STRUCTURE OF THE ECONOMY

Oil was discovered in Qatar in 1939, but development only got under way in 1949. Production reached a cyclical peak of 530,000 barrels a day (b/d) in 1973, with about half coming from offshore areas. Following the oil price slump of the mid-1980s, development slowed, but re-accelerated in the 1990s. Important discoveries have given new life to the sector, and reserves are now 15,200 million barrels, according to figures published by British Petroleum in June 2002. Qatar Petroleum (QP), the state energy firm, is aiming to raise production capacity to l million b/d. Qatar's production is constrained by OPEC policy, and as a result its quota currently stands at 562,000 b/d. Qatar has been pressing for an increase in its quota to reflect its large reserves and small production level. Two thirds of Qatari oil goes to Japan and more than 95 per cent to Far Eastern countries

The second element of Qatar's energy sector is natural gas. Qatar currently has the second largest gas reserves in the world after Russia, with proven reserves put at 900 trillion cubic feet (tcf). Following the development of the North Field, which extends from the north of Qatar into the Gulf and is the world's largest non-associated gas field, the first shipment of liquefied natural gas (LNG) took place in December 1996. LNG exports rose to 10.5 million tons in 2000, from 6.6 million tons in 1999. In May 2002, QP announced that combined sales including spot cargoes amounted to about 13 million tons in 2001. Qatar aims to increase production to 45 million tons by 2010, at which point Qatar will be the world's leading LNG supplier.

The fruit of a massive investment program, the LNG center in Ras Laffan has given a huge lift to economic prospects. It is expected that gas will overtake oil as a source of export earnings in 2005.

The first LNG plant is the Qatar Liquefied Natural Gas Company (Qatargas), a joint venture involving QP and ExxonMobil, TotalFinaElf, Mitsui and Marubeni. The second plant is Ras Laffan Liquefied Natural Gas Company (RasGas). This opened in June 1999. The company is now building its third and fourth plants. In March 2001, an Emiri decree announced the setting up of Ras Laffan LNG Company II (RasGas II), principally designed to supply Petronet of India with 7.5 million tons a year (t/y) of LNG. Work on the project is now under way.

As part of the effort to exploit gas resources, Qatar is participating in the Dolphin Gas Project, a pipeline scheme promoted by the UAE Offsets Group of Abu Dhabi. This will involve building a pipeline to Taweelah in Abu Dhabi and Jebel Ali in Dubai with the possibility of an extension to Oman and other regional customers. Qatar is also planning to sign a joint venture agreement by the end of 2002 for a 1,000 million-cubic-feet-a-day gas pipeline to Kuwait.

The third element of Qatar's energy product development program is an expansion in condensate output. Supplies of condensate are expected to grow with the development of the Dolphin Program.

Qatar's Contracted LNG Exports (mtpa):

Qatar's Current Crude Oil Production Capacity and Projected Capacity:

Source: Qatar Economic Review 2005, Qatar National Bank