Boasting 12% of the world’s proven natural gas reserves and robust activities across the hydrocarbon value chain, Qatar is a natural gas and petroleum powerhouse. The nation has long relied on its natural gas and petroleum resources as the key driver of economic activity, sending abroad nearly USD35 billion worth (approximately 4.3 trillion cubic feet) of natural gas and more than half a billion barrels of oil per day, according to the US-Qatar Business Council. Asian nations are the primary market for Qatar’s natural gas, representing the final destination for 70% of its exports. Further, in recent years Qatar Petroleum (QP) has announced its intentions to expand the North Field, including the development and deployment of four new liquified natural gas (LNG) trains. Though the COVID-19 pandemic has delayed the process by three to six months, QP hopes to bring the new trains online by 2025, achieving a total capacity of approximately 110MMTPA. Despite this dominant position in global energy markets, however, Qatar’s leaders in the private and public sector have begun directing more and more attention towards energy and economic diversification.
Thus far, energy diversification has been primarily concerned with downstream product expansion, as well as an expansion of gas-to-power projects relying on Qatari natural gas. QP has announced numerous partnerships aimed at augmenting the nation’s petrochemical production, including partnerships with Shell and Qatar Petrochemical Company (Qapco), among others. Many of these projects were inaugurated with the expectation that growing competition amongst global natural gas producers might chip away at Qatari market share, and many observers are confident that Qatar’s forward-looking approach will allow it to maintain a dominant position in not only natural gas exports but value-add downstream products as well. These downstream products will allow Qatari firms to effectively counter pressures from low-cost natural gas producers in places like the US, and it will give the Qatari economy an important new source of additional growth in an environment marked by low prices. New gas-to-power projects also represent a new source of domestic consumption for Qatari natural gas as well as a forum for more vigorous export activities among local energy firms targeting European markets.
Operators within the Qatari market are particularly excited for what diversification would mean for SMEs. A keen focus for Qatari leaders has been creating a domestic marketplace that can support local entrepreneurs and businesses, and downstream petrochemical production represents many exciting opportunities. A key piece of this puzzle has been the Tawteen program, also known as the Supply Chain Localization Program for the Energy Sector in Qatar, which is led by QP and pursued in concert with other industry operators. The main aims of this program include attracting knowledge and technology-based companies to the local energy sector; creating in-country suppliers that can support the local energy sector; and enhancing the development and diversification of the Qatari economy. As downstream activities gain prominence in Qatar’s domestic energy scene, national leaders are focused on ensuring that value is created and captured in country. Qatari leaders recognize that long-term success requires the development of a more holistic approach to energy production and value creation.
This shift in focus has also been quite notable when it comes to the investment strategy of the Qatar sovereign wealth fund, the Qatar Investment Authority (QIA). Despite the primacy of oil and gas, QIA has announced its intentions to focus its capital on assets beyond the hydrocarbon industry. This has included the development of an infrastructure investment portfolio with 44% of projects constituting zero-emission investments, according to QIA’s CEO, Mansoor bin Ebrahim Al Mahmoud. Qatari investors and builders are excited to see green and sustainable development take on a more prominent role within the country. In an exclusive interview with TBY, Diaa El-Masry, General Manager at Qatar Green Leaders, lauded the leadership displayed by the government, noting that the public sector’s energy and vision has prompted many firms to align their activities with the government’s long-term goals. “Lately,” said El-Masry, “[green and sustainable building] has become a trend in Qatar, and every organization is trying to be in line with the national vision.” As Qatar continues to take significant steps towards diversifying not only its energy mix but its entire economy, expect public and private sector actors to train a sharp eye on downstream petrochemical production.