North Field development to boost Qatar's GDP
18 Apr 2017 - 22:43
Qatar’s renewed gas development plans in the North Field will support the country’s long-term economic activity and the government revenue.
The gas development will support the country’s real GDP growth and income levels, Moody’s Investors Service said in its latest research note on Qatar.
Natural gas production is a major growth driver in Qatar. Over the past decade, Qatar has been one of the world's fastest growing economies because of a strong expansion in the hydrocarbon sector, particularly in natural gas production. Natural gas production increased 260 percent between 2006 and 2015, to 3.3m barrels per day (b/d) of oil equivalent; this was accompanied by a 65 percent increase in oil production (including crude oil, shale oil, oil sands and natural gas liquids) to 1.9m b/d.
The country’s annual real GDP growth averaged 12.3 percent over the past decade, a significantly higher level than the 3.5 percent Aa-rated median. However, since 2014 real hydrocarbon GDP has contracted and Moody’s anticipates that the sector's growth rate will remain close to zero in 2016-18, reflecting stable production.
In the absence of output increase, Moody’s expects the economy to expand at around 3.3 percent between 2017 and 2018, supported by non-hydrocarbon sectors of the economy Further development of the North Field will boost hydrocarbon real GDP growth when it comes on stream in 2022-24, with an estimated 400,000 b/d of oil equivalent expected from the new development. It will also add to Qatar's export capacity (though the Barzan project will provide a boost to hydrocarbon growth before then, its output is focused on domestic consumption).
According to Middle East Economic Survey, the new development could add 15 percent to Qatar's LNG export capacity, which currently is around 79m tonnes per year, the highest in the world. Part of the additional increase could also be used to increase exports to other Gulf countries through the Dolphin pipeline.
GDP per capita in purchasing power terms stood at $132,870 in 2015, one of the highest in our sovereign ratings universe, after Abu Dhabi (Aa2 negative) and Macao (Aa3 negative). Though levels started to fall in 2011-16 owing to very high population growth and the recent oil price decline, renewed production growth will reverse this trend.
Qatar is currently the world’s leading exporter of LNG, accounting for almost one-third of global LNG exports. In addition, according to the BP Statistical Review of World Energy, the country’s proven oil and gas reserves amounted to approximately 188 billion barrels of oil equivalent in 2015, the sixth highest in the world.