FUTURE PROSPECTS

                GDP Growth in Qatar
             Budgetary Surplus
             Export Verses Import
             Gas Reserves in Qatar
             LNG Exports in Qatar
             The Dolphin Project
             Oil Reserves
             Gas to Liquids
             Petrochemicals Industry
             Investment laws
             New Vision for the Future
             Strategy of Economic Development

GDP Growth in Qatar:

Qatar’s GDP growth in nominal terms averaged 13.5% over the past five years. In 2001, nominal GDP declined marginally by 1.8% to reach QR 58.8 billion ($16.2 billion), as a result of a 12.9% decline in average crude oil prices to $23.6 p/b, from $27.1 p/b in 2000. Qatar’s crude oil production also declined in 2001 to 681,000 bpd from 696,000 bpd in 2000, due to quota stipulations put in place by OPEC. In spite of the oil price and production fallback, Qatar has been able to stem the decline in GDP, with an effective economic diversification plan, that has seen natural gas and downstream industries gaining ground over crude oil. Natural gas and downstream industries will dominate industrial activities in the coming years and fuel a two-fold increase in GDP by 2005.

Budgetary Surplus:

The Government recorded its second consecutive budgetary surplus for the fiscal year 2001/2002, with QR 50 million. This has enabled the Government to bring about an effective strategy that has led to the building up of its foreign reserves, improving the domestic liquidity situation, and in meeting external debt payments. The 2002/2003 State Budget shows an overall increase in expenditure by 14% to reach QR 20.0 billion, with the Government's allocation for major public projects increasing by over 56% to reach QR 4.4 billion. This increased allocation will see the development of the State's infrastructure, which in turn will support the rapid advancement of the industrialization process.

Export Verses Import:

Qatar’s exports have nearly tripled in the past five years from QR 14.0 billion ($3.9 billion) in 1997 to QR 39.6 billion ($10.9 billion) in 2001. This substantial rise in exports is a direct outcome of income diversification, which has seen LNG export revenues increase ten-fold from QR 1.5 billion in 1997, to around QR 15.0 billion in 2001. Qatar’s imports have seen a fluctuating trend over the years as huge industrial projects come on stream and new ones emerge, as was seen in 1999 and 2000. However with the current and upcoming projects showing no signs of abating, imports are set to rise in the coming years. The current account position has been steadily improving since 1999, with surplus in balance of payments reaching QR 10.0 billion in 2001. The Balance of Payments situation is set to strengthen further with projects such as Q-Chem and NGL-4 commencing production and exports.

Gas Reserves in Qatar:

Qatar in June 2002, emerged as having the second largest proven gas reserves in the world after Russia at over 900 trillion cubic feet (tcf). Qatargas and RasGas, Qatar's two LNG projects aimed at exploiting Qatar's North Field, have production capacities of 8.2 million tons per annum (mtpa) and 7 mtpa respectively, and exported 12.8 million tons of LNG in 2001. RasGas II was formed in March 2001, primarily aimed at supplying 7.5 mtpa of LNG to Petronet of India and 3.5 mtpa to Edison Gas of Italy. RasGas II has commenced the construction of the world's largest two trains, which on commissioning will each have a capacity of around 4.7 mtpa. Qatargas II was announced in June 2002, after signing an agreement to supply UK with 14 mtpa of LNG. Qatargas II will involve the construction of two super-trains, each with a capacity that could reach 7 mtpa.

LNG Exports in Qatar:

Qatar's rapid increase in LNG exports has seen it emerge in 2001 as the fourth largest LNG exporter in the world after Indonesia, Algeria and Malaysia. With LNG expansion projects currently underway, Qatar is set to become the leading exporter of LNG in the world, with export volumes forecast to reach 21 mtpa by 2004 and reach 42 mtpa by the year 2010. As a result of LNG expansion, Qatar will see a rise in condensate production and exports, which are by-products of the LNG industry.

The Dolphin Project:

The 'Dolphin Project' was initiated in 2000 with the aim of further utilizing Qatar's North Field gas resources, in the form of piped gas exports. The first phase of the Dolphin Project valued at $3.5 billion, will involve the production and distribution of 2 billion standard cubic feet of gas per day (bn scf/d) to the U.A.E. Further piped gas exports to Kuwait and Bahrain estimated at 1.5 bn scf/d is expected through Qatar's EGU project, after the signing of agreements with the respective countries.

Oil Reserves:

Qatar's proven oil reserves according to 'BP's Statistical Review of World Energy - June 2002', stands at 15.2 billion barrels as at year-end 2001. This is a substantial increase from 1999, when it was only 3.7 billion barrels. Given current production rates, proven reserves will last approximately 61 years. Various expansion projects are currently underway which will see production capacity expand from around 850,000 bpd to 1 million bpd by the year 2006.

Gas to Liquids:

Qatar is fast heading towards becoming the leading producer of Gas to Liquids (GTL) in the world, with six project proposals currently being tendered. The most advanced of these is the $800 million Qatar GTL project, which will convert natural gas into 33,750 bpd of high grade fuels from two trains. QP and ExxonMobil are looking at the possibility of building an estimated $3 billion plant with a capacity of 80,000 bpd. Shell is proposing a 140,000 bpd plant, estimated to cost $4 billion. Three other proposals have come in from Ivanhoe, Conoco, and Marathon.

Petrochemicals Industry in Qatar:

The rapid expansion of Qatar's Petrochemicals industry can be witnessed through developments such as the grass-roots Q-Chem project and the QAFCO-IV project. This expansion has received a further boost in 2002, with the launch of three new projects, namely Q-Chem II, Qatofin and the Ras Laffan Ethylene Cracker. Ethylene feedstock for the Q-Chem II and Qatofin projects will be supplied by the Ras Laffan Ethylene Cracker, while ethane feedstock for the projects will be indirectly routed through Qatar's North Field. Project economics are fast turning in Qatar's favor with abundant ethane feedstock being supplied from Qatar's North Field.

Investment laws:

Various new laws which will have a direct impact on business were enacted in 2002. They were: Commercial Companies Law (No. 5); Commercial Agents Law (No. 8); Copyright Law (No. 7); Pensions Law (No. 24); Money Laundering Law (No. 28); and the Mutual Funds Law (No. 25). The new mutual funds law will allow for expatriates to invest in the Doha Securities Market, through the medium of mutual funds. Qatar has already brought about a new investment law in 2000, which allows for foreign investors to acquire up to 100% in projects in certain sectors of the economy.

New Vision for the Future:

Qatar's hosting of the Asian games in 2006 has brought along with it various infrastructural obligations. Qatar has already started work on the construction of an estimated $700 million 'Asian Games Village', which will include additional sporting facilities and accommodations for athletes and sports officials.  Qatar is also hoping to have a new International Airport ready in time for the Asian Games, Qatar's Tourism efforts are beginning to gather pace with the setting up of the Qatar Tourism Authority (QTA) in 2000. The QTA launched Qatar's first ever shopping festival called 'Qatar Summer Wonders Festival of Fun' in July/August 2002. The QTA also plans to open offices in other gulf states to promote Qatar as a tourist destination. Qatar continues to be the choice venue for conducting various international seminars and conferences. Privatization efforts have led the state-owned tourism and leisure firm Qatar National Hotels Company (QNHC) to hand over the management of Sealine Beach resort to Movenpick Hotels and Resorts Ltd. in 2001.
Qatar's long-term vision has also led it to invest heavily in education, through the development of an 'education city', under the aegis of the 'Qatar Foundation for Education, Science and Community Development', set up by H.H. the Emir Sheikh Hamad Bin Khalifa Al-Thani. The facility will have amongst others, professional higher educational institutions. The 'Weill-Cornell Medical College-Qatar', which is a central feature of the 'education city' started its first ever academic year in October 2002.

Strategy of Economic Development:

Qatar's abundant hydrocarbon wealth, reduction in external debt, and its strategy of economic development based on the diversification away from oil, has led to sovereign ratings upgrades in 2002, by leading credit rating agencies Standard & Poor's, Moody's and Capital Intelligence. These upgrades certify that the seeds of Qatar's resource development strategy has come to fruition and Qatar's image as an investment destination is set to strengthen further in the coming years.