QAFCo will hold a 60% stake in the project, with QH holding the remaining 40%. QmC will have a production capacity of 60,000 tons per year.

Figure 3.11:QAFCo’s Production (mt)

Source: QAFCo.

Qatar Fertiliser Company is now the Largest Producer of Fertiliser in the Middle East


QAtAR StEEL ComPANy (QASCo)

QASCo is a wholly owned subsidiary of Industries Qatar (IQ), which was initially set up in 1974 as a joint venture. the plant was commissioned in 1978 as the first integrated steel plant in the Arabian Gulf region. In 2008, QASCo produced 1,638,000 tons of Hot Briquetted Iron/Direct Reduction Iron from its dual technology plant, 1,406,000 tons of steel billets, 1,146,000 tons of re-inforced steel bars, and 102,000 tons of coil. Expansion plans at QASCo saw the signing of an agreement in February 2005 between QASCo and Kobe Steel of Japan, to build a new Direct Reduction Iron plant with an annual production capacity of 1.5 million tons. the plant has started operations.

QAtAR FUEL ADDItIvES ComPANy (QAFAC)

QAFAC is owned by Industries Qatar (50%), oPIC Netherlands Antilles N.v. (20%), LCy Investments Corporation (15%) and International octane Ltd. of Canada (15%). QAFAC’s plant in mesaieed has a production capacity of 610,000 tpa of methyl tertiary Butyl Ether (mtBE), and 832,500 tpa of methanol.

the plant’s development costs were in the vicinity of $650 million, with production of methanol and mtBE starting in June and July 1999 respectively. In 2008, QAFAC produced 650,000 tons of mtBE and 960,000 tons of methanol, compared to 481,000 tons of mtBE and 884,000 tons of methanol produced in 2007. QAFAC exports the majority of its methanol to markets in the Far East, Europe, India and the GCC, while mtBE is exported to the Far East, Europe, North Africa and the GCC.

QAtAR PEtRoCHEmICAL ComPANy (QAPCo)

Industries Qatar owns 80% of QAPCo with the remaining capital of 20% held by total Petrochemicals (Chemical arm of France’s totalFinaElf). QAPCo commenced full commercial operations in 1981 and produces high quality Ethylene, Low Density Polyethylene (LDPE) and Sulphur.

QAPCo is currently the largest producer of LDPE in the middle East with a design production capacity of 390,000 tpa. Ethylene design production capacity was at 535,000 tpa. In 2008, QAPCo produced 800,000 tons of Ethylene, 420,000 tons of LDPE and 52,000 tons of Sulphur (table 3.12).

Product 2004 2005 2006 2007 2008

Ethylene 500,000 550,000 550,000 550,000 800,000

LDPE 370,000 420,000 409,000 359,000 420,000

Sulphur 44,000 45,000 40,000 32,300 52,000

In December 2004, QAPCo started construction work for the debottlenecking of the existing Ethane cracker plant, so as to further increase the capacity from the current 535,000 tpa to 800,000 tpa. Concurrently, LDPE production is expected to rise to 420,000 tpa. QAPCo is also looking at the possibility of adding another LDPE line to increase LDPE production by 200,000 tpa.

Table 3.12:QAPCo’s Production (tons)

Source: QAPCo.

Qatar Petrochemical Company is the Largest Producer of LDPE in the Middle East


QAtAR vINyL ComPANy (QvC)

QvC is a joint venture between QAPCo (31.9%), QP (25.5%), Norsk Hydro of Norway (29.7%) and total Petrochemicals of France (12.9%). Krupp Uhde of Germany constructed the core process unit of the plant, while Italy’s technip covered the development of a 130 mW power generation facility. Project costs were estimated at $680 million. In 2008, QvC produced 200,000 tons of EDC, 330,000 tons of vCm and 370,000 tons of Caustic Soda. QAPCo provides the Ethylene feed-stock and also supplies facilities to the company through horizontal integration. South East Asia and Australia buy a large part of QvC’s production. QvC has already started looking into expansion prospects, with studies to expand capacity currently underway.

QAtAR CHEmICAL ComPANy (Q-CHEm)

In November 1997, QP (with a 51% interest) and Chevron Phillips Chemical Company (with a 49% interest) signed a joint venture agreement to construct a petrochemical complex, called Qatar Chemical Company (Q-Chem), in the mesaieed industrial area.

Construction of the $1.2 billion Ethylene cracker plant with a capacity of 500,000 tpa commenced in 1999, and had its first commercial operational year in 2004. the plant obtains Ethane and Butane feed-stock from the NGL-4 facility. the plant has a capacity of 500,000 tpa of Ethylene, 453,000 tpa of High-Density Polyethylene (HDPE), 47,000 tpa of Hexane-1, and 36,000 tpa of Sulphur. In 2008, Q-Chem produced 450,000 tons of Ethylene, 450,000 tons of HDPE, 42,000 tons of Hexane-1, and 40,000 tons of Sulphur.

QAtAR CHEmICAL ComPANy II (Q-CHEm II)

Qatar Petroleum, with a 51% stake and Chevron Philips Chemical Company (CPC) with a 49% stake are partners in this joint-venture, which will see the construction of a ‘world-scale’ High Density Polyethylene (HDPE) and olefins plant, adjacent to the Q-Chem plant in mesaieed. the Ethane feed-stock for the project will be sourced from the Ras Laffan Ethylene Cracker project, which will be fed with natural gas from the North Field. the project is estimated to cost well in excess of $1 billion, with a design capacity of 350,000 tpa of HDPE and 350,000 tpa of normal alpha olefins. the feasibility study for the project has been completed, with project completion scheduled for the fourth quarter of 2009. A Letter of Intent for building the plant was signed with technip of France in April 2005.

QP - SHELL PEtRoCHEmICAL PLANt

Qatar Petroleum and Shell Chemicals signed a Letter of Intent in march 2005 to set up a $2 billion world scale Ethane cracker and derivatives complex at Ras Laffan. QP will hold a 51% stake in the venture, with Shell holding the remaining 49%. the Ethane cracker project is expected to have a design capacity of 1.3 mtpa, with studies currently ongoing.

QAtoFIN

this is a joint venture between QAPCo (63%), total Petrochemicals (36%) and QP (1%), which will see the establishment of a Linear Low Density Polyethylene (LLDPE) plant with a 450,000 tpa capacity. the plant will be located in mesaieed, adjacent to the QAPCo facilities. the Ethane feed-stock for the plant will be supplied from the Ras Laffan Ethylene Cracker project. the EPC contractors for LLDPE plant is Snamprogetti, with the foundation stone for the project being laid in may 2006. the plant is scheduled for start-up in the fourth quarter of 2009.

Qatofin will Produce 450,000 tpa of LLDPE on Completion during the Last Quarter of 2009


RAS LAFFAN EtHyLENE CRACKER (RLEC)

this venture between Q-Chem II (53.31%), Qatofin (45.69%) and QP (1%), is primarily set up with the aim of supplying the Q-Chem II and Qatofin projects with Ethylene feed-stock. the Ethylene cracker unit is estimated to have a design capacity of 1.3 mtpa and is to be located at Ras Laffan. the Ethylene feed-stock will be transported via pipeline from Ras Laffan to Q-Chem II and Qatofin in mesaieed. the plant is set to become operational in the fourth quarter of 2009.

LINEAR ALKyL BENzENE (LAB) PRoJECt

the expansion and diversification plans of Qatar Petroleum Refinery led to the development plan for an estimated $340 million integrated Linear Alkyl Benzene (LAB) project. In January 2003, QP concluded deals to launch a linear alkyl benzene (LAB) project, in which the private sector will play a partnership role. In January 2004, QP awarded the EPC contract to South Korea’s LG Engineering and Construction Company. Linear Alkyl Benzene is produced from N-Paraffin and Benzene, with the plant having a design capacity of 100,000 tpa of Linear Alkyl Benzene. In 2008, Linear Alkyl Benzene production reached 120,000 tons.

QAtALUm

In march 2006, QP signed a Joint venture Agreement with Norway’s Hydro for the construction of an Aluminium smelter plant in mesaieed Industrial City with an initial capacity of around 585,000 tpa. to meet the huge power load requirement of the smelter plant, a power plant with a capacity of 1,350 mW will be constructed along-side. Project costs are estimated at around $5.0 billion, with expected completion in the fourth quarter of 2009.

RAS LAFFAN CoNDENSAtE REFINERy

In September 2006, the foundation for the Ras Laffan Condensate Refinery was laid with QP holding the majority stake of 51%, followed by Exxonmobil with 10%, total S.A. with 10%, Idemitsu with 10%, Cosmo oil with 10%, marubeni with 4.5%, and mitsui with 4.5%. the Ras Laffan Condensate Refinery will have a refining capacity of 146,000 bpd. the Refinery will receive feedstock from the North Field and produce Naphtha, Kerojet fuel, Gasoil and LPG. Project costs are estimated at around $800 million and is scheduled for completion in the third quarter of 2009.

3.4 inFrastructurE ProjEcts

NEW DoHA INtERNAtIoNAL AIRPoRt

the $11 billion estimated New Doha International Airport (NDIA) will be able to handle a capacity as large as 50 million passengers a year, on completion of all three phases of the project by 2015 (table 3.13). NDIA will be the world’s first airport to be designed and specifically built to handle the world’s largest passenger aircraft, the Airbus A380-800. the airport will also have a luxury hotel adjacent to the terminal and another one within the terminal for transit passengers. In January 2004, US company Bechtel was awarded the contract to develop the NDIA, by the State of Qatar.

Phase Contact Gates

Remote Gates

DevelopmentArea

Passenger Capacity Completion

Phase 1 24 7 130,000 m2 12 million 2010

Phase 2 40 11 219,000 m2 24 million 2012

Phase 3 80 11 416,000 m2 50 million 2015

Table 3.13:New Doha International Airport

Source: Qatar Airways and Published Information.

New Doha International Airport will be Able to Handle 50 Million Passengers a Year


RAS ABU FoNtAS B (RAF-B2)

the first phase of the expansion project saw the addition of 380 mW to Qatar’s power grid, taking total capacity at Ras Abu Fontas B to 990 mW. the second-phase of the expansion will involve the addition of 570 mW of power and 29 million gallons of water a day of desalination capacity to the existing 33 million gallons of water a day and the installation of waste heat recovery boilers. the EPC contract for the power generation was awarded to General Electric, while the contract for the water desalination was awarded to Fisia Italimpianti.

RAS LAFFAN INDEPENDENt WAtER AND PoWER PRoJECtS (IWPP)

the Ras Laffan Independent Water and Power Project (IWPP) is Qatar’s first power project developed on the build-own-operate-transfer (Boot) basis and will meet the rising domestic and industrial demand for power and water. the plant which is currently fully operational has a capacity of 750 mW of power and 40 million gallons of water a day. the Ras Laffan Power Company (RLPC) was formed in August 2001, as a Qatari company which undertook the project, in which AES Corporation owns a 55% share, Qatar Petroleum 10%, Qatar Electricity and Water Company 25%, and Gulf Investment Corporation 10%.

the Ras Laffan B Independent Water and Power Project is Qatar’s second project developed on the Boot basis and has a capacity of 680 mW of power and 15 million gallons of water a day. the project has been completed and full commercial operations have started in 2008. the Qatar Power Company undertook the project in which Qatar Electricity and Water Company has a 55% stake, UK’s International Power has a 40% stake, and Japan’s Chubu Electric Power has a 5% stake.

the Ras Laffan C Independent Water and Power Project which was launched in April 2008 is set to become Qatar’s largest power plant with a production capacity of 2,730 mW of power and 63 million gallons of water a day. the Ras Girtas Power Company has been establsihed to undertake the project in which QP has a 15% stake, QEWC a 45% stake, and the remaining 40% stake being held by Suez Energy International and mitsui. the project is estimated to cost around $3.8 billion and is set for completion in 2011.

INDEPENDENt PoWER PRoJECt - 2 (IPP - 2)

the Independent Power Project - 2 (IPP - 2) is a joint venture between QP (30%), QEWC (30%), and marubeni Corporation (40%). the plant will be located at mesaieed and will have capacity of 2,007 mW of power. the $2 billion estimated plant is currently under construction and is expected to be completed by the last quarter of 2009.

ENERGy CIty QAtAR

the $2.6 billion Energy City Qatar (ECQ) project was launched in march 2006, with the aim of making Qatar an energy business hub. ECQ is a pioneering development that will establish Qatar as an integrated energy business centre that will cater to the needs of the hydrocarbon sector with cutting-edge facilities and services. ECQ aims to attract the world’s leading oil and gas companies, support services, infrastructure and downstream activities, shipping and trading, market and resource data, and energy trading. An energy trading platform called the International mercantile Exchange (ImEx) will also be set up as part of the ECQ.

3.5 HEaLtH, Education and tourism ProjEcts

HAmAD mEDICAL CIty

the Hamad medical City project is estimated to cost QR1.5 billion and will include a 300-bed unit, a dialysis unit, medical staff accommodation and laboratories. this project forms part of the QR12.5 billion budget of the ministry of municipal Affairs and Agriculture. two other new hospital projects are also in the construction phase; the estimated QR220 million Southern Area Hospital at Wakrah, with a 200-bed facility, and the estimated QR100 million Cardiology Hospital at Rumailah, with a 110-bed facility.

The $2.6 Billion Energy City will Establish Qatar as an Energy Business Hub


EDUCAtIoN CIty

the 2,400 acre multi-institutional ‘Education City’ is being set up under the aegis of the Qatar Foundation for Education, Science and Community Development, which was established in 1995 by H.H. the Emir Sheikh Hamad Bin Khalifa Al-thani. the facility includes higher educational institutions at the university level, specialised training in design arts and languages, and sporting facilities. the Qatar Foundation has signed a number of agreements with world renowned educational institutions to set up branches of their institutions in the ‘Education City’ in Qatar. the first such agreement was signed with New york based Cornell University for establishing the ‘Weill Cornell medical College - Qatar’. As part of the Weill Cornell medical College - Qatar there is also a proposal to set up a hospital with a 250-300 bed capacity. the other leading educational institutions represented in Qatar are Washington based Georgetown University’s Welsh School of Foreign Services, texas A&m University which offers engineering degree courses, Carnegie mellon University which offers undergraduate programmes in computer science and business, Northwestern University which offers Bachelor’s degrees in communication and journalism, Canada based College of North Atlantic and Canadian Bureau of International Education, among others.

HotELS

Qatar’s hotel room capacity in the 3-5 Star category is set to increase substantially by an additional 13,624 rooms in the coming years, as a result of various up-coming projects (table 3.14).

Hotel Rooms

the Pearl-Qatar - Four Seasons 250

Holiday Hotel villa & Residence 358

marriott Courtyard 204

marriott Renaissance Hotel 249

Hilton 310

Shangri-La 271

Rotana 287

oasis 322

merweb Grand City Centre 256

Jumeirah Dubai towers 235

Four Points Hotel 250

maritim 358

Qatar Silouette 320

Barwa West Bay 370

Al-Quds tower Hotel 264

Retaj Hotel 218

Qatar Airways Hotel 400

St. Regis 322

Aspire tower 168

Barwa Al Rayyan Hotel 250

Abdulwahab tower 488

Grand Saray 240

Barwa Al Khor Hotel 400

others 6,834

Total 13,624

Table 3.14:Upcoming 3-5 Star Hotels in Qatar (2009 - 2012)

Source: Qatar tourism and Exhibitions Authority.

Qatar’s Hotel Room Capacity will Increase by an Additional 13,624 Rooms by 2012


Table 4.1:Consumer Price Index(2006 = 100)


4. inFLationInflation in Qatar has risen rapidly and increased more than seven-fold in recent years, averaging 11.3% over the past five years (2004-2008), compared to an average of 1.6% in the preceding five years (1999-2003). this increase in inflation over the past few years can be primarily attributed to the rapid and sustained increase in housing costs. However, during the first half of 2009 Qatar witnessed a deflation of 3.6% due to the effects of the global financial crisis and its impact on the housing sector in particular. the group Housing which has the highest weight of 32.2% on the index, declined by 8.4% during the first half of 2009 (table 4.1).

the overall annual inflation rate reached an all time high of 15.1% in 2008, compared to an increase of 13.8% in 2007. Consumer Price Index (CPI) data released by the Qatar Statistics Authority for 2008 show all the main groups of commodities and services on the index witnessed an increase. the group Food and Beverages with an increase by 19.9%, along with the group Housing were the main inflation drivers in 2008. Housing continues to be one of the main inflation drivers in 2008, increasing by 19.6%, after an increase of 29.3% in 2007, and a rise of 26.0% in 2006. Among the other groups of commodities and services in 2008, the group miscellaneous goods and services increased by 12.4%, with the group garments and footwear increasing by 11.8%, and the group education, culture and recreation going up by 9.9%. Going forward, QNB Capital estimates inflationary pressures to ease considerably in 2009 to between 3-5%, with the cooling down of the housing market.

Groups of Commodities and Services

2006 2007 2008 2008 Jan - Jun 2009

%Change

%Change

%Change Index Index

%Change

Food, Beverages and tobacco 7.33% 7.36% 19.94% 128.77 130.13 1.06%

Garments and Footwear 12.43% 12.59% 11.79% 125.86 122.92 -2.34%

Housing 25.97% 29.33% 19.61% 154.69 141.77 -8.35%

Furniture, textiles and Home Appliances 3.94% 5.42% 7.71% 113.55 109.49 -3.58%

medical Care and medical Services 1.17% 1.23% 4.22% 105.50 106.73 1.16%

transport and Communications 1.87% 2.36% 8.87% 111.44 107.29 -3.73%

Education, Culture and Recreation 2.32% 4.96% 9.86% 115.31 114.27 -0.90%

miscellaneous Goods and Services 13.60% 4.55% 12.38% 117.49 124.40 5.88%

General Index 11.84% 13.76% 15.05% 130.90 126.23 -3.57%

the most recent Family Expenditure Survey (FES) conducted by the Qatar Statistics Authority in 2006/07, reflects the changing spending patterns of households and also the changing nature of the market. the 2006/07 FES shows that the average household (Qatari and Non-Qatari) has an expenditure of QR21,852 per month, with Qatari households having a monthly expenditure of QR40,757, and Non-Qatari households having an expenditure of QR13,329 per month. the average household spending per month on Housing is QR7,036 per month, which forms 32.2% of total monthly expenditure. Average monthly household expenditure on transport and Communication is QR4,480 and for Food and Beverage is QR2,885 (table 4.3).

the new weights for the groups of commodities and services on the Consumer Price Index (CPI), based on the FES conducted in 2006/07 shows that the group Housing now forms the largest part of household expenditures, with a weight or part of total expenditures at 32.2%, compared to 19.1% in 2000/01. the group transportation forms the second largest part of household expenditures with a weight of 20.5%, followed by group Food and Beverages with a weight of 13.2% (table 4.2).

Qatar’s Inflation Averaged 11.3% Over the Past Five Years


Groups of Commoditiesand Services Relative Importance (Weight on 10,000)

FES-2000/01 % Spent FES-2006/07 % Spent

Food and Beverage 1,809 18.1 1,322 13.2

Clothing and Footwear 711 7.1 582 5.8

Housing 1,914 19.1 3,215 32.2

Furniture and Furnishings 863 8.6 822 8.2

medical Care and Services 214 2.2 204 2.0

transport and Communication 1,577 15.8 2,047 20.5

Education, Entrtainment and Culture 1,608 16.1 1,085 10.9

miscellaneous Goods and Services 1,304 13.0 723 7.2

total Weight 10,000 100.0 10,000 100.0

Groups of Commoditiesand Services

Average Household(QR Spent) % Spent

Food and Beverage 2,885 13.2

Clothing and Footwear 1,267 5.8

Housing 7,036 32.2

Furniture and Furnishings 1,792 8.2

medical Care and Services 437 2.0

transport and Communication 4,480 20.5

Education, Entertainment and Culture 2,382 10.9

miscellaneous Goods and Services 1,573 7.2

total 21,852 100.0

Table 4.2:Weightage on the Consumer Price Index


Table 4.3:Family Expenditure Survey (2006/07)


The Group Housing has the Biggest Weight of 32.2% on the Consumer Price Index


Table 5.1:Balance of Payments(2004 - 2008)

Source: Qatar Statistics Authority and Qatar Central Bank.

5. BaLancE oF PaymEntsFoREIGN tRADE

Qatar’s exports and imports have increased rapidly in recent years due to the huge ongoing and completed gas, oil, industrial, infrastructure, educational and tourism related projects.

Qatar’s exports have grown by an average of 33.6% over the past five years (2004 - 2008). Qatar’s successful diversification efforts are being realised, with increased export revenues coming in from natural gas, chemicals and related products, and iron and steel (table 5.2). Qatar’s exports have grown by 203% over the five-year period from 2004 to 2008, to reach QR206.0 billion ($56.6 billion) in 2008, from QR68.0 billion in 2004.

Qatar’s imports have been showing a more impressive growth rate averaging 43.1% during the past five years (2004 - 2008). Qatar’s various project requirements have led to the big rise in imports, as can be seen through the increase in imports of machinery and mechanical appliances and also building materials (table 5.5). Qatar’s imports have grown by 365% over the five year period from 2004 to 2008, to reach QR91.5 billion ($25.1 billion) in 2008, from QR19.7 billion in 2004.

the Balance of Payments situation has been equally impressive, with consecutive surpluses being recorded since 1999.

ExPoRtS

Qatar’s exports increased by 34.7% in 2008, to reach QR206.0 billion, from QR153.0 billion in 2007 (table 5.1). the export data obtained from the Qatar Statistics Authority show significant increases in the export of crude oil, LNG, chemicals and related products, and iron and steel.

the increase in crude oil export revenues in 2008 was due to the high oil prices. QNB Capital forecasts indicate that Qatar’s exports will drop in 2009 with the decline in oil prices and production, and the decline in gas and related industry product prices.

Particulars (QR Million) 2004 2005 2006 2007 2008

Exports 68,013 93,774 123,945 152,953 205,997

Imports (19,691) (32,992) (53,911) (72,158) (91,492)

1. trade Balance 48,322 60,782 70,034 80,795 114,505

2. Services and Private transfers (Net) (20,833) (33,547) (35,604) (42,771) (56,703)

3. Current Account (1+2) 27,489 27,235 34,430 38,024 57,802

4. Net Capital transfers (private and official) (13,194) (10,915) (14,630) 8,070 (8,272)

5. Surplus in Balance of Payments (3+4) 14,295 16,320 19,800 46,094 49,530

Qatar’s Exports have Grown by an Average of 33.6% from 2004 - 2008


Qatar’s principal export items in 2008 were mineral fuels and products, which accounted for 89.6% of the total value of goods exported, followed by chemicals and related products (table 5.2).

Export Items (QR Million) 2004 2005 2006 2007 2008

1. mineral Fuels and Products (a) Petroleum and Related Products (b) Gas - Natural and manufactured (I) LNG (II) Condensates (III) Propane (Iv) Butane (v) Ethylene, Propylene, Butylene & Butedine

58,93535,41723,51819,7941,6731,450

601--

83,22351,51831,70524,5644,3352,012

794--

111,20463,87547,32932,34010,7813,0111,197

--

136,91575,76161,15434,49619,3644,3812,361

552

184,500100,41384,08758,78323,230

--836

1,238

2. Chemicals and Related Products(a) Plastics in Primary Form (Polyethylene)(b) Fertilisers (Urea)(c) organic Chemicals (methanol - vinyl

Chloride - Hexane)(d) Inorganic Chemicals (Helium -

Ammonia - Caustic Soda)(e) others

6,4441,4421,4362,578

828

160

7,1722,2332,4941,915

454

76

9,6214,0362,4532,248

818

66

12,2154,8483,2623,012

966

127

16,3685,0735,3774,292

1,391

235

3. Iron and Steel and Related Articles 1,363 1,463 1,336 1,535 1,305

4. Sulphur, Limestone and Cement 82 108 86 164 442

5. Aluminium and Related Articles 9 29 23 29 18

6. others 330 239 132 167 214

7. Re-Exports 850 1,540 1,543 1,928 3,150

Total 68,013 93,774 123,945 152,953 205,997

Qatar exported 30.4 million tons (mt) of LNG in 2008 which accounted for 28.5% of overall export earnings. LNG export revenues have increased by 197% over the past five years to reach QR58.8 billion in 2008 from QR19.8 billion in 2004. LNG export destinations have increased over the years with new SPA’s being signed with major international companies. South Korea is the leading importer of LNG and in 2008 received 8.5 mt of LNG, followed by India with 7.5 mt, Japan with 6.9 mt and Spain with 3.5 mt (table 5.3).

Country (Million Tons) 2004 2005 2006 2007 2008

South Korea 6.0 6.2 6.7 8.2 8.5

India 2.0 4.5 5.0 6.2 7.5

Japan 6.9 6.2 6.4 6.4 6.9

Spain 3.2 3.7 3.7 3.5 3.5

Belgium -- -- -- 1.7 2.2

others 0.3 1.6 3.3 1.4 1.8

Total 18.4 22.2 25.1 27.4 30.4

Qatar’s leading export trade partner in 2008 was Japan, accounting for 33.3% of the total value of exports. South Korea, Singapore, India, and thailand were some of Qatar’s other main export trade partners during 2008 (table 5.4). India currently is the second largest importer of Qatari LNG receiving 7.5 million tons in 2008, and entered the top export trade partners list for the first time in 2004, and continues to gain prominence in the list in 2008 with exports to India increasing from QR3,661 million in 2004, to QR10,434 million in 2008.

Table 5.2:Qatar’s main Items of Export (2004 - 2008)


Table 5.3:LNG Exports (2004 - 2008)

Source: QatarGas & RasGas.

Qatar’s Main Export Item in 2008 was Petroleum and Related Products


Country (QR Million) 2004 2005 2006 2007 2008

Japan 28,315 37,506 51,388 62,072 68,624

South Korea 10,677 14,771 17,198 26,698 43,535

Singapore 6,169 7,686 11,715 17,294 23,379

India 3,661 3,262 6,036 9,720 10,434

thailand 1,863 1,903 3,390 7,003 7,398

Belgium 10 64 345 2,195 4,984

Spain 1,262 898 3,051 3,410 4,940

New zealand 250 441 675 1,030 3,944

UAE 2,243 4,280 5,355 5,693 3,170

taiwan 929 2,382 1,944 1,850 2,555

ImPoRtS

Qatar’s imports (fob) increased by 26.8% in 2008 to reach QR91.5 billion, from QR72.2 billion in 2007 (table 5.1). Data on imports obtained from the Qatar Statistics Authority show that Qatar’s main items of import in 2008 consisted of machinery and mechanical appliances, base metals, vehicles and transport equipment, and food products (table 5.5). machinery and mechanical appliances gained top spot in the list of import items due to the various energy sector, infrastructure and industrial projects that are ongoing. Qatar continues to import substantial quantities of base metals, primarily iron and steel, to keep pace with the needs of the burgeoning construction sector.

Import Items(QR Million) 2004 2005 2006 2007 2008

1. machinery and mechanical Appliances

4,630 12,053 21,593 31,600 37,997

2. Base metals and Articles of Base metals

2,717 6,058 11,766 16,159 20,012

3. vehicles and other transport Equipment

1,402 5,200 8,857 9,641 12,807

4. Food Products 1,438 2,064 2,811 3,453 5,544

5. Cement, Iron ores, Earths and Stones

850 1,838 2,702 3,877 5,222

6. Chemicals and Related Products

1,010 1,932 2,415 3,255 4,704

7. optical, Photographic and measuring Equipment

700 1,342 1,811 1,980 2,008

8. Furniture 374 801 1,484 1,450 1,896

9. textiles and textile Articles

632 858 1,395 1,531 1,834

10. Plastics and Related Articles

410 631 966 1,248 1,656

11. Aircrafts and Parts 6,136 493 476 1,065 1,517

12. Pearls, Precious Stones and Precious metals

336 501 674 1,180 819

13. others 1,221 2,850 2,785 3,658 5,540

Total* 21,856 36,621 59,735 80,097 101,556

Table 5.4:Exports to main trade Partners (2004 - 2008)


Table 5.5:Qatar’s main Items of Import (2004 - 2008)

* values at CIF (including customs, insurance and freight).


Qatar’s Main Import Item in 2008 was Machinery and Mechanical Appliances


In 2008, Qatar’s main import trade partner was Japan, accounting for 9.6% of the total value of imports, followed by USA with 9.0% and Germany with 8.4% (table 5.6).Imports from Japan increased rapidly in 2008, mainly as a result of imports of machinery and mechanical appliances for the oil and gas industry, and vehicle and transport equipment.

Country (QR Million) 2004 2005 2006 2007 2008

Japan 1,141 4,263 7,183 7,982 9,785

USA 2,102 4,232 5,900 9,120 9,169

Germany 1,149 3,362 5,581 6,209 8,527

Italy 740 2,365 5,543 8,229 7,474

China 668 1,892 3,483 4,660 7,327

UAE 1,381 2,356 3,606 5,632 6,728

South Korea 409 1,658 3,278 4,863 5,577

Saudi Arabia 2,079 2,093 3,055 3,925 4,954

UK 1,119 2,096 2,985 3,769 4,773

turkey 117 254 1,217 1,716 3,827

CURRENt ACCoUNt

Qatar’s trade balance increased by 41.7% in 2008 to reach QR114.5 billion, from QR80.8 billion in 2007. Qatar’s trade balance increase in 2008 was mainly due to the price and production increase in both oil and gas.

the net outflow of services and private transfers has steadily increased over the years, mainly due to repatriation of funds by expatriate workers, and in 2008 reached QR56.7 billion. Preliminary numbers released by the QCB for the year 2008 indicates a current account surplus of QR57.8 billion ($15.9 billion), compared to a surplus of QR38.0 billion ($10.4 billion) in 2007 (Fig. 5.1).

ovERALL BALANCE oF PAymENtS

Net capital transfers amounted to QR8.3 billion in 2008, resulting in a record overall Balance of Payments surplus of QR49.5 billion (Fig. 5.2). Balance of Payments surpluses are likely to remain strong in the coming years on the back of increasing quantities and diversified product exports.

Table 5.6:Imports from main trade Partners (2004 - 2008)


Qatar’s Main Import Trade Partner in 2008 was Japan


Figure 5.1:Qatar’s Current Account Balance (QR million)

Source: Qatar Statistics Authority & QCB.

Figure 5.2:Qatar’s Balance of Payments (QR million)

Source: Qatar Statistics Authority & QCB.

Trade Balance Balance of Payments Surplus

2004 2005 2006 2007

70,000

60,000

50,000

40,000

30,000

20,000

10,000

80,000

90,000

46,094

80,795

2008

49,350

114,505

14,29516,320

60,782

48,322

19,800

70,034

100,000

110,000

120,000

2004 2005 2006 2007

60,000

55,000

50,000

45,000

40,000

35,000

30,000

25,000

20,000

15,000

10,000

38,024

2008

57,802

27,489 27,235

34,430

Qatar’s Trade Balance Reached QR114.5 Billion in 2008


6. monEtary PoLicythe monetary management in Qatar is implemented by Qatar Central Bank (QCB) which was established by Law No. 15 for the year 1993, from what was formerly called the Qatar monetary Agency (QmA).

the main objective of the QCB is to regulate the monetary, credit and banking policies in accordance with the general plans of the State, in order to support the national economy and the stability of the currency. QCB has full powers over the monetary policies of the State, and supervises and controls banks and financial institutions.

An effective monetary tool utilised by the QCB is the imposition of minimum reserve requirements for commercial banks. In February 2000, QCB instructed banks to maintain cash reserves equal to 2.75% of total deposits (including foreign deposits) instead of 19% of total demand deposits, previously in effect.

Another important monetary tool used by the QCB is the loans-to-deposit ratio limit applied to commercial banks, which is set at 90% of the total deposits base and any bank that exceeds this limit is penalised by the QCB.

6.1 domEstic LiQuidity

Domestic Liquidity witnessed an increase by 2.3% during the first half of 2009 to reach QR188.2 billion, compared to QR184.0 billion as at year-end 2008 (table 6.1).In 2008, Domestic Liquidity increased by 19.7% to reach a high of QR184.0 billion. High domestic liquidity has resulted from the continued rally in energy prices for most part of 2008. In 2008, narrow money supply (m1) increased by 24.9% to reach QR50.9 billion, from QR40.7 billion in 2007. the increase in m1 resulted from an increase in demand deposits, which rose by 25.5% to reach QR45.5 billion. Savings and time deposits increased by 33.1% to reach QR85.7 billion, compared to QR64.3 billion in 2007. Foreign currency deposits witnessed a decline by 2.4% in 2008 to QR47.5 billion. Domestic Liquidity increased by 39.5% in 2007 to reach a level of QR153.7 billion, compared to QR110.2 billion in 2006.

(QR Million) 2005 2006 2007 2008 June 2009

Currency with public 2,866 3,959 4,487 5,368 5,543

Demand deposits 22,791 29,533 36,250 45,502 45,909

narrow money Supply (m1) 25,657 33,492 40,737 50,870 51,452

Savings and time deposits 28,409 39,622 64,349 85,676 112,019

Foreign currency deposits 24,835 37,059 48,650 47,459 24,704

total quasi money 53,244 76,681 112,999 133,135 136,723

Broad money Supply (m2) 78,901 110,173 153,736 184,005 188,175

6.2 ExcHangE ratE PoLicy

the Qatari Riyal is officially pegged to the US dollar at a rate of 1 US$ = QR3.640. In 2008, the Qatari Riyal continued its slide against major currencies, while making a gain against the Sterling Pound. In 2008, the Qatari Riyal declined by 14.2% against the Japanese yen, by 11.1% against the Swiss Franc, and by 7.5% against the Euro, while gaining on the Sterling Pound by 7.4% (table 6.2).

In 2007, the Qatari Riyal witnessed big declines against the major european currencies, while making marginal gains against the Japanese yen. In 2007, the Qatari Riyal declined by 9.1% against the Euro, by 8.6% against the Sterling Pound, and by 4.5% against the Swiss Franc, while gaining on the Japanese yen by 1.2%.

Table 6.1:money Supply(2005 - June 2009)

Source: Qatar Central Bank.

Domestic Liquidity witnessed an increase by 2.3% during the First Half of 2009


(Average) 2004 2005 2006 2007 2008

Pound Sterling -12.1% 0.6% -1.2% -8.6% 7.4%

Euro -10.0% -0.2% -0.9% -9.1% -7.5%

Swiss Franc - 8.3% 0.1% 0.7% -4.5% -11.1%

Japanese yen (Per 100) -7.2% 1.8% 5.2% 1.2% -14.2%

6.3 intErEst ratE PoLicy

Up until 1996, the QCB imposed a ceiling on interest rates offered by commercial banks on credits and deposits. In February 2001, the QCB removed its ceiling on interest rates for local currency deposits, freeing the banking system from all interest rate policy restrictions.

In July 2001, the QCB introduced a new monetary instrument called the “Qatar monetary Rate” (QmR), which allows banks in Qatar to deposit or borrow from the QCB, overnight funds of an amount not less than QR2.0 million, at rates determined by the QCB, which are fixed on a daily basis.

the US Federal Funds rate has witnessed a number of cuts in 2008 as a result of a slowing US economy and the ongoing financial crisis. the US Federal Funds rate stood between 0.00% - 0.25% as at June 2009, while the QCB Repo rate stood at 5.55%, with the QmR Lending rate at 5.50%, and the QmR Deposit rate at 2.00% (table 6.3).

End of Period US Fed Funds Rate (%)

QCB RepoRate (%)

QMR Lending Rate (%)

QMR Deposit Rate (%)

2003 1.00 1.53 1.33 1.23

2004 2.25 3.15 2.60 2.50

2005 4.25 5.10 4.50 4.40

2006 5.25 5.55 5.50 5.15

2007 4.25 5.55 5.50 4.00

2008 0.00 - 0.25 5.55 5.50 2.00

march 2009 0.00 - 0.25 5.55 5.50 2.00

June 2009 0.00 - 0.25 5.55 5.50 2.00

Table 6.2:Change in Qatari Riyal against other major currencies(2004 - 2008)

Note: An Emiri Decree (No. 34) was issued in July 2001 fixing the Qatari Riyal to the US$ at a rate of 1 US$ = QR3.64.


Table 6.3:US Federal Funds Rate and QCB Repo Rate movements

Source: Qatar Central Bank and Financial times.

Overnight QMR Lending Rate Stood at 5.5% and Deposit Rate at 2.0% as at June 2009


7. Banking sEctorthe Qatari banking sector comprises of a combination of national and foreign banks. A total of 17 banks currently operate in Qatar, nine of which are Qatari institutions, including six commercial banks (ahlibank, Al Khaliji Bank, Commercialbank, Doha Bank, International Bank of Qatar, and Qatar National Bank) and three Islamic institutions (masraf Al Rayan, International Islamic and Qatar Islamic Bank). Also represented is the local branches of seven foreign banks including Arab Bank, Bank Saderat Iran, HSBC, mashreqbank, BNP Paribas, Standard Chartered, and United Bank. A specialised government owned institution - Qatar Development Bank, was established in 1997 and provides financing to small and medium scale industries.

In 2008, the domestic banking system continued to witness the rapid expansion of local banks both regionally and internationally, through branches, representative offices, equity stakes, joint ventures and acquisitions. In 2008, QNB’s strategic expansion into the middle East and North Africa Region saw it acquire a 24% stake in the UAE-based Commercial Bank International and a 50% stake in the tunisian-Qatari Bank. Further, QNB’s stake in Jordan’s Housing Bank for trade and Finance was increased to 33%. Additionally, QNB established a full service branch in Singapore, while QNB Al Islami opened its first international branch in Sudan.

BANKING SECtoR - JUNE 2009

During the first half of 2009, Qatari Banks continued to perform well even as the global financial crisis continued, with Net Profits increasing by 5.4% to reach QR5,567.3 million, compared to QR5,280.0 million achieved during the first half of 2009 (table 7.2). During the first half of 2009, total Assets of Qatari Banks increased by 10.4% to reach QR378.3 billion, compared to QR342.7 billion as at June 2008. Customer Deposits rose by 13.7% during the first half of 2009 to reach QR237.0 billion, with loans and advances increasing by 13.8% to reach QR218.2 billion. total Shareholders’ Equity reached QR58.4 billion as at June 2009.

the market share of QNB and other Qatari banks as at June 2009 are presented graphically in Figure 7.1, while the profit distributions of local Qatari banks during 2004 - 2008 are highlighted below in table 7.1.

2004 2005 2006 2007 2008

QNB

Cash Dividend (%) 60% 75% 60% 50% 75%

Bonus Shares Nil 1 for 4 1 for 4 1 for 5 1 for 4

Doha Bank

Cash Dividend (%) Nil Nil 5% 40% 50%

Bonus Shares 7 for 10 8 for 10 Nil 1 for 5 Nil

Commercialbank

Cash Dividend (%) 40% 40% 70% 40% 70%


Qatar Islamic Bank

Cash Dividend (%) Nil 25% 70% 20% 70%


ahlibank

Cash Dividend (%) 18.75% Nil 15% 20% 50%

Bonus Shares Nil 1 for 3 1 for 4 3 for 20 Nil

International Islamic

Cash Dividend (%) 10% Nil Nil Nil 40%

Bonus Shares 3 for 10 1 for 1 1 for 2 8 for 10 Nil

Masraf Al Rayan

Cash Dividend (%) - - - 10% 15%

Bonus Shares - - - Nil Nil

Table 7.1:Qatari Banks Dividend Distribution (2004 - 2008)

Source: Banks’ Annual Reports and Published Information.

Net Profit of Qatari Banks Increased by 5.4% During the First Half of 2009


61.1% 38.9%

56.6% 43.4%

62.0% 38.0%

62.9% 37.1%

Figure 7.1:market Share (June 2009)

Assets

Deposits

Loans & Advances

Net Profit

QNB has the Largest Market Share in Qatar


Total Assets Customer Deposits

(QR Million) 2008 June 2008

June 2009 2008 June

2008June 2009

Qatar National Bank 151,974 152,640 147,115 104,253 98,524 102,823

Commercialbank 61,302 53,818 59,043 32,186 28,918 30,039

Doha Bank 39,003 36,773 43,812 23,277 24,995 23,398

Qatar Islamic Bank 33,543 26,960 35,685 16,592 15,509 20,202

masraf Al Rayan 16,769 13,648 22,613 10,898 8,146 16,903

International Bank of Qatar 22,411 22,411 22,308 11,465 10,538 14,022

ahlibank 17,799 17,742 16,800 12,111 12,649 11,410

International Islamic 12,842 12,643 14,706 9,139 9,138 10,508

al khaliji Bank 12,501 6,033 16,219 4,673 26 7,664

Total 368,144 342,668 378,301 224,594 208,443 236,969

Foreign Banks 31,349 33,870 32,279 20,442 24,321 20,255

Loans and Advances Shareholders’ Equity


June 2009 2008 June

2008June 2009

Qatar National Bank 100,053 84,285 82,898 16,643 18,982 17,725

Commercialbank 33,898 29,848 32,051 9,978 7,422 10,508

Doha Bank 23,966 23,385 23,614 4,913 4,772 5,054

Qatar Islamic Bank 18,866 15,264 19,711 7,143 6,589 7,524

masraf Al Rayan 13,326 10,668 16,886 5,694 5,036 5,467

International Bank of Qatar 13,177 9,183 13,591 2,593 1,908 2,583

ahlibank 11,547 11,542 11,163 1,640 1,700 1,673

International Islamic 8,253 6,367 10,179 2,780 2,686 3,062

al khaliji Bank 6,980 1,225 8,151 4,546 4,574 4,789

Total 230,066 191,767 218,244 55,930 53,669 58,385

Foreign Banks 15,632 14,273 14,932 3,748 N/A N/A

Share Capital Net Profit


June 2009 2008 June

2008 June 2009

Qatar National Bank 2,409 2,409 3,011 3,652.5 1,857.0 2,067.4

Commercialbank 2,062 1,869 2,165 1,702.4 1,039.1 943.3

Doha Bank 1,722 1,722 1,809 946.5 579.3 646.3

Qatar Islamic Bank 1,969 1,969 2,068 1,642.5 853.5 812.6

masraf Al Rayan 4,125 4,125 4,125 917.0 250.1 386.5

International Bank of Qatar 1,000 321 1,000 305.1 150.0 176.0

ahlibank 584 584 613 425.8 187.6 171.6

International Islamic 1,261 1,261 1,324 501.2 350.8 255.2

al khaliji Bank 3,600 3,600 3,600 29.3 12.6 108.4

Total 18,732 17,860 19,715 10,122.3 5,280.0 5,567.3

Foreign Banks -- N/A N/A 625.7 N/A N/A

Table 7.2:Balance Sheets of Qatari Banks

Balance Sheets of Qatari Banks

Balance Sheets of Qatari Banks

Note: Foreign banks’ Net profit is on after tax basis.

Source: Banks’ Annual Reports and Published Information.

Total Assets of Banks in Qatar Reached QR410.6 Billion as at June 2009


8. domEstic crEdit FaciLitiEstotal Domestic Credit facilities declined by 2.5% during the first half of 2009 to QR215,322 million, compared to QR220,807 million as at year-end 2008 (table 8.1). In 2008, total domestic credit facilities increased by 51.0% to reach QR220,807 million, compared to QR146,329 million in 2007. In 2008, credit facilities to all sectors increased substantially. total domestic credit facilities increased by 54.4% in 2007, and by 40.7% in 2006.

the Personal Sector currently accounts for the largest portion of domestic credit facilities and as at June 2009 accounted for 26.2% of total domestic credit facilities (Figure 8.1). During the first half of 2009 the domestic credit facilities to the Personal Sector witnessed a marginal decline to QR56,345 million from QR56,771 million as at year-end 2008. In 2008, the domestic credit facilities to the Personal Sector increased by 20.5% to reach QR56,771 million. the Personal Sector has witnessed tremendous growth in recent years with domestic credit facilities extended to this sector witnessing an over four-fold increase to reach QR56,771 million in 2008, from QR11,503 million in 2003. In 2007, domestic credit facilities to the Personal Sector increased by 34.0% to reach QR47,123 million, compared to QR35,177 million in 2006.

Sector (QR Million) 2005 2006 2007 2008 June 2009

Public 18,650 21,537 35,902 60,589 46,981

merchandise 8,184 11,553 17,978 21,884 22,617

Industry 2,419 2,078 3,460 5,501 6,733

Land, Housing & Construction 9,541 15,745 27,967 44,733 49,147

Personal 24,731 35,177 47,123 56,771 56,345

Services 2,942 7,246 11,090 26,441 27,411

others 900 1,437 2,809 4,888 6,088

Total Domestic Credit 67,367 94,773 146,329 220,807 215,322

outside Qatar 2,368 7,775 14,267 21,846 18,419

Domestic credit facilities extended to the Land, Housing and Construction Sector showed no signs of slowing down even during the first half of 2009 with a growth of 9.9% to reach QR49,147 million. the Land, Housing and Construction Sector accounted for the second largest portion of domestic credit facilities as at June 2009. In 2008, the domestic credit facilities extended to the Land, Housing and Construction Sector increased by 60.0% to reach QR44,733 million. the credit facilities extended to the Land, Housing and Construction Sector recorded a growth of 77.6% in 2007 to reach QR27,967 million, from QR15,745 million in 2006. the higher spending by the State on infrastructure projects, education projects, health and social welfare projects, and various other hotel, commercial and residential construction projects have been the main reasons for the substantial growth in this sector in recent years.

Domestic credit facilities to the Public sector declined by 22.5% during the first half of 2009 to QR46,981 million, compared to QR60,589 million as at year-end 2008. the Public Sector had overtaken the Personal Sector in 2008 to account for largest portion of domestic credit facilities. In 2008, domestic credit facilities to the Public Sector increased by 68.8% to reach QR60,589 million. the share of credit facilities to the Public Sector as a percentage of total domestic credit facilities had been declining from a high of 46.0% in 2003, to 24.5% in 2007, as the government finances witnessed a stark improvement supported by its successful economic diversification efforts and higher energy prices and exports. However, the Public Sector continues to use short-medium term financing for its various development projects. Domestic credit facilities to the Public Sector increased by 66.7% in 2007 to reach QR35,902 million, compared to QR21,537 million in 2006.

Credit facilities extended to the merchandise Sector grew by 3.3% during the first half of 2009 to reach QR22,617 million. In 2008, credit facilities to the merchandise Sector increased by 21.7% to reach QR21,884 million, compared to QR17,978 million in 2007. In 2007, this sector recorded a growth of 55.6%.

Table 8.1:Credit Facilities by Economic Sector (2005 - June 2009)


Domestic Credit Facilities witnessed a Slight Decline during the First Half of 2009


the domestic credit facilities to the Services Sector increased by 3.7% during the first half of 2009 to reach QR27,411 million. In 2008, domestic credit facilities to the Services Sector increased by 138.4% to reach QR26,441 million. In 2007, the Services Sector recorded a growth of 53.0%, receiving QR11,090 million out of total domestic credit facilities.

Domestic credit to the Industry Sector witnessed a growth of 22.4% during the first half of 2009 to reach QR6,733 million. In 2008, domestic credit to this sector increased by 59.0% in 2008 to reach QR5,501 million, compared to QR3,460 million in 2007.

Credit facilities extended outside Qatar declined by 15.7% during the first half of 2009 to QR18,419 million. In 2008, credit facilities outside Qatar increased by 53.1% to reach QR21,846 million. In 2007, credit facilities outside Qatar recorded an increase of 83.5% to reach QR14,267 million, from QR7,775 million in 2006. Credit facilities outside Qatar has witnessed a huge growth in recent years, rising from QR442 million in 2003 to QR18,419 million as at June 2009.

26.2%

12.7%

22.8%

2.8%

21.8%13.7%

Figure 8.1:Distribution of Credit Facilities (June 2009)


The Personal Sector Accounts for the Largest Portion of Domestic Credit Facilities


9. PuBLic FinancEthe Government’s primary source of budget revenues are oil and gas related, which are generated by QP’s activities. In addition to such export receipts, the Government obtains revenues primarily from dividend income of other industrial enterprises, including Industries Qatar, QNCC, QEWC and commercial enterprises and banks such as Q-tEL and QNB. other sources of Government revenues include investment income, customs duties, taxes, public utility fees and other charges.

the principal items of Government expenditure are wages and salaries of the public sector, interest payments on government indebtedness, other current expenditures, and capital expenditures.

Available data from the ministry of Economy and Finance estimates indicate a budget surplus in each of the past nine fiscal years amounting to a total of QR140.8 billion ($38.7 billion). these surpluses highlight the turnaround that has been achieved by the government, after almost a decade of deficits. Qatar’s improved fiscal position along with reduced debt servicing requirements has resulted in a better outlook and higher sovereign ratings from Standard & Poor’s, moody’s and Capital Intelligence.

2006/07 BUDGEt

Data on government revenues and expenditures released by the ministry of Economy and Finance for the fiscal year 2006/07, shows that total revenues continue on an upward trend and increased by 31.0% to reach QR86,063 million, while total expenditures increased by 32.3% to reach QR67,147 million, resulting in a surplus of QR18,916 million. oil prices recorded an increase of 11.4% during the fiscal year 2006/07 and averaged $62.1 p/b, compared to an average of $55.7 p/b during the fiscal year 2005/06. oil production averaged 808,000 bpd during the fiscal year 2006/07.

(QR Million) 2006/07Actual

2007/08Actual

2008/09*Prelim.

2008/09Budget

2009/10Budget

total Revenues 86,063 117,850 136,278 103,300 88,700

Expenditure

total Current Expenditure 49,751 50,969 64,560 55,400 56,600

total Capital Expenditures 17,396 33,931 32,862 40,500 37,900

total Expenditures 67,147 84,900 97,422 95,900 94,500

Surplus/(Deficit) 18,916 32,950 38,856 7,400 (5,800)

Surplus as % of GDP(1) 9.2 12.7 10.6 -- --

2007/08 BUDGEt

Data on government revenues and expenditures released by the ministry of Finance for the fiscal year 2007/08, shows that total revenues increased by 36.9% to reach QR117,850 million, while total expenditures increased by 26.4% to reach QR84,900 million, resulting in a large surplus of QR32,950 million. oil prices recorded an increase of 28.0% during the fiscal year 2007/08 and averaged $79.5 p/b, compared to an average of $62.1 p/b during the fiscal year 2006/07. oil production averaged 836,000 bpd during the fiscal year 2007/08.

Table 9.1:the State Budget

Note: (1) Surplus as a % of GDP is calculated using GDP on a calendar year basis and budget figures on a fiscal year basis ending.

* Preliminary Data

Source: ministry of Economy and Finance.

Qatar has Witnessed a Budget Surplus in each of the Past Nine Fiscal Years, Totaling QR140.8 Billion


2008/09 BUDGEt

Preliminary data on government revenues and expenditures for the fiscal year 2008/09 released by the ministry of Economy and Finance shows a record surplus of QR38,856 million. total revenues increased by 15.6% to reach QR136,278 million, while total expenditures increased by 14.7% to reach QR97,422 million. oil prices averaged $82.8 p/b during the fiscal year 2008/09 compared to $79.5 p/b in 2007/08, while oil production averaged 826,000 bpd, with increased revenues from gas, petrochemicals and investments.

2009/10 BUDGEt

the 2009/10 State Budget which was announced in April 2009 continues to show the government’s commitment to keeping major infrastructure and other projects on track to meet the growing needs in the coming years. After four consecutive fiscal years in which the State Budget showed a surplus, the 2009/10 State Budget projected a deficit of QR5.8 billion, primarily due to the decline in oil prices, restriction in oil production due to oPEC quotas, and the State’s commitment to keep up capital expenditures. the 2009/10 Budget forecasts total revenues to decline by 14.1% to QR88.7 billion, from QR103.3 billion in the preceding Budget estimates, and total expenditures are forecasted to witness a marginal decline of 1.4% to QR94.5 billion. the oil price assumption for the 2009/10 Budget is $40 p/b, compared to $55 p/b in the 2008/09 Budget estimates.

the 2009/10 State Budget allocations for major public projects has declined by 6.4% to QR37.9 billion, compared to QR40.5 billion in the previous budget

The State Budget for 2009/10 Allocated QR37.9 Billion for Major Public Projects


10. Qatar ExcHangEQatar’s aim to create a world class financial center around a global exchange took shape in June 2009 with the formation of the Qatar Exchange (formerly Doha Securities market). the Qatar Exchange (QE) is a strategic partnership between Qatar Holding (investment arm of Qatar Investment Authority), which holds a 80% stake and NySE Euronext which holds a 20% stake. the QE will transition itself to NySE Euronext’s next-generation trading technology (Universal trading Platform), and will work with the regulators and market participants to diversify the products traded on the exchange. the Qatar Financial markets Authority (QFmA) is the regulatory and supervisory authority of the Qatar Exchange.

During the first eight months of 2009, ‘vodafone Qatar’ was listed on the Qatar Exchange, taking the number of listed companies to 43, which include stocks in the banking, insurance, services and industry sectors. In 2008, ‘Ezdan Real Estate Company’, ‘Islamic Financial Securities Company’, and ‘Gulf International Services’ were listed on the Qatar Exchange. Currently, QE listed companies are required to publish audited financial results annually, and also publish quarterly results. Seven brokers have been licensed to trade on the market.

the total value of shares traded on the Qatar Exchange during the first half of 2009 declined by 49.0% to QR52.4 billion, compared to QR102.7 billion during the first half of 2008 (table 10.1). the value of shares traded in the Services Sector represented 42.0% of the total value of shares traded on the QE during the first half of 2009, while the Banking Sector represented 40.1%, with the Industry Sector representing 16.4% and the Insurance Sector representing 1.5%. In 2008, the total value of shares traded on the QE increased by 61.2% to reach QR175.6 billion, compared to QR108.9 billion traded in 2007 (Figure. 10.1).

Sector (QR Million) 2007 2008 June 2008 June 2009 % of Total (June 2009)

Services 43,840.7 65,822.8 40,699.9 22,041.3 42.0%

Banking 45,474.2 78,647.3 46,122.5 21,012.2 40.1%

Industry 16,200.3 26,655.1 13,329.0 8,594.0 16.4%

Insurance 3,414.3 4,427.1 2,594.9 795.5 1.5%

Total 108,929.5 175,552.3 102,746.3 52,443.0 100.0%

the GCC stock markets began a slight recovery in the first half of 2009, after the earlier declines resulting from the impacts of the global economic and financial crisis. Saudi Arabia’s tASI index was the best performer during the first half of 2009 with an increase by 16.5%, followed by UAE’s ADI with a gain of 10.1%, UAE’s DFm index which went up by 9.1%, Kuwait’s KSE index which rose by 3.8%, and oman’s mSm index which gained 3.1% (table 10.2). Bahrain’s BAx index declined by 12.3% during the first half of 2009, while Qatar’s QE index went down by 5.7%.

Country (Index)2007 2008 June 2009

Market Index % Change Market

Index % Change Market Index % Change

Bahrain (BAx) 2,755.27 24.2% 1,804.07 -34.5% 1,581.67 -12.3%

Kuwait (KSE) 12,558.90 24.7% 7,782.60 -38.0% 8,080.30 3.8%

oman (mSm) 9,035.46 61.9% 5,441.12 -39.8% 5,612.21 3.1%

Qatar (QE) 9,580.45 34.3% 6,886.12 -28.1% 6,491.65 -5.7%

Saudi Arabia (tASI) 11,038.66 39.1% 4,802.99 -56.5% 5,596.46 16.5%

UAE (ADI) 4,551.80 51.7% 2,390.01 -47.5% 2,631.32 10.1%

UAE (DFmI) 5,931.95 43.7% 1,636.29 -72.4% 1,784.45 9.1%

Table 10.1:QE value of traded Shares (2007 - June 2009)

Source: QE.

Table 10.2:GCC Stock Exchanges

Source: Reuters, market Reports and QNB Capital.

Total Value of Shares Traded on the QE Declined by 49.0% during the First Half of 2009


2006 2007 2008

2,338

10,849

26,455

35,295

74,937

3,414

16,200

43,841

45,474

108,929

4,427

26,655

65,823

78,647

175,552

2004 2005 2007 20082006 Aug 2009

11,053.1

6,886.1

7,133.0

6,493.6

9,580.5

7,117.3

Figure 10.1:value of QE traded Shares (QR million)

Source: QE.

Figure 10.2:QE Index

Source: QE.

QE Index Increased by 3.4% up to August 2009 to 7,117.25


the QE market capitalisation increased by 9.5% during the eight months ended August 2009 to reach QR305.7 billion ($84.0 billion), compared to QR279.0 billion as at year-end 2008. the three largest companies on the QE by market capitalisation as at August 2009, were Industries Qatar, QNB, and Q-tel, representing 19.4%, 14.8% and 7.2% of the total market respectively. the following table shows share prices and market capitalisation of listed companies as at August 2009.

Sector Listed CompaniesPrice at

31/12/2008(QR)

Price at31/08/2009

(QR)

Capitalisation at 31/08/2009(QR Million)

Qatar National Bank 137.0 150.2 45,228

Commercialbank 88.3 73.0 15,806

Doha Bank 42.0 42.4 7,668

Qatar Islamic Bank 82.8 90.5 18,711

ahlibank 43.5 42.1 2,582

International Islamic 58.6 43.0 5,695

masraf Al Rayan 11.0 12.1 9,075

al khaliji 7.2 14.9 5,364

First Finance 23.5 20.5 1,310

Total Banking Sector 111,440

Qatar Insurance Co. 51.5 66.8 4,965

Qatar General Insurance & Re-insurance Co. 91.3 55.0 1,407

Al-Khaleej Insurance Co. 37.1 32.9 468

Qatar Islamic Insurance Co. 37.0 31.1 467

Doha Insurance Co. 20.6 20.9 376

Total Insurance Sector 7,682

Qatar Navigation Co. 60.2 66.1 4,761

Qatar Cinema & Film Distribution Co. 45.4 33.0 86

Qatar Electricity and Water Co. 111.5 103.3 10,330

Qatar Shipping Co. 37.5 32.6 3,586

Qatar Real Estate Investment Co. 29.1 24.4 2,108

medicare Group 9.1 9.2 259

Q-tel 109.5 150.7 22,103

Salam International Investment 10.4 8.9 881

WoQoD 130.1 167.0 5,261

National Leasing 16.5 17.5 577

meat & Livestock 8.7 13.4 241

Warehousing 19.5 16.6 415

Nakilat 21.6 25.3 14,168

Dlala 20.5 14.2 284

Barwa 30.3 35.1 9,214

mannai 109.4 140.0 2,218

Aamal 41.0 27.6 10,474

Qatar oman Investment Co. 8.6 8.2 246

Ezdan Real Estate Co. 27.0 35.6 16,266

Islamic Financial Securities Co. 48.0 34.6 138

Gulf International Services 20.5 31.6 4,271

Vodafone Qatar 8.9 7,524

Total Service Sector 115,410

Qatar National Cement Co. 79.8 84.5 3,772

zad Holding Co. 40.8 51.0 467

Qatar-German medical Co. 11.5 9.1 105

Qatar Industrial manufacturing Co. 36.7 40.3 1,209

Industries Qatar 100.6 108.0 59,400

United Development Co. 35.3 38.4 4,118

Gulf Holding Co. 17.4 16.6 2,064

Total Industrial Sector 71,135

Total Market 305,667

Table 10.3:Qatar Exchange market Capitalisation

Source: QE.

QE Market Capitalisation Increased by 9.5% up to August 2009 to reach QR305.7 Billion


Company Name

Net Profit(QR Million)

2007 2008 June 2008 June 2009 % Change

Qatar National Bank 2,507.5 3,652.5 1,857.0 2,067.4 11.3%

Commercialbank 1,390.7 1,702.4 1,039.1 943.3 -9.2%

Doha Bank 926.5 946.5 579.3 646.3 11.6%

Qatar Islamic Bank 1,255.4 1,642.5 853.5 812.6 -4.8%

ahlibank 302.6 425.8 187.6 171.6 -8.5%

International Islamic 480.0 501.2 350.8 255.2 -27.2%

masraf Al Rayan 1,079.6 917.0 250.1 386.5 54.5%

al khaliji 74.3 29.3 12.7 108.4 756.8%

First Finance Company 103.9 144.6 69.3 43.7 -37.0%

Banking and Finance Sector 8,120.5 9,961.8 5,199.4 5,435.1 4.5%

Qatar Insurance Co. 472.7 510.8 408.3 334.3 -18.1%

Qatar General Insurance & Re-insurance Co. 125.1 226.3 157.7 71.1 -54.9%

Al-Khaleej Insurance Co. 77.4 87.0 103.8 43.8 -57.8%

Qatar Islamic Insurance Co. 44.4 68.5 49.6 18.2 -63.4%

Doha Insurance Co. 44.3 47.2 36.1 25.6 -29.1%

Insurance Sector 763.9 939.8 755.6 492.9 -34.8%

Q-tel 1,674.3 2,277.2 1,183.9 1,637.9 38.4%

Qatar Electricity and Water Co. 613.6 756.7 349.0 415.1 18.9%

Qatar Navigation Co. 437.9 569.4 398.2 347.6 -12.7%

Qatar Shipping Co. 610.6 517.9 375.0 158.6 -57.7%

Qatar Real Estate Investment Co. 299.7 311.4 173.0 113.0 -34.6%

Qatar Cinema & Film Distribution Co. 6.0 9.5 7.3 4.7 -36.3%

medicare Group -24.2 19.2 24.8 -1.6 --

Salam International Investment 127.5 153.9 96.4 63.3 -34.3%

WoQoD 616.3 1,205.6 351.3 407.8 16.1%

National Leasing 54.8 55.1 31.3 24.0 -23.3%

meat & Livestock 8.3 39.3 27.5 7.9 -71.1%

Warehousing 1.4 -16.5 1.8 3.0 63.9%

Nakilat 89.5 129.1 94.2 233.4 147.8%

Dlala 25.0 50.5 40.1 -9.9 --

Barwa 529.7 310.0 278.8 374.3 34.2%

mannai Corp. 100.5 146.5 80.1 105.4 31.5%

Aamal Holdings 824.1 623.8 218.5 167.8 -23.2%

Qatar oman Investment Co. 11.7 3.8 17.0 14.9 -12.6%

Ezdan Real Estate Co. 561.0 1,357.0 408.9 203.4 -50.2%

Islamic Financial Securities Co. 10.5 18.4 15.5 3.9 -74.8%

Gulf International Services -- 423.4 148.7 283.7 90.8%

Service Sector 6,588.5 8,968.9 4,321.2 4,558.1 5.5%

Qatar National Cement Co. 355.2 413.6 251.8 253.3 0.6%

Qatar Industrial manufacturing Co. 115.6 188.4 80.1 80.9 1.0%

zad Holding Co.. 21.5 47.7 46.2 46.3 0.2%

Qatar-German medical Co. -1.1 6.8 7.8 -0.2 --

Industries Qatar 4,983.3 7,275.6 4,594.5 2,631.0 -42.7%

United Development Co. 339.6 583.5 99.2 325.0 227.7%

Gulf Holding Co. 31.5 34.1 43.5 58.8 35.1%

Industry Sector 5,845.5 8,549.6 5,123.2 3,395.2 -33.7%

Total Market 21,318.4 28,420.1 15,399.5 13,881.4 -9.9%

Table 10.4:Net profit for QE listed Companies (2007 - June 2009)

Source: Annual Reports and published financial statements.

Net Profit of QE Listed Companies Stood at QR13.9 Billion for the First Half of 2009


11. invEstmEnt incEntivEsQatar welcomes foreign participation in joint ventures through technology supply, market administration and equity participation. the Government offers several attractive incentives for joint ventures, such as:

• Natural gas priced at $0.60-0.75 per mn Btu.• Electricity at $0.0178 per Kwh.• A developed infrastructure.• Industrial land at a nominal rent starting at one Qatari Riyal per square meter

per year (Note: land rent can differ from area to area and also from the Public and Private Sectors).

• No custom duties on imports of machinery, equipment and spare parts.• No export duties.• No taxes on corporate profits for pre-determined periods.

In addition to the above, the Government also offers the following incentives:• No quantitative quotas on imports.• No income tax on salaries of expatriates.• No exchange control regulations - the Qatari Riyal is freely convertible at a

parity of US$1= Qatari Riyals 3.64; an exchange rate which has been stable for over two decades.

• Excellent medical and educational facilities.• Easy access to world markets with first class air and sea connections.• Excellent telecommunications facilities.• Liberal immigration and employment rules to enable import of skilled and

unskilled labour.

An Emiri decree was issued on 15th october 2000, which allows for foreigners to own up to 100% in Hotels, Hospitals, Power Plants, Schools and Colleges. However, the following features were considered in the New Foreign Investment Law (No. 13) for the year 2000:

• Foreign investors are defined as non-Qatari persons, whether natural or juristic, who invest their money in any of the projects in which direct investment is permitted by the Government.

• Foreign investors may invest in all sectors of the national economy provided they have one or more Qatari partners whose share shall not be less than 51% of the capital. It is however permissible by a decision from the minister of Economy and Commerce for foreign investors to exceed the percentage of their participation up to 100% of the project’s capital in the sectors of agriculture, industry, health, education, tourism and the development and exploitation of natural resources or energy or mining.

• It is prohibited for foreign investors to invest in the sectors of Banking, Insurance, Commercial Agencies and Real Estate (exception being the new “Pearl of the Gulf Island”, “West Bay Lagoon” , “Al Khor Resort” projects and areas specified under the new Lease Law).

• the Law offers several incentives for foreign investors including the allotment of land through long term lease agreements for a period up to 50 years which may be renewed.

• Foreign investors are permitted to perform whatever is required for the establishment, operation and expansion of the project.

• the ministry may grant foreign investors:- Exemption from income tax for a period not exceeding ten years.- Exemption from custom duties with regard to imported machinery and

equipment necessary for the establishment of the project.- Exemption from custom duties with regard to primary or semi-manufactured

materials necessary for production, provided such materials are not available in the local market.

• Foreign investors have the freedom to transfer investments to and from abroad without delay.

Foreign Investors can Own Up to 100% in Certain Projects According to the New Foreign Investment Law


NEW LAWS

Qatar’s efforts in attracting foreign investment has led to the promulgation of new laws directed at creating a favourable business environment. the following new laws were legislated since 2004:

• Labour Law (Law No. 14 of 2004).• Property Law: Non-Qatari’s (Law No. 17 of 2004).• Qatar Science and technology Park Law (Law No. 36 of 2004).• New QE Law (Law No. 13 of 2005).• Qatar Financial Centre Law (Law No. 7 of 2005).• Qatar Financial markets Authority Law (Law No. 33 of 2005).• Commercial Law (Law No. 27 of 2006).• telecommunications Law (Law No. 34 of 2006).• Lease Law (Law No. 4 of 2008).

QAtAR FINANCIAL CENtRE

the Qatar Financial Centre (QFC) opened its doors on may 1st 2005, under Law No.7 of 2005, to attract international financial institutions and multi-national firms to establish themselves in Qatar. Qatar’s vibrant economy and an estimated capital investment programme of over $130 billion in the coming five years provides vast opportunities for international financial institutions. the QFC has been designed to attract the premier international financial institutions and corporations to share in the wealth of Qatar and the region and to share in the vision of a long-term mutually beneficial partnership with Qatar. the QFC provides a world-class business environment for undertaking financial services and also promotes revenue generating opportunities internationally. the QFC provides a familiar international legal and business infrastructure that is seperate from the host Qatari systems. the QFC is led by a commercial authority and a regulatory authority - the QFC Authority and the QFC Regulatory Authority, that is independent from each other and the government of Qatar. the QFC operates from their new building located in the West Bay area, opposite the City Centre - Doha.

QAtAR SCIENCE AND tECHNoLoGy PARK

the Qatar Science and technology Park (QStP) was set up to be an internationally renowned centre for research excellence and commercialisation. the QStP is part of the Qatar Foundation and aims at being a home for technology-based companies from around the world, and an ideal location for start-up companies. the QStP operates as a ‘free-zone’, providing favourable investment incentives and access to world-class international research universities present at the ‘Education City’. the QStP has been successful in attracting leading world-wide business establishments and current tenants include European Aeronautic Defence and Space Company (EADS), Exxonmobil, Gartner Lee, microsoft, Rolls-Royce, Shell and total.

FREE INvEStmENt zoNE

the Free Investment zone (FIz) is to be established in Qatar as per an official government decree issued in September 2005. the new zone will allow businesses to be 100% foreign owned and free from tax and duties for pre-determined periods.

The Qatar Science and Technology Park Sets Precedence for Free Zones in Qatar


12. Qatar nationaL BankQatar National Bank (QNB) was established in 1964 as the country’s first Qatari-owned commercial bank, and has steadily grown to be the largest bank in Qatar with 55 local branches and offices and a well connected network of over 160 Atms. the QNB Group and associates is now represented in Algeria, Bahrain, France, Guernsey, Iran, Iraq, Jersey, Jordan, Kuwait, Libya, Luxembourg, oman, Palestine, Qatar, Singapore, Sudan, Switzerland, Syria, tunisia, UAE, UK, and yemen. QNB subsidiary Ansbacher Holdings has an office at the Qatar Financial Centre and provides a wide range of wealth management services in the region and internationally.

In 2008, QNB’s strategic expansion into the middle East and North Africa Region saw it acquire a 24% stake in the UAE-based Commercial Bank International and a 50% stake in the tunisian-Qatari Bank. Further, QNB’s stake in Jordan’s Housing Bank for trade and Finance was increased to 33%. Additionally, QNB established a full service branch in Singapore, while QNB Al Islami opened its first international branch in Sudan. QNB’s European operations were restructured in 2008 with the London branch having overall responsibilities. Going forward, QNB’s European operations will be strengthened through the opening of a new branch in Geneva, Switzerland wholly dedicated to private banking.

In 2008, QNB opened two Corporate Branches wholly dedicated to its corporate customers. QNB’s main Branch now serves as the headquarters for its Corporate Banking service activities. QNB was the first bank in Qatar to offer its corporate banking customers dedicated SWIFt access. QNB continues to play its role as mandated lead arranger in major projects and syndications in Qatar and the region. In 2008, it was the mandated lead arranger for what will be Qatar’s largest integrated power and water plant, the $3.3 billion Ras Laffan C Project. In 2008, QNB launched its corporate advisory services through QNB Capital, located at the Qatar Financial Centre.

In 2008, QNB started the implementation of a Branch Automation System that automates cash processing duties and gives tellers more time to focus on providing quality customer service.

During the first half of 2009 QNB’s Net Profit increased by 11.3% to reach QR2,067 million, compared to QR1,857 million achieved during the first half of 2008 (table 12.1). In 2008, QNB’s financial performance enabled it to rank among the top three banks in the GCC Region with a Net Profit increase of 45.7% to reach QR3,653 million ($1,003 million). total assets increased by 32.9% in 2008 to reach QR152.0 billion, compared to QR114.4 billion in 2007. Loans and Advances increased by 51.4% to reach QR100.1 billion, while Customer Deposits (including unrestricted investment accounts) reached QR104.3 billion. total shareholders’ equity as at year-end 2008 totalled QR16.6 billion. QNB’s earnings per share reached QR15.4 in 2008, compared to QR11.0 in 2007.

(QR Million) 2006 2007 2008 June 2008 June 2009

operating Income 2,701 3,722 5,540 2,492 2,944

Net Profit 1,998 2,506 3,653 1,857 2,067

total Assets 71,663 114,361 151,974 152,640 147,115

total Deposits 55,767 79,364 104,253 98,524 102,823

total Loans and Advances 46,227 66,064 100,053 84,285 82,898

total Shareholders’ Equity 8,457 13,858 16,643 18,982 17,725

Earnings per Share (QR) 11.7 11.0 15.4 6.3 6.9

In 2008, Global Finance and the Banker recognised and awarded QNB as the “Best Bank in Qatar”.

QNB’s exceptional performance and industry leadership was also recognised by leading international rating agencies such as moody’s, Standard and Poor’s, Fitch and Capital Intelligence, who have assigned QNB with the highest bank ratings in Qatar as listed in the following page.

Table 12.1:Qatar National Bank, Summary: (2006 - June 2009)

Source: QNB Annual Reports.

QNB’s Net Profit Increased by 11.3% during the First Half of 2009


QnB ratings QNB is the highest rated bank in Qatar with the widest coverage and currently has a rating from Fitch, Capital Intelligence, Standard and Poor’s and moody’s.

Foreign Currency Financial Strength Support Rating Outlook

Long-term Short-term

AA- A1+ A+ 1 Stable

on June 4th, 2008, Capital Intelligence raised QNB’s long-term foreign currency rating to AA-, from A+, short-term foreign currency rating to A1+ from A1, and had a positive outlook on QNB’s financial strength ratings. Capital Intelligence mentioned that the upgrade reflects the bank’s leading position in a fast growing and diversifying economy. Capital Intelligence also stated QNB’s operating profit benefited from sound control of costs in an inflationary environment. Going forward, QNB’s investment in expanding its international network and activities should contribute to lifting the Group to the next level as a powerful regional player. Capital Intelligence currently gives QNB the highest rating in Qatar, with a long-term foreign currency deposit rating of ‘AA-‘, and a support rating of ‘1’ (table 1).

Bank Credit and Deposits Outlook


A+ A1 Stable

on may 14th, 2007, Standard and Poor’s raised QNB’s long-term counterparty bank credit and deposit rating to ‘A+’, from ‘A’ (table 2). Standard and Poor’s stated that the ratings reflect QNB’s strong financial performance, amid economic momentum in the country. overall the leading domestic position of QNB in Qatar, allows it to mitigate risks linked to the restricted playing field of the non-oil private sector and to maintain healthy operating profitability.

Long-Term Short-Term Support Individual

A+ F1 1 B/C

on November 15th, 2006, Fitch upgraded QNB’s long term rating to A+, from A (table 3), affirming all other ratings. Fitch mentioned that the upgrade in the ratings reflects the support by the Qatari authorities. Fitch also mentioned that QNB’s individual rating takes into account the bank’s well established and dominant domestic franchise and a track record of strong financial performance.

Bank Deposits Financial Strength Outlook


Aa3 P-1 C- Stable

on october 9th, 2006, moody’s upgraded QNB’s long-term foreign currency bank deposit ratings to Aa3, from A1, and QNB’s short-term foreign currency bank deposit ratings to P-1 from P-2 (table 4). moody’s mentioned that the ratings were set at the country ceiling and that the action recognises the bank’s importance within the domestic banking system.

Table 1:Capital IntelligenceCredit Ratings for QNB

Source: Capital Intelligence.

Table 2:Standard and Poor’s CreditRatings for QNB

Source: Standard and Poor’s.

Table 4:moody’s CreditRatings for QNB

Source: moody’s.

Table 3:Fitch Credit Ratings for QNB

Source: Fitch.

QNB is the Highest Rated Bank in Qatar


1

Source: Qatar Statistics Authority and Qatar Central Bank.

2

Source: ministry of Economy and Finance.

aPPEndix Qatar statisticaL summary

The Economy(QR Million) 2004 2005 2006 2007 2008

GDP (nominal) 115,512 154,564 206,644 259,411 365,483

% Change 34.8% 33.8% 33.7% 25.5% 40.9%

Inflation Rate 6.8% 8.8% 11.8% 13.8% 15.1%

Exchange Rate ($:QR) 3.64 3.64 3.64 3.64 3.64

total Exports (fob) 68,013 93,774 123,945 152,953 205,997

total Imports (fob) (19,691) (32,992) (53,911) (72,158) (91,492)

Balance of trade 48,322 60,782 70,034 80,795 114,505

Current Account Balance 27,489 27,235 34,430 38,024 57,802

Capital & Finance Account Balance (13,194) (10,915) (14,630) 8,070 (8,272)

overall Balance 14,295 16,320 19,800 46,094 49,530

Public Finance(QR Million)

2006/07Actual

2007/08Actual

2008/09Prelim.

2008/09 Budget

2009/10 Budget

Government Revenue 86,063 117,850 136,278 103,300 88,700

Government Expenditure 67,147 84,900 97,422 95,900 94,500

Budget Surplus/(Deficit) 18,916 32,950 38,856 7,400 (5,800)

Budget Surplus/Deficit as % of GDP 9.2 12.7 10.6 -- --

Oil and Gas 2004 2005 2006 2007 2008

oil Production (000 bpd) 759 779 810 819 837

Price per Barrel ($) 35.2 51.7 62.9 70.0 95.2

LNG Exports (mtpa) 18.4 22.2 25.1 27.4 30.4

3

Source: middle East Economic Survey, Qatargas, and RasGas.


aPPEndix Qatar statisticaL summary

Monetary Survey(QR Million) 2005 2006 2007 2008 June

2009

Currency in Circulation 2,866 3,959 4,487 5,368 5,543

Demand Deposits 22,791 29,533 36,250 45,502 45,909

Narrow money Supply (m1) 25,657 33,492 40,737 50,870 51,452

% Change m1 56.7% 30.5% 21.6% 24.9% 1.1%

Savings and time Deposits 28,409 39,622 64,349 85,676 112,019

Foreign Currency Deposits 24,835 37,059 48,650 47,459 24,704

Quasi-money 53,244 76,681 112,999 133,135 136,723

money Supply (m2) 78,901 110,173 153,736 184,005 188,175

% Change m2 42.9% 39.6% 39.5% 19.7% 2.3%

Deposits of Commercial Banks(QR Million) 2005 2006 2007 2008 June

2009

Private Sector Deposits:

Demand Deposits in Qatari Riyals 16,977 23,133 30,242 36,715 39,518

time and Saving in Qatari Riyals 26,045 34,761 55,854 71,091 85,228

Demand Deposits in Foreign Currencies 2,706 4,189 4,079 6,160 6,311

time and Saving in Foreign Currencies 7,147 14,323 12,427 8,250 7,852

total Private Sector Deposits 52,875 76,406 102,602 122,215 138,909

Public Sector Deposits:

Demand Deposits in Qatari Riyals 5,793 8,884 8,977 10,885 8,088

time and Saving in Qatari Riyals 7,031 8,461 9,731 18,209 36,341

Demand Deposits in Foreign Currencies 5,123 6,296 9,924 15,639 9,322

time and Saving in Foreign Currencies 13,809 19,256 31,608 31,103 11,109

total Public Sector Deposits 31,756 42,898 60,240 75,835 64,860

Non-Resident Deposits 769 1,155 4,365 14,429 18,162

total Commercial Banks Deposits 85,400 120,459 167,207 212,479 221,931

4


5



QNB Branches and OfficesHead Office

P.o.Box 1000, Doha, State of Qatartel. (+974) 440 7407, Fax (+974) 441 3753website www.qnb.com.qa, E-mail [email protected]

24-Hour Call Center 440 7777

Branches can be contacted through the Call Center

Branches

Air Force Base mesaieed

Al Gharrafa musheireb

Al Khor Qatar Foundation

Al Rayyan Qatar University Ladies Campus

Al Sadd Qatar University men’s Campus

Al Sadd-Ladies Qtel

Al Shamal Ras Laffan Industrial City

Al Wakra Salwa Road

C-Ring Road Shahaniya

City Center-Doha Sharq village & Spa

Doha marriot Gulf Hotel Sheraton Doha Hotel & Resort

Exhibition Centre the mall

Industrial Area the Ritz-Carlton Doha

Grand Hamad West Bay

Hamad medical Hospital

QnB al islami

Al Gharrafa Industrial Area

Al Khor Salwa Road

Al Rayyan Hamad medical Hospital

Al Wakra Qatar olympic Committee Building

C-Ring Road - Corporate Branch General Retirement and Pension Authority

Grand Hamad Street

offices

Airport Departures terminal Q-Post

ministry of Education RasGas

muwasalat RasGas (Al Dana tower)

Qatargas Souq Waqif

Qatar Petroleum - Head office Urban Planning

Qatar Petroleum - Al Sadd


QnB Group Subsidiary / associate companies

QnB international Branchesand representative offices:

United Kingdom51 Grosvenor Street, London W1K 3HHtel: (+44) 207 647 2600, Fax: (+44) 207 647 [email protected]

France65 Avenue d’lena75116 Paristel: (+33) 1 53 23 0077, Fax: (+33) 1 53 23 [email protected]

KuwaitAl-Arabia tower, Ahmad Al-Jaber Street. Sharq AreaP.o. Box: 583Dasman 15456 Kuwaittel: (+965) 2226 [email protected]

omanQatar National Bank Building mBD Area - matarah / opposite to Central Bank of omanP.o. Box: 4050 Postal Code: 112, Ruwitel: (+968) 24783555, Fax: (+968) [email protected]

SudanAfrica Road – Amarat Street No. 9P.o. Box: 8134tel: (+249) 183-480000Fax: (+249) 183- 486666

Singaporeone temasek Avenue22-03 millenia towerSingapore 039192tel: (+65) 6499 0866, Fax: (+65) 6884 [email protected]

YemenQatar National Bank Building Al-zubairi StreetP.o. Box: 4310 Sana’a - yementel: (+967) 1 517517, Fax: (+967) 1 [email protected]

iran(Representative office)6th floor Navak BuildingUnit 14 Africa tehran - Irantel: (+98) 21 88 889 814Fax: (+98) 21 88 889 [email protected]

Libya(Representative office)Burj Al Fatah – 19th FloorP.o. Box: 91351 tripoli - Libyatel: (+218) 213362131 / 2Fax: (+218) [email protected]

QnB Subsidiary / associates:

iraqmansour BankAssociate CompanyP.o. Box: 3162Al Alawiya Post officeAl Wihda District Baghdad - Iraqtel: (+964) 1 7175586, Fax: (+964) 1 7175514

Jordanthe Housing Bank for tradeand Finance (HBtF)Associate CompanyP.o. Box: 7693Postal Code 11118 Amman - Jordantel: (+962) 6 5200400, Fax: (+962) 6 5678121

QatarAl Jazeera Islamic CompanyAssociate CompanyP.o. Box: 22310 Doha - Qatartel: (+974) 4682812, Fax: (+974) 4682616

SwitzerlandQNB Privée SuisseSubsidiaryGeneva (Under Establishment)october 2009

Syria QNB SyriaAssociate CompanyDamascus (Under Establishment)November 2009

tunisiatunis Qatari BankAssociate CompanyRue de la cité des sciences B.P 320 – 1080 tunis Cedextel: (+216) 71713555, Fax: (+216) 71713111www.tqb.com.tn

UaECommercial Bank International p.s.cAssociate CompanyP.o. Box: 4449, Dubai, Al Riqqa Street, Deiratel: (+971) 042275265, Fax: (+971) 04 2279038

Qatar Economic Review October 2009

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