Forbes: Strong growth in gas exports and expectations of a budget surplus

A report by the American magazine Forbes stressed the importance of raising the credit rating of the State of Qatar from stable to positive, which highlights the development of the Qatari economy, especially in light of the expected strong growth in gas exports in the country in the coming years. The report referred to the vital investment of Qatar in the gas field in the north, which will result in an increase in revenues that will allow the diversification of the economy and achieve sustainability in the country. The report indicated that the economic stability and expected development in the Qatari market is due to the positive impact of reducing geopolitical tensions in the region, noting that Doha has succeeded in positioning itself as a mediator between Western powers and the regimes in Iran and Afghanistan. The report highlighted the increasing importance of Qatar in the global energy markets, especially due to European pressure to reduce dependence on Russian gas. The Forbes report said that Fitch Ratings revised its outlook on Qatar’s credit rating from AA- from stable to positive, noting the expected strong growth in the country’s gas exports in the coming years. Qatar is currently investing heavily in the massive expansion of its production capacity in its giant North Field, just as demand for natural gas is increasing in key markets around the world. And the report continued: The rating agency said on March 28 that it expects the first phase of this expansion to begin to have a full impact on revenues from 2026, with the second phase to begin the following year. Significant production from the North Field should help lower the hydrocarbon price the government needs to balance its budget – known as the fiscal break-even point – to below $50 a barrel, from $57-58 a barrel currently. This financial situation will leave the Qatari government in a very comfortable position, even if oil prices decline as expected in the coming years. Economic growth The Forbes report highlighted that the decision taken by Fitch Agency is an echo of a decision by Moody’s Investors Service last November, before Qatar hosts the FIFA,Football,Soccer,Football,Soccer World Cup. From the perspective of the Qatari government, the end of the World Cup means that there is no longer the same pressure to invest heavily in transportation, hotels, sports stadiums and other related infrastructure. While Fitch said the Qatari government “is likely to find new spending to diversify the economy,” it still expects Qatar to run budget surpluses given its long-term oil price forecast of $53 a barrel. The report also showed that expanding production in the North Field will boost LNG production capacity from 77 million tons per year at present to 110 million tons by 2025 and 126 million tons by 2027. The project is expected to cost about $12.5 USD, which It will be paid, at least in part, by bond issues. The end of the World Cup has contributed to a slowdown in the local economy – Fitch Ratings estimates that Qatar’s GDP will expand by just 0.7% this year, compared to 4.8% in 2022, the year the tournament was held.