(Last updated: 4 Nov 2011)
Trends and opportunities
Although the global economic recession of 2008-09 slowed the rate at which electricity demand is growing in the GCC, consumption is still increasing. Electricity demand is expected to double over the next five years in Qatar, fuelled by industry development, and an increased residential and commercial population. Demand forecast studies show that Qatar will need to build a new power generation plant in order to meet increased demands for electricity.
Based on the growing demand, the Qatari government has invested more than $10 billion for electricity generation and water desalination in the last 10 years and more than $12 billion in the development and expansion of electricity and water transmission and distribution networks. Qatar has the largest electricity reserves in the GCC with contracted electricity production capacity increasing to 8,761MW in 2011 from 7,643MW in 2010.
Qatar is looking to diversify its energy supplies by the use of renewable energy sources of energy, and is exploring nuclear, solar and wind power options. In 2009, Qatar announced plans to launch a preliminary study into the viability of developing a nuclear power facility in the country. In January 2011, Qatar also announced that it is seeking to construct a major new solar power plant which will require an investment of $1 billion. Qatar is placing greater emphasis on sustainable living. It is looking towards green energy sources and promoting the importance of electricity and water conservation.
Water scarcity continues to remain one of the most pressing concerns confronting Qatar. With low levels of rainfall, the country relies heavily on water from desalination, in addition to ground water and recycled water. Desalination water accounts for 50 per cent of the water used, 36 per cent is fresh ground water and 14 per cent recycled water.
Many desalination projects are on the pipeline as double digit increase in water demand is expected in 10 years. According to the Qatar National Development Strategy 2011-16, consumption through 2020 is expected to increase 5.4 per cent a year for Qataris and 7 per cent a year for expatriates.
Qatar has allocated US$4.1 billion for electricity and water projects over the next three years.
Key priorities for Qatar in the energy and water industries:
- Complete capital projects awarded in the last three years
- Continue the development and expansion of Qatar’s electricity and water networks to meet anticipated population growth
- Establish water security through the $2 billion Water Security Mega Reservoirs project in Doha
- Phase 10 of the Kahramaa’s Electricity Network Expansion Project
- Construction of an integrated electricity and water emergency call centre
- Feasibility studies into nuclear power, solar power plants, and wind turbines
- Heavy investment in desalination plants and technology
The key drivers of the Qatar economy include:
- Qatar’s 2030 vision and National Master Plan – There continues to be projects initiated to help Qatar reach its stated 2030 vision to diversify the economy and become less reliant on oil and gas. Economic policy is focused on developing Qatar’s non-associated natural gas reserves and increasing private and foreign investment in non-energy sectors.
- FIFA World Cup 2022 – Qatar has major transport, power and infrastructure projects planned as part of its long term strategy and vision for the country. In light of Qatar’s successful bid to host the FIFA World Cup in 2022 it is now estimated that more than $100 billion will be invested overall during the next 10 years. It is projected that in its build-up to the 2022 World Cup Qatar will spend – $48 billion to build air-conditioned stadia, $77 billion on facilities for soccer fans and players from all over the world and $45 billion on developing Lusail City. Qatar has also allocated $50 billion to upgrade its transport infrastructure, including new rail and metro systems.
- Vast financial and oil reserves – Petroleum accounts for more than 70 per cent of total government revenue, more than 60 per cent of gross domestic product and approximately 85 per cent of export earnings. Oil reserves of 15 billion barrels will enable output at current levels for 37 years.
Qatar’s reserves of natural gas are nearly 26 trillion cubic metres, about 14 per cent of the world total and third largest in the world. Qatar is currently the leading global exporter of liquefied natural gas, and an estimated US$16.7 trillion in monetisable oil and gas reserves (Source: Progress Qatar 2010-2011). Qatar’s sovereign wealth fund is growing and establishing itself with many high profile foreign acquisitions, but also with substantial local development arms.
- Increased government spending on infrastructure – continued economic growth and development of Qatar’s LNG resources has resulted in significant population increases and the development of many new industries. Rapid economic growth over the past years has allowed Qatar to invest heavily in its economic and social infrastructure. The nation has made accelerated progress in areas such as urban development, health, education and the environment.
- A robust economy – Qatar’s real GDP has grown an average of 15 per cent since 2000 and is one of the world’s fastest growing economies. Qatar’s GDP is projected to total $180.4 billion in 2011 and $199.9 billion in 2012.
Qatar’s per capita GDP for 2009 has been estimated at $121,000 compared to the advanced industrial nation’s median of $40,844. Qatar’s economy has doubled in the past four years and will double again in the next four years. Qatar’s risk rating is the highest in the region, with Standard and Poor rating it AA. The 2009 budget estimates show revenues of $35.93 billion and expenditures of $28.28 billion, providing the State with a budget surplus which is a rarity in today’s economic climate.
- Sporting events – Qatar continues to host and bid for major sporting events. After winning bids to host the FIFA World Cup in 2022 and the Handball World Cup in 2015, Qatar is now bidding for the World Athletics Championship in 2017 and the men’s Volleyball World Championships in 2018.
- Population growth – In emerging markets such as Qatar, fast growing populations, accelerated urbanisation and robust economic growth will see construction activity to continue to grow.
In an emerging market such as Qatar the opportunities for Australians to enter the market are vast. Key areas of opportunities include but are not limited to, specialist rail and roads consultancy, transport and logistics, including ports, water management, green building expertise, facility management, project management and construction contracting and specialist sub-contracting.
Product opportunities include, but are not limited to heavy machinery, a wide variety of building materials and products including sustainable solutions, water saving devices, systems for building automation, air-conditioning and security, cutting edge solar and wind energy solutions and swimming pool equipment.
What makes Qatar an attractive place to do business?
- Qatar has a sound economy, a well funded government, and a progressive vision.
- It is investing heavily in education for its youthful population with improvements in primary, secondary as well as tertiary education and training.
- Australia's profile in Qatar is growing with high regard for Australian companies and capabilities. Many Australian companies have established themselves on the ground in Qatar, while many others have provided products or services to the Qatari market. An estimated 3,000 Australians work in various capacities in both government and private enterprise.
- Qatar’s Government is continuing to promote capital development projects in areas such as power, desalination, manufacturing and industrial zones. These initiatives represent opportunities for Australian firms as they are significant in value and number.
Qatar, like the UAE, is strategically located between India and Europe and not far from South East Asia. Competitors from Europe and Asia are numerous. Price positioning is an important consideration in this market as purchasing decisions are often based on price rather than on quality.