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Hydrocarbons: Secured place.slower pace

Written by  Author |   Mon, 12 August 2013 11:11

Following hikes in hydrocarbon production to full capacity, which aided in raising real GDP growth to 18% over the 2006–2011 period, activity decelerated considerably in 2012 on account of a weaker momentum at the level of hydrocarbon industries (circa 60% of GDP in 2012). Indeed, Qatar's stellar economic growth, usually driven by hydrocarbons, has somewhat eased in 2012 as the real growth of such industries decelerated from 15.7% in 2011 to 3.6% in 2012, as per IMF data. As a matter of fact, attention shifted to the non-hydrocarbon segment of the economy which grew at a faster pace than the hydrocarbons one in 2012 within the context of ongoing diversification effort as the moratorium on further development of gas-related projects ends in 2015.

In parallel, Qatar's LNG output is estimated to have reached 77.0 million tons per year in 2012, rising by 2.9% from 2011, a year during which the country had posted a production increase of 29.6%, as per IMF data. That of oil was almost flat at 749 thousand barrels per day compared with 745 thousand barrels per day in 2011, as per the same source. Consequently, such a slowdown created downward pressures on Qatar's revenues stemming from hydrocarbons as they recorded a decline of 5% according to IMF figures to make up 50% of total revenues in fiscal year 2012/2013 compared with a share of 62% in fiscal year 2011/2012, as per the same source. Export revenues from the hydrocarbon sector were also subjected to a weaker growth in 2012 compared to 2011 when they grew by 45%, as per IMF data.



To enhance its export capacity, Qatar Petroleum International concluded an agreement with ExxonMobil according to which both would construct a $10 billion natural gas export terminal based in Texas. The project will involve installing a liquefaction facility at an existing import location according to Golden Pass Products, a subsidiary formed by the two companies. Both entities plan to ship as much as 15.6 million metric tons of gas annually from the Golden Pass Facility.

Indeed, the sector remains of significant importance to the economy. Qatar holds the world's third largest gas reserves (after Iran and Russia), estimated at around 890 trillion cubic feet (US Energy Information Administration), which along with crude oil and condensate reserves equals nearly 193 billion barrels of oil equivalent in 2012. With Qatar's population at only 1.8 million in 2012, hydrocarbon reserves and revenue per national were the highest in the world at 724,000 billion of oil equivalent and $183,000 respectively. The government is still embarking on efforts to enhance its hydrocarbons resources. Qatar's vast gas reserves are located in the offshore North Field, which is the single largest non-associated gas field in the world and currently subjected to a Moratorium. Still, a deposit with 2.5 trillion cubic feet of fuel was found in the Northern part of the country, the first discovery since uncovering the world's biggest gas field 42 years ago. State-run Qatar Petroleum, Wintershall AG and Mitsui & Co plan to develop the reservoir in a 544 square-kilometer (338 square-miles) area called block 4N off the Persian Gulf State's northern coast. The future expansion of gas production will also be driven by the Barzan project that is estimated to bring on-stream an additional 1.5 billion cubic feet per day and new discoveries that are likely to add a further 0.7 billion cubic feet per day by 2016. Qatar Petroleum announced that the project, dedicated to supplying domestic industry, is 50% complete and is on course to start up in early 2014.

Until 2015, a year after which the moratorium ends, hydrocarbon activity should remain almost at the same level as that seen in 2012. Consequently, growth rates would stabilize mainly due to a slowdown in hydrocarbon sector growth, as the self-imposed moratorium on increasing LNG capacity kicks in.

 

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