Economy of Qatar - Energy Sector

Energy Sector

Before the emergence of petrol-based industry, Qatar was a poor pearl fishing country. The exploitation of oil and gas fields began in 1940. In 1973, oil production and revenues increased dramatically, moving Qatar out of the ranks of the world's poorest countries and providing it with one of the highest per capita incomes in the world.

Qatar's economy was in a downturn from 1982 to 1989. OPEC (Organization of Petroleum Exporting Countries) quotas on crude oil production, the lower price for oil, and the generally unpromising outlook on international markets reduced oil earnings. In turn, the Qatari government's spending plans had to be cut to match lower income. The resulting recessionary local business climate caused many firms to lay off expatriate staff. With the economy recovering in the 1990s, expatriate populations, particularly from Egypt and South Asia, have grown again.

Oil production will not long remain at peak levels of 500,000 barrels (80,000 m³) per day, as oil fields are projected to be mostly depleted by 2023. Nevertheless, large natural gas reserves have been located off Qatar's northeast coast. Qatar's proved reserves of gas are the third-largest in the world, exceeding 250 trillion cubic feet (7000 km³). The economy was boosted in 1991 by completion of the $1.5-billion Phase I of North Field gas development. In 1996, the Qatargas project began exporting liquefied natural gas (LNG) to Japan. Further phases of North Field gas development costing billions of dollars are in various stages of planning and development.

Qatar's heavy industrial projects, all based in Umm Said, include a refinery with a 50,000 barrels (8,000 m³) per day capacity, a fertilizer plant for urea and ammonia, a steel plant, and a petrochemical plant. All these industries use gas for fuel. Most are joint ventures between European and Japanese firms and the state-owned Qatar General Petroleum Corporation (QGPC). The U.S. is the major equipment supplier for Qatar's oil and gas industry, and U.S. companies are playing a major role in North Field gas development.

Qatar pursues a vigorous program of "Qatarization", under which all joint venture industries and government departments strive to move Qatari nationals into positions of greater authority. Growing numbers of foreign-educated Qataris, including many educated in the U.S., are returning home to assume key positions formerly occupied by expatriates. In order to control the influx of expatriate workers, Qatar has tightened the administration of its foreign manpower programs over the past several years. Security is the principal basis for Qatar's strict entry and immigration rules and regulations.