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Record High Income in Qatar for 2011

Qatar : 25 May 2011

Income boost will result in sizable fiscal surplus and sharp economic improvements.

As the price of crude surges it will combine with increasing gas exports to increase the exported hydrocarbon earnings in Qatar to a new record this year. This surge will also increase the fiscal surplus and result in an economic boost, according to a leading Saudi bank.

Qatar will bring in almost $53 billion in the exports of crude oil as well as natural gas liquids, according to SAMBA (or Saudi American Bank Group). Sales of LNG (or liquefied natural gas) will bring in over $30 billion in revenues.

SAMBA stated that exports of LNG will surpass $30 billion in 2011, bringing the total export earnings of Qatar to a forecasted $90 billion.

These current price levels will create the highest level of income for the nation since Qatar started oil and gas exportation years ago.

SAMBA noted that these increases will create a sharp boost in crude price and push the completion of LNG projects within Qatar, bringing the nation’s capacity for total output to almost 77 million tonnes annually. This is the highest level in the world.

Hydrocarbon export earnings are sure to continue growing in Qatar, due to increasing production levels and higher prices, according to SAMBA.

The recent volatility of oil prices were also noted, but the average price of $99 seen since May 9 is still 20 percent above the numbers reported in 2010.

Prices of NGL have also been moving upwards, according to the report that mentioned an increase in NGL output, despite insignificant increases in the oil output, has allowed the combined output of these two exports to rise by 7.5 percent on average in the opening quarter.

The export of refined petroleum products, oil and NGL resulted in $38 billion in earnings for Qatar last year and is expected to bring in $53 billion for 2011.

Reported estimates regarding the exports of LNG put that figure around $21 billion for last year. It is expected to continue increasing as volumes move up due to the last mega-train completion.

The report stated that LNG earnings are more difficult to project as there is not a single reference price to work with.

Spot prices for gas of $4.20 / mbtu are still relatively weak, although a majority of the LNG sold from Qatar involves long-term contracts with links to the price of oil.

The prices of LNG differ widely all over the world. In Japan, data on the LNG prices indicates a strong rebound for this year, up from the 2009 figures of $8 / mbtu up to $14 / mbtu. In the later part of 2008 the record high of $16 / mbtu was reached, according to SAMBA. Since Qatar has plans to boost Japanese exports in 2011, these figures bode well for the nation’s earnings. SAMBA expects the exports of LNG to surpass $30 billion in 2011, resulting in total Qatari export earnings of $90 billion.

The report noted that surging revenues in Qatar will result in a widening fiscal surplus, even with an expected increase in spending.

The most current state budget for the Gulf nation, covering 2011 and 2012, was put into place assuming a conservative price of $55 per barrel for oil.

As has happened in the past, both expenditures and revenue for the nation will surpass the budget figures. This is also likely to happen with the surplus. Projections put the surplus at 8 percent of the GDP (or $13.3 billion) with $55 billion in revenue and $41.2 billion in expenditures.

Data in the report indicates that revenue may hit $54.5 billion, spending should hover around $41.2 billion and the surplus will come out at $13.3 billion.

Increased income will result in Qatar maintaining a position among the most rapidly growing economies across the globe. Real GDP is forecasted to improve by almost 20 percent and current prices should see even more growth.

Estimates on hand state that real GDP rose by about 16 percent last year, with nominal GDP surging by almost 30 percent and hitting $116 billion.

Nominal growth is being driven primarily by the rebounding of hydrocarbons, a sector that increased by 57.7 percent due to higher production and prices, based on official figures as reported by SAMBA.

Looking toward the future, both 2011 and 2012 will see solid performance in most economic sectors with accelerated spending on public infrastructure and more output gains in the hydrocarbon sector. Real GDP should see more than 20 percent growth this year due to many of the remaining major gas projects moving on stream. That figure should slow down to 6 percent next year.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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