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Qatar Economic Review

September 2006

Contents
Sovereign Ratings Overview of the State of Qatar The Economy of Qatar Key Economic Sectors Ination Balance of Payments Monetary Policy Banking Sector Domestic Credit Facilities Public Finance Doha Securities Market Investment Incentives Qatar National Bank (QNB) QNB Ratings Appendix 5 6 10 14 31 33 38 40 43 45 47 51 53 54 55

Qatar Economic Review is a publication of Qatar National Bank (QNB). It is authored by the Economics & Research Department. All the information in this review has been carefully collated and veried. However, QNB accepts no liability whatsoever for any direct or consequential losses arising from its use. Where an opinion is expressed, unless otherwise cited, it is that of the authors which does not coincide with that of any other party, and such opinions may not be attributed to any other party. Qatar Economic Review is distributed on a complimentary basis to valued business partners of the Bank. It may not be reproduced in whole or in part without permission.
Qatar National Bank SAQ Economics and Research Department P.O.Box 1000 Doha, State of Qatar Tel. (+974) 440 7932 Fax (+974) 440 7930
Sovereign Ratings: State of Qatar

Qatar stands among the highest rated GCC countries along with UAE and Kuwait (Table 4) and is currently rated by Capital Intelligence, Moodys, and Standard and Poors.
Table 1: Moodys ratings for Qatar
Government Bonds Foreign Currency Aa2

Source: Moodys.
Foreign Currency Bonds and Notes LT : Aa2 ST : P-1 Bank Deposits LT : Aa2 ST : P-1
Outlook
Domestic Currency A1
Stable
On May 24th, 2006 Moodys implemented a new approach to its ratings wherein Qatars sovereign country ceilings were upgraded to Aa2 from A1 (Table 1). Earlier on May 18th, 2005 Moodys had raised the sovereign long-term foreign currency and bond ratings to A1 from A3, and the short-term country ceilings to P-1 from P-2. The outlook on the ratings continues to be stable. Moodys mentioned that the rating action is in acknowledgement of Qatars rapid economic expansion, improving debt ratios and ongoing political reform.
Table 2: Capital Intelligence ratings for Qatar
Foreign Currency Long-Term A+

Source: Capital Intelligence.
Local Currency Long-Term A+ Short-term A1
Outlook
Short-term A1
Stable
On August 18th, 2005 Capital Intelligence (CI) raised the sovereign long-term foreign currency ratings (LT FCR) by two notches to A+ from A-, and the short-term foreign currency ratings to A1 from A2 (Table 2). CI also assigned a long-term local currency rating of A+ and a short-term local currency rating of A1 for the first time. The outlook is stable. Capital Intelligence mentioned that the upgrade reflects the expectation that investment in the gas sector and other export-oriented industries will continue to deliver budget and current account surpluses over the medium term, thereby further enhancing already strong debt-servicing ability.
Table 3: Standard and Poors ratings for Qatar
Local Currency Long-Term A+

Source: Standard and Poors.
Foreign Currency Long-Term A+ Short-term A-1
Outlook
Short-term A-1
Stable
On September 12th, 2005 S&P revised the outlook for the State of Qatar to Stable, reaffirming the A+ ratings (Table 3).
Table 4: GCC Ratings long-term foreign currency rating
Sovereign Bahrain Kuwait Oman Qatar Saudi Arabia UAE
Moodys A2 Aa3 A2 Aa2 A1 Aa2
Standard and Poors A A+ BBB+ A+ A+ N/R
Fitch AAAN/R N/R A N/R
Capital Intelligence BBB+ A+ BBB+ A+ A+ A+
Source: Moodys, Standard and Poors, Fitch and Capital Intelligence.
SOVEREIGN RATINGS 5
1. Overview of the State of Qatar

1.1 Location, Area and Historical Background
Qatar is an independent state in the Southern Arabian Gulf surrounded by Saudi Arabia, Bahrain, the United Arab Emirates and Iran. The country is situated midway along the western coast of the Arabian Gulf between latitudes 24.27 - 26.10 North and longitude 50.45 - 51.40 East. Qatars area is 11,437 square kilometres, projecting northward about 160 kilometres into the Gulf. The coastline is 563 kilometres long and bounds the country to the west, north and east.
1.2 Population
The population of Qatar as per the 1997 census is 522,023 representing a 41.4% increase from the 1986 census of 369,079 and translating into an average annual increase of 3.7% during 1986-1997. In December 2004, The Planning Council announced the final results of the new population census. According to the 2004 census, Qatars population reached 744,029 increasing by 42.5% from the 1997 census of 522,023 (Table 1.1). As per the 2004 census, 45.7% of the total population resided in Doha, while 36.7% of the population resided in Al-Rayyan. The 2004 census shows an average annual increase of 5.3% during the period 1997-2004, compared to the annual average increase of 3.7% during 1986-1997. The rapid increase in population over the last few years is attributed to the strong performance of the economy, which has resulted in a large number of projects coming online, thereby leading to the influx of professionals, service and contracting sector staff and others. QNB estimates the total population of Qatar to have reached 855,000 by year-end 2005, and forecasts total population to reach 910,000 by year-end 2006.
Table 1.1 Geographical Distribution of Population
1997 Census Municipality Doha Al Rayyan Al Wakra Umm Slal Al Khor Others Total
Source: The Planning Council.
2004 Census % of Total 50.6 32.5 4.7 3.5 3.4 5.3 100% Population 339,847 272,860 31,441 31,605 31,547 36,729 744,029 % of Total 45.7 36.7 4.2 4.3 4.2 4.9 100%
Population 264,009 169,774 24,283 18,392 17,793 27,772 522,023
OVERVIEW OF THE STATE OF QATAR 6
Population by Gender
The 2004 population census breakdown by gender shows that males accounted for 66.7% of the total population (Table 1.2). This major gender imbalance is due to the growing number of expatriates, especially single males.
Table 1.2 Population by Gender
1997 Census Population Males Females Total

2004 Census % of Total 65.6% 34.4% 100.0% Males Females Total Population 496,382 247,647 744,029 % of Total 66.7% 33.3% 100.0%
342,459 179,564 522,023
Population by Age Groups

Further evidence to the gender imbalance can be seen through the population break-up by Age Groups, where we see 24.2% of the total population between the Age Groups 30 - 39, numbering 180,206 (Table 1.3). The percentage of male population between the Age Groups 30 - 39 is 71.4%, with the percentage of Female population at 28.6%. The percentage of population below 20 years is 28.2%, numbering 209,809.
Table 1.3 Population by Age Groups and Gender (2004 Census)
Age Group 0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-69 70 + Total
Males 30,059 28,420 26,687 22,187 39,896 59,477 66,976 61,624 56,617 46,488 29,738 15,771 9,573 2,869 496,382
Females 28,489 27,814 26,149 20,004 19,671 24,576 27,833 23,773 19,260 12,631 7,615 4,104 3,863 1,865 247,647
Total 58,548 56,234 52,836 42,191 59,567 84,053 94,809 85,397 75,877 59,119 37,353 19,875 13,436 4,734 744,029
Economically Active Population by Gender and Employment Status

The economically active population increased by 56.2% as per the 2004 Census to reach 437,561 compared to the 1997 Census of 280,122 (Table 1.4).
Table 1.4 Economically Active Population by Gender and Employment Status
1997 Census Males Employer Own Account Employee Other Total 1,438 2,139 238,645 163 242,385 Females 39 48 37,620 30 37,737 Total 1,477 2,187 267,265 193 280,122 Males 2,932 1,882 368,129 160 373,103
2004 Census Females 61 22 64,375 0 64,458 Total 2,993 1,904 432,504 160 437,561
Economically Active Population by Economic Activity

There has been a rapid growth in the economically active population in all major economic sectors, with a noticeable rise of 108.6% in the construction sector to 117,049 (Table 1.5), which constitutes 26.8% of the total economically active population.
Table 1.5 Economically Active Population by Economic Activity
Economic Activity Agriculture, Hunting & Forestry Fishing Mining and Quarrying Manufacturing Electricity and Gas Construction Wholesale and Retail Trade Hotels and Restaurants Transport, Communication & Storage Financial Intermediation Real Estate, Renting and Related Activities Public Administration Education Health and Social Work Other Community Social Services Domestic Services Extra-territorial Organisations and Bodies Others Total
1997 Census 9,044 1,303 9,364 24,143 3,206 56,106 30,622 6,068 9,614 3,094 4,644 49,873 13,954 5,434 7,663 45,100 595 295 280,122
2004 Census 10,200 1,825 17,997 40,039 4,364 117,049 54,438 10,280 15,218 4,766 11,859 53,438 19,877 11,554 10,130 53,356 1,171 -437,561
1.3 Constitution and Legal System

The National Constitution Committee, established by an emiri decree in July 1999 to draft a new permanent constitution, presented a final draft to HH the Emir in July 2002. One of the main provisions in the new constitution is the establishment of an elected parliament. The draft constitution received an overwhelming majority vote in the referendum held in April 2003, and became effective in June 2005. The Judiciary in Qatar was expressly established as an independent body by the provisional constitution and was formerly divided into two court systems; the Civil, Commercial and Criminal system and the Sharia Court system which administers Islamic laws. The Civil and Commercial system was formerly divided into the Minor and Major courts. The Minor court had jurisdiction to consider only disputes not exceeding QR 30,000 presided by a single judge. All civil and commercial disputes in excess of that value were heard by the Major courts, comprised of a panel of three judges. Appeals from the Minor courts were raised to the Major courts, and from the Major courts to the Court of Appeal, which is the highest court of appeal in the country. In October 2004, the judicial system underwent a radical change with the establishment of the new Judiciary Law issued in 2003, which became effective in 2004. According to the new Judiciary Law, the previous two-court system has merged into one. A Higher Court called the Court of Cassation (Supreme Court) has been established. Appeals from the Court of Appeal can be raised to the Court of Cassation, which will be considered the highest court of appeal in the country.
1.4 Foreign Relations and International Organisations

Qatar is a member of the Gulf Cooperation Council (GCC), whose other members are Bahrain, Kuwait, Oman, Saudi Arabia and the United Arab Emirates; the Organisation of Petroleum Exporting Countries (OPEC), and other international and multilateral organisations such as the United Nations, the International Monetary Fund, the International Bank for Reconstruction and Development and the World Trade Organisation. During the GCC summit held in December 2001, the supreme council of the GCC approved the establishment of a GCC customs union by 1st January 2003, which is currently in place. This agreement has accelerated the proposed customs union by two years, setting unified customs tariffs at 5% for all imported goods into the region. The GCC summit also approved proposals for a monetary union and the introduction of a single GCC currency by 2010. Qatar and Bahrain signed a Memorandum of Understanding (MOU) in February 2005 for the setting up of a causeway between the two countries. In June 2006, an agreement was signed to start the work on the construction of the $3 billion 40 kilometre causeway between the two countries. The project is expected to take four years to complete and will have a great impact in further enhancing bilateral ties.
2. The Economy of Qatar

Qatars economy continues to grow from strength to strength and has become one of the fastest growing economies in the world. Nominal GDP growth was at a strong 33.8% in 2005, and is estimated by QNB to grow by a further 27.1% in 2006, and by another 17.0% in 2007 (Table 2.2). Moving the economy forward is the rapidly expanding Natural Gas sector and related industries, which continues to lead the economic diversification efforts and provides the momentum for reshaping the economy. Although economic performance is still relatively dependent on oil revenues, the contribution of LNG has increased significantly over the past few years. The share of the oil and gas sector in the overall GDP stood at 60% in 2005, according to the Planning Council, while QNB estimates show that the oil and gas sector will continue to hold a prominent share in the overall GDP and is expected to stay at 61% in 2006 and at 60% in 2007, mainly due to the rally in oil prices and production and the increased production of natural gas and related industries. Qatars rapid economic growth has enabled it to become one of the wealthiest countries in the world, as measured by GDP per capita. In 2005, Qatars GDP per capita reached a record level of $49,655. QNB estimates show GDP per capita reaching as high as $64,495 by the year 2007.
2.1 Gross Domestic Product (GDP)

Qatars nominal GDP growth has reached record levels, averaging 19.9% over the past five years (20012005). Primary attributes for this rapid pace come from the underlying increased exports of oil, LNG, petrochemicals and related industries, coupled with rising product prices. The final GDP figures for the year 2004 released by the Planning Council shows that nominal GDP grew by a substantial 34.8%, to reach QR 115.5 billion, compared to the preliminary estimate of QR 103.6 billion. For 2005, final figures from the Planning Council show GDP growth continuing at an impressive rate of 33.8%, to reach QR 154.6 billion (Table 2.1). In 2005, the oil and gas sector witnessed a growth of 46.3%, while the non-oil sector grew by 18.8%. Qatars GDP has more than trebled since 1999, when it was at a level of QR 45.1 billion, to the current level in 2005 of QR 154.6 billion.
Table 2.1 Gross Domestic Product at Current Prices by Economic Sectors (2001-2005)
(QR Million) 1. Oil & Gas Sector % Change 2. Non-Oil Sector % Change - Agriculture & Fishing - Manufacturing - Electricity & Water - Building & Construction - Trade, Restaurants and Hotels - Transport and Communications - Finance & Insurance - Real Estate and Business Services - Other Services*
2001 36,812 -5.8% 27,028 5.7% 240 3,909 433 2,938 3,919 2,223 2,221 2,975 8,170 63,840 -1.2% 17,538 27,128
2002 40,717 10.6% 29,767 10.1% 181 5,076 409 3,593 3,969 2,489 2,694 3,108 8,248 70,484 10.4% 19,364 28,125
2003 50,551 24.1% 35,112 18.0% 201 6,553 1,205 4,654 4,345 2,911 3,222 3,224 8,797 85,663 21.5% 23,534 31,803
2004 62,922 24.5% 52,590 49.8% 210 11,995 1,482 6,425 6,148 4,020 3,748 6,177 12,385 115,512 34.8% 31,734 39,892
2005 92,071 46.3% 62,493 18.8% 216 13,042 2,209 8,744 6,869 5,114 7,113 7,672 11,514 154,564 33.8% 42,463 49,655
* Includes social services, imputed bank service charges, government services, household services and import duties.
Total GDP % Change Total GDP ($ Million) GDP per capita ($)
THE ECONOMY OF QATAR 10
Figure 2.1 GDP Growth Rate (%) Figure 2.2 Oil & Gas GDP / Non-Oil & Gas GDP (QR Billion)
* QNB Estimates.
Source: The Planning Council and QNB.
For 2005, final figures by the Planning Council shows nominal GDP growth at 33.8%. The following were the main factors behind this rapid rise : The price of Qatari crude oil increased by 46.9% in 2005 to reach $51.7 p/b, compared to $35.2 p/b in 2004, according to figures obtained from the Middle East Economic Survey (MEES). Qatars crude oil production increased by 2.6% to average 779,000 bpd in 2005, compared to 759,000 bpd in 2004, according to MEES. LNG exports increased by 24.4% to reach 22.9 million tons, from 18.4 million tons in 2004. Higher oil and gas prices and production resulted in the Oil & Gas sector GDP showing an increase of 46.3% in 2005 to reach QR 92.1 billion, compared to QR 62.9 billion in 2004. The Non-Oil and Gas sector GDP grew by 18.8% in 2005 to reach QR 62.5 billion, compared to QR 52.6 billion in 2004. For 2006, QNB estimates GDP growth to remain strong at 27.1%, underpinned by the following factors: The price of Qatars crude oil increased by 21.9% during the first half of 2006, averaging $63.0 p/b, from $51.7 p/b in 2005, according to data obtained from MEES. Qatars crude oil production averaged 805,000 bpd during the first half of 2006, compared to 779,000 bpd in 2005, according to data compiled by MEES. LNG exports is expected to reach 25.0 million tons in 2006, compared to 22.9 million tons in 2005. Non-Oil and Gas GDP is expected to grow by an estimated 23.8% to reach QR 77.4 billion.
Table 2.2 Gross Domestic Product (2005-2007*)
(QR Million) Nominal Oil and Gas GDP % Growth Nominal Non-Oil and Gas GDP % Growth Total GDP
2005 92,071 46.3% 62,493 18.8% 154,564 33.8%
2006* 119,090 29.3% 77,360 23.8% 196,450 27.1%
2007* 136,677 14.8% 93,169 20.4% 229,846 17.0%
* QNB Estimates.
% Growth
Source: The Planning Council and QNB.
The Non-Oil and Gas Sector

The Non-Oil and Gas sector contributed 40.4% of total GDP in 2005, recording a growth of 18.8% over 2004. The main components of this sector are the following: a. Manufacturing Industry In 2005, the Manufacturing sector made the largest contribution to GDP among non-oil and gas sectors. This sector grew by 8.7% at current prices, contributing QR 13,042 million, which represented 8.4% of total GDP. This sector is strongly supported by the Government as a part of a general policy to diversify income sources and to maximise the utilisation of Qatars natural resources. The major sub-sectors of the Manufacturing sector are petroleum refining, industrial, chemicals, fertilisers and steel, which utilise natural gas as feed-stock and/or fuel. Other important activities include the production of flour, cement, concrete, plastics, textiles and footwear, household articles and paint. b. Other Services The Other Services sector, which includes government services, social services, household services, imputed bank service charges and import tariffs, made the second largest contribution to GDP of the non-oil and gas sectors, and in 2005 contributed QR 11,514 million (representing 7.4% of total GDP). c. Building and Construction The rapid pace of developments in the Building and Construction sector is quite evident around Doha over the past few years, and as such this sector continues to be a major contributor to the GDP and employment of labour force. This sector witnessed a growth of 36.1% in 2005, contributing QR 8,744 million to overall GDP. Credit facilities extended by commercial banks to the land, housing and construction sector increased by 67.0% during the year 2005 to reach QR 9,541 million, compared to QR 5,712 million in 2004. During the first half of 2006, credit facilities to this sector grew by a further 25.8% to reach QR 12,000 million. Another major indicator showing the level of activity in the building and construction sector is the number of building permits issued. In 2005, the number of building permits issued increased by 23.4% to reach 5,950 (Table 2.3).
Table 2.3 Building permits issued by Municipality (2001-2005)
Municipality Doha Al-Rayyan Wakrah Umm Slal Al-Khor Total

2001 1,545 1,305 184 369 153 3,556
2002 1,579 1,418 217 468 192 3,874
2003 1,581 1,372 262 409 287 3,911
2004 1,930 1,741 302 586 262 4,821
2005 2,082 2,373 407 700 388 5,950
Public expenditure is a very important factor affecting the prospects for the building and construction sector, and the realisation of budgetary surpluses in the last six fiscal years has increased the level of public spending. Allocation for major public projects in the 2006/07 Budget increased by 70.5% to reach QR 20.0 billion, which covers the areas of public services, infrastructure, social and health services, and education and youth welfare.
d. Real Estate and Business Services The Real Estate and Business Services sector made the fourth largest contribution to GDP of QR 7,672 million. This sector witnessed a strong growth of 24.2% in 2005 and represented 5.0% of Qatars total GDP. e. Finance and Insurance The Finance and Insurance sector is comprised of three sub-sectors: banking, insurance and financial intermediation services. This sector has witnessed the most rapid growth in 2005, increasing by 89.8% and contributing QR 7,113 million to the overall GDP in 2005. This sector represented 4.6% of Qatars total GDP in 2005. f. Trade, Restaurants and Hotels The Trade, Restaurants and Hotels sector contributed QR 6,869 million to Qatars overall GDP in 2005, representing 4.4% of total GDP. This sector grew by 11.7% in 2005 and will be one of the most promising in the coming years, as business, cultural, sports, education and tourism events aimed at promoting Qatar, gathers even more momentum. The upcoming Asian Games in December 2006 will also have a very positive impact on the tourism industry. Qatars hotel room capacity in the luxury sector is expected to increase by an additional 9,318 rooms in the coming years as a result of up-coming projects such as the West Bay Resort, the Doha Hilton, the ShangriLa, the Renaissance, the Al-Sharq Village Resort & Spa, La Cigale, the Marriott Courtyard and the Rotana amongst others. The Qatar Tourism Authority which was established in the year 2000, is actively promoting Qatar as a tourist destination. g. Transport and Communications This sector contributed QR 5,114 million to the overall GDP in 2005, and witnessed a growth of 27.2%. Qatar Airways is the principal airline operating from Qatar, designated as the National Carrier, and is a joint public and private sector enterprise (being 50% owned by the Government). In 2005, Qatar Airways carried over 6 million passengers and ranked 2nd in the region. It currently flies to over 70 destinations in the Middle East, North Africa, Europe, the Indian sub-continent and the Far East. Qatar Airways operates an all-Airbus fleet of 45 aircraft and will triple its fleet to 110 by 2015. Qatar Telecom (Q-Tel) under licence, is currently the sole telecommunications service provider in Qatar. Rapid growth in wireless communications has seen Q-Tels GSM subscriber numbers rise substantially, and by the first half of the year 2006 had over 800,000 subscribers, which translates into a 93% penetration level, one of the highest in the region. Q-Tel has also expanded its operations in the region, with the successful bid in 2005 to become the second mobile operator (Nawras Telecom) in Oman. h. Electricity and Water The Electricity and Water sector witnessed a growth of 49.0% in 2005, contributing QR 2,209 million to Qatars overall GDP. Most of Qatars electricity generation capacity comprises of gas turbines, which are fuelled by natural gas. Water desalination is achieved in tandem with electricity generation. Ras Abu Fontas-B Plant, Qatars largest power and water desalination plant, entered operation in 1996 and provides installed capacity of 610 megawatts. A number of industrial companies, such as QAPCO and QAFCO, have their own electricity generating facilities. Qatars first independent water and power project (IWPP) became operational in March 2004 at Ras Laffan and has a capacity of 750 MW of power and 40 million gallons of water a day. The Ras Laffan B IWPP was completed in June 2006 and will start full commercial operations in 2008. The project will add a further 680 MW of power and 15 million gallons of water a day. i. Agriculture and Fisheries The Agriculture and Fishing sector has traditionally played only a minor role in the modern Qatari economy because of unsuitable weather and environmental conditions. Cultivable land accounts for only approximately 0.7% of Qatars total surface area. This sector grew by a marginal 2.9% in 2005, contributing QR 216 million to Qatars GDP.
3.Key Economic Sectors

3.1 The Oil Sector
The State of Qatar conducts its principal oil operations through State-owned Qatar Petroleum (QP), which manages Qatars oil, gas, fertiliser, petrochemicals and refining enterprises in Qatar and abroad. The Governments oil policy has the twin aim of replenishing proven reserves within currently producing fields and identifying additional new reserves. Qatars oil reserves as at December 2005 stood at 27.0 billion barrels (Table 3.1). Qatars oil reserves have substantially risen over the past seven years, from 3.7 billion barrels in 1999 to 27.0 billion barrels as at December 2005. Given an average production of 715,000 barrels per day (bpd) over the past five years, proven reserves would last approximately 103 years.
Table 3.1 Qatar - Proven Oil Reserves
(Billion barrels) Crude Oil Condensates Total

Source: Qatar Petroleum.
Dec. 2005 4.3 22.7 27.0
QP has in its new five-year plan (2006 - 2010), budgeted an overall QR 204 billion for projects in crude oil, natural gas, gas-to-liquids, refining, petrochemicals, industrial cities and others (Table 3.2).
Table 3.2 QP Five Year Plan (2006 - 2010)
Projects Crude Oil Natural Gas GTL & Refining Petrochemicals Industrial Cities and Others Total
QR Billion 8.5 122.0 40.0 17.0 16.5 204.0
QP has embarked upon an investment programme with the intention of expanding oil production from its onshore and offshore fields from the current 834,000 bpd, to around 900,000 bpd by year-end 2008 (Table 3.3).
Table 3.3 Qatars Current Crude Oil Production and Projected
Field (bpd)
Operator
Current Production Dec. 2005
Projected Production Dec. 2008 350,000 50,000 35,000 105,000 15,000 270,000 36,000 14,000 10,000 15,000 900,000
Dukhan Bul Hanine Maydan Mahzam Idd Al-Shargi North Dome Idd Al-Shargi South Dome Al-Shaheen Al-Khaleej Al-Rayyan Al-Karkara El-Bunduq Total
QP QP QP Occidental Occidental Maersk Oil TotalFinaElf Anadarko QPD BOC
340,000 70,000 35,000 90,000 10,000 220,000 38,000 16,000 -15,000 834,000
KEY ECONOMIC SECTORS 14
QP Production
QP produces oil on its own account from one onshore and two offshore fields and from other fields through Exploration/Development and Production Sharing Agreements (EPSAs/DPSAs) with major international partners (Fig 3.1). QP operates exclusively the Dukhan Field, which is Qatars oldest and largest field. The field comprises of three reservoirs for crude oil and one reservoir for non-associated gas. The Dukhan Field is Qatars only onshore field and has estimated reserves in excess of 2 billion barrels of oil, equivalent to around 18 years production at present production levels. QP also produces offshore crude oil for its own account from two fields within Qatars territorial waters: Maydan Mahzam and Bul Hanine, which currently have production capacities of 35,000 bpd and 70,000 bpd. QPs oil production accounted for 53% of Qatars total oil production as at December 2005.
Exploration/Development and Production Sharing Agreements (EPSAs/DPSAs)

Qatars total oil exploration area is divided into twenty two hydrocarbon blocks covering a total surface area of 43,426 square kilometres. Since the early 1990s, QP has entered into a number of EPSAs/ DPSAs. Under an EPSA agreement the contractor is granted the right to explore for oil in the relevant block and, if oil is discovered, to develop the fields. Under a DPSA agreement the contractor is required to cover appraisal and development of already discovered structures or further development of existing fields. Key aspects of major EPSAs/DPSAs include the following ventures:
Idd Al Shargi (Offshore)

Occidental Petroleum has been exploring, operating and developing both the North Dome of this field since 1994 when it signed a DPSA with QP, and the South Dome since December, 1997 following a separate DPSA. Occidental aims to increase production of Idd Al Shargi Field (for both North and South Domes) from the current production of 100,000 bpd, to 120,000 bpd by 2008.
Al Shaheen Field - Block 5 (Offshore)

The development of this field is based on extensive use of horizontal drilling and water injection, applying state-of-the-art technology developed by Maersk Oil. QP signed a deal with Maersk Oil Qatar in early 2001 to further develop the field at an estimated cost of $1.2 billion. The development plan saw production capacity increase to the current 220,000 bpd. QP and Maersk further in April 2004 signed on EPSA for an extention area of Block 5, located Northwest of the Al-Shaheen Field. Further to this, a new development plan was signed in March 2006 which will double current production levels.
Al Khaleej Field - Block 6 (Offshore)

TotalFinaElf Qatar operates this field under a DPSA with QP. Production at this field reached 38,000 bpd as at year-end 2005.
Al Rayyan Field (Offshore)

Anadarko Petroleum Corporation currently operates the field with a 92.5% stake, along with Marubeni Corporation with a 7.5% stake. BP was the field operator until June 2002, when Anadarko acquired its stake in Blocks 11,12 & 13. Production from this field is currently at 16,000 bpd.
Al Karkara Field (Offshore)

Qatar Petroleum Development Company (QPD) operates the field under a DPSA signed with QP in 2003. QPD is a Japanese consortium (Cosmo Oil Co., Nissho Iwai Corp., and United Petrleum Development Co.). Production at this field started in the first quarter of 2006.
Blocks 1, 3, 4, 7 and 14 (Offshore) Following the border resolution with Bahrain in March 2001, new Blocks 3 and 14 have been demarcated, with Block 3 currently under bidding and expected to be awarded in the second half of 2006. Block 4 was awarded to Anadarko in May 2004. Block 14 is expected to go for bidding in the second half of 2006, while Block 1 is likely to go for bidding in the last quarter of 2006. Block 7 is expected to go for bidding in the second quarter of 2007. Block 2 (Onshore) In March 1998, QP and ChevronTexaco signed an EPSA for the onshore Block 2 oil concession, which covers an area of approximately 10,900 square kilometres. In 2001, Canadian firm EnCana and Swedish firm Svenska acquired a stake in Block 2 from ChevronTexaco and now the block is operated through a consortium.
Figure 3.1 Qatars Oil and Gas Areas Situation Map
Oil Production, Price and Exports: Qatars oil production increased by an average of 26,000 bpd during the first half of 2006, to average 805,000 bpd, compared to 779,000 bpd produced in the year 2005. Qatars oil production has increased from an average of 681,000 bpd in 2001, to an average of 805,000 bpd during the first half of 2006 (Fig 3.2), according to figures obtained from Middle East Economic Survey (MEES). In 2005, Qatars oil production increased by 2.6% to average 779,000 bpd, compared to an average of 759,000 bpd produced in 2004. Qatars oil price has almost trebled to average $63.0 p/b during the first half of 2006, compared to an average of $23.6 p/b in the year 2001 (Fig 3.3), according to MEES. During the first half of 2006, Qatars oil price increased by 21.9% to average $63.0 p/b, compared to an average of $51.7 p/b in the year 2005. Qatars oil prices are based on the average of a basket of two crudes, mainly Dukhan and Marine.
Figure 3.2 Qatars crude oil production (000 bpd)
Figure 3.3 Qatars crude oil price ($ p/b)
Source: Middle East Economic Survey.
Qatars crude oil exports are directed mainly towards the Asian markets, with the region accounting for around 96.0% of the total oil exports in 2005. In 2005, Japan received 60.0% of Qatars total oil exports, followed by Singapore with 16.0%, South Korea with 13.0%, Thailand with 3.0%, Taiwan with 2.0%, and Philippines with 2.0% (Table 3.4). In 2004, Japan received 50.6% of Qatars total crude oil exports, followed by Singapore with 17.1%, South Korea with 9.7%, Thailand with 4.6%, and India with 3.9%.
Table 3.4 Destination of Qatars Crude Oil Exports (2005)
Country Japan Singapore South Korea Thailand Taiwan Philippines Other Countries Total
% Share 60.0% 16.0% 13.0% 3.0% 2.0% 2.0% 4.0% 100.0%
3.2 The Natural Gas Sector

Qatars North Gas Field, discovered in 1971, is the largest non-associated gas field in the world, with proven reserves currently estimated at over 910 trillion cubic feet (tcf), which is equivalent to about 164 billion barrels of oil. These reserves would translate into 14.4% of the world total and will be sufficient to support planned production of natural gas for over 200 years. The North Field extends over an area of approximately 6,000 square kilometres, predominantly underlying the territorial waters of the State of Qatar (Figure 3.1). Associated gas reserves are currently estimated at 15 tcf. Within the Middle East, Qatar has the second highest proven gas reserves after Iran. QP has initiated and developed two major LNG projects with foreign shareholders for the purpose of utilising the North Field gas for exports in the form of LNG. These projects are Qatargas and RasGas. Expansion of LNG facilities through RasGas II, Qatargas II, RasGas 3, Qatargas 3, and Qatargas 4 is being pursued to meet additional export opportunities. Sales and Purchase Agreements (SPA) have been reached with a number of countries, which at their peak in 2011 will reach 59.4 million tons per annum (mtpa). Several Heads of Agreement (HoA) have also been signed, and should these turn into confirmed SPAs, total LNG exports would reach about 78.1 mtpa by 2011 (Table 3.5). The Qatar Gas Transport Company (Nakilat) was established as a DSM listed company in early 2005, to meet the transportation needs of the various LNG export deals. QP has allocated QR 122 billion in its five year plan, starting 2006, to meet the rapidly expanding needs of the Natural Gas sector.
Table 3.5 Qatars Contracted LNG Exports (mtpa)
Destination (Supplier) Sales & Purchase Agreements Japan1 (Qatargas 1) Korea (RasGas)
2
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
6.3 4.9 1.2 12.4
6.3 4.9 1.1 0.1 12.4
6.3 6.8 2.5 1.3 0.8 17.7
6.3 8.8 3.8 2.2 0.7 0.6 22.4
6.4 8.8 5.0 2.6 0.5 0.8 24.1
6.6 8.8 5.0 2.9 0.8 2.6 1.5 28.2
6.6 6.8 5.0 3.5 2.9 0.8 3.4 2.1 1.2 5.3 37.6
6.6 4.9 5.6 4.7 2.9 0.8 3.4 2.1 2.5 7.8 5.3 5.3 51.9
6.6 4.9 7.5 4.7 2.9 0.8 3.4 2.1 3.0 7.8 7.8 7.8 59.3
6.7 4.9 7.5 4.7 2.9 0.8 3.4 2.1 3.0 7.8 7.8 7.8 59.4
6.7 4.9 7.5 4.7 2.2 0.8 3.4 2.1 3.0 7.8 7.8 7.8 58.7
India (RasGas II)

3
Italy (RasGas II)

4
Spain (Qatargas 1)
5
1
SPAs with 8 Japanese Companies. SPA with KOGAS of Korea. SPA with Petronet of India. SPA with Edison Gas of Italy.
Spain6 (Qatargas 1) Spain7 (RasGas II) Belgium8 (RasGas II) Belgium9 (RasGas II) Taiwan10 (RasGas II) UK11 (Qatargas II) France12 (Qatargas II) USA13 (Qatargas 3) Total SPAs Heads of Agreement Spain14 (Qatargas 1) USA15 (RasGas 3) USA
16
SPA with Gas Natural Group of Spain.

5 6
SPA with BP.
SPA with Endesa Generacion SA of Spain.

7 8
SPA with Fluxys LNG of Belgium. SPA with Distrigas of Belgium.
SPA with Chinese Petroleum Corporation.

10 11
HoA with ExxonMobil. HoA with Total. HoA with ConocoPhilips. HoA wth Eni of Italy. HoA with ExxonMobil. HoA with ExxonMobil.
12.4
12.4
0.4 0.4 18.1
0.7 0.7 23.1
0.7 0.7 24.8
0.7 0.7 28.9
0.7 1.0 1.7 39.3
0.7 8.1 8.8 60.7
0.7 10.8 5.3 16.8 76.1
0.7 10.2 7.8 18.7 78.1
0.7 10.2 7.8 18.7 77.4
12
13
(Qatargas 4)
14
Total HoAs Grand Total

Source: Qatargas, RasGas, and QNB.
15
16
Qatars LNG Projects

1. Qatar Liqueed Natural Gas Company (Qatargas) Qatargas was established in 1984, with the first sales agreement being signed in 1992. The main activities of Qatargas are divided into two main projects with separate shareholder groups: the upstream joint venture (offshore production and the onshore receiving facilities) and the downstream joint venture (onshore LNG Plant). The Qatargas upstream joint venture has equity held by QP (65%) and four major energy and trading companies, TotalFinaElf (20%), ExxonMobil (10%), Mitsui (2.5%) and Marubeni (2.5%). The Qatargas downstream joint venture has equity held by QP (65%), TotalFinaElf (10%), ExxonMobil (10%), Mitsui (7.5%) and Marubeni (7.5%). The first output from the plant in the form of condensate was shipped to Japan in October 1996, with the first LNG shipment to Chubu Electric Power following in December of the same year. The production capacity of Qatargas existing three trains exceeds 9.2 mtpa, whose output is destined to Japan (Chubu Electric Power and seven other Japanese customers). In 2005, Qatargas exported a total of 9.9 million tons (mt) of LNG, with contracted exports expected to reach 41.5 million tons by 2011 (Table 3.6). Qatargas produced 9.9 mt of LNG and around 60,000 bpd of condensates in 2005.
Table 3.6 (a) Qatargas Actual LNG Exports
(In million tons per annum) Actual (SPAs and Spot)
2000 6.6
2001 7.5
2002 7.5
2003 8.0
2004 8.9
2005 9.9
(b) Qatargas Anticipated LNG Exports
(In million tons per annum) Contracted (SPAs and HoA)

Source: Qatargas, QP and QNB.
2006 10.2
2007 10.2
2008 15.5
2009 28.6
2010 38.9
2011 41.5
Japan is the worlds largest importer of LNG, importing 97% of its natural gas needs, all in the form of LNG. Japan is the main importer of Qatargas LNG and in 2005 imported 6.2 million tons, followed by Spain with 2.9 mt and other spot sales totaled 0.8 mt (Table 3.7).
Table 3.7 Qatargas LNG Exports (mtpa)
Destination Country Japan Spain Others Total

Source: Qatargas and QP.
2001 6.1 0.6 0.8 7.5
2002 6.3 1.2 7.5
2003 6.8 1.1 0.1 8.0
2004 6.8 2.0 0.1 8.9
2005 6.2 2.9 0.8 9.9
Qatargas has completed its debottlenecking process which began in 2001, and current production capacity of its three existing trains has increased from 6.6 mtpa to 10.2 mtpa in 2006. The debottlenecking project was completed by a joint venture partnership between Chiyoda Corporation of Japan and Technip of France.
2. Qatar Liqueed Natural Gas Company II (Qatargas II) In June 2002, QP and ExxonMobil announced the setting up of a joint venture, provisionally referred to as Qatargas II, with the primary aim of supplying up to 14 mtpa of LNG to the UK market. Project costs are estimated at $12.8 billion. QP has a 70% equity stake in the venture, with ExxonMobil holding the balance of 30%. Qatargas II was set up as part of Qatargas expansionary plans to add trains 4 and 5. The two new super-trains could each have a capacity as large as 7.5 mtpa, with the first train scheduled to start production in 2008 and the second to commence in 2009. In December 2004, the EPC contract for trains 4 and 5 was awarded to a joint venture of Frances Technip and Japans Chiyoda. In March 2005, Frances Total acquired a 16.7% equity stake in Train 5, with an investment plan estimated at $3.5 billion. Train 5 will also have QP as a 65% equity stakeholder and ExxonMobil holding the remaining 18.3%. A $550 million loan syndication consisting of 18 banks was signed in June 2005 for trains 4 and 5.
3. Qatar Liqueed Natural Gas Company 3 (Qatargas 3) In July 2003, QP and ConocoPhillips signed a Heads of Agreement for a joint venture project referred to as Qatargas 3. The agreement outlines that the project will have an ownership structure of QP (70%) and ConocoPhillips (30%). The Qatargas 3 project envisages the construction of a LNG train with a capacity of around 7.5 mtpa, scheduled for completion by 2010, with the output mainly destined for the US market. Project costs are estimated at around $7 billion.
4. Qatar Liqueed Natural Gas Company 4 (Qatargas 4) In February 2005, QP and Shell signed a Heads of Agreement to launch Qatargas 4. The Qatargas 4 project involves the construction of a 7.5 mtpa LNG train, scheduled for completion in 2011, with exports destined for North America and Europe. The Qatargas 4 joint venture will have QP holding a 70% equity stake, with Shell holding the remaining 30%. Project costs are estimated at around $7 billion. In April 2006, the foundation stone for Qatargas 3 and 4 was laid by H.H the heir Apparent Sheikh Tamim bin Hamad Al-Thani.
5. Ras Laffan Liqueed Natural Gas Company (RasGas) RasGas was established in 1993 as a $3.3 billion grassroots LNG and related products venture, owned by QP (63%), ExxonMobil (25%), Koras (5%), Itochu Corporation (4%), and LNG Japan Corporation (3%). Production from RasGas first and second LNG trains began in June 1999 and April 2000 respectively. Each of the first two trains has a capacity of just over 3.3 mtpa. RasGas began producing field condensates in April 1999, with an initial production volume of around 15,000 bpd. RasGas also has a production capacity for solid sulfur of about 300 tons per day. RasGas LNG production increased by 54.7% in 2004 to reach 9.9 mt, compared to 6.4 million tons of LNG produced in 2003. RasGas currently has a LNG production capacity of 16.0 mtpa, from 11.3 mtpa as at year-end 2004. The increase in LNG production capacity is a result of RasGas train 4 coming into production in 2005. Contracted LNG exports are expected to reach 37.2 mt by the year 2010 (Table 3.8).
Table 3.8: (a) RasGas Actual LNG Exports
(In million tons per annum) Actual (SPAs and Spot)
2000 3.9
2001 5.3
2002 6.0
2003 6.4
2004 9.5
2005 13.0
(b) RasGas Anticipated LNG Exports
(In million tons per annum) Contracted (SPAs and HoA)

Source: RasGas, QP and QNB.
2006 14.6
2007 18.7
2008 23.8
2009 32.1
2010 37.2
2011 36.6
In 2005, RasGas exported 13.0 mt of LNG, compared to 9.5 mt of LNG exported in 2004 (Table 3.9). RasGas exported 5.0 mt of LNG to South Korea, which accounted for 38.5% of total LNG exports, followed by India which received 4.4 mt (33.8%).
Table 3.9 RasGas LNG Exports (mtpa)
Destination Country South Korea India Spain USA Others Total

Source: RasGas and QNB.
2001 4.8 0.5 5.3
2002 5.1 0.2 0.7 6.0
2003 5.8 0.4 0.2 6.4
2004 5.9 2.0 1.2 0.2 0.2 9.5
2005 5.0 4.4 0.7 2.9 13.0
6. Ras Laffan Liqueed Natural Gas Company II (RasGas II) RasGas II was formed primarily to execute the planned expansion of RasGas. An Emiri decree issued on 26th March 2001 announced the setting up of Ras Laffan LNG Company II (RasGas II). The project involves the construction of three LNG trains (Trains 3, 4 & 5), each having a capacity of 4.7 mtpa and was initially aimed at providing Petronet of India with 7.5 mtpa of LNG. RasGas II was established with a capital of QR 2 billion ($549.5 million), owned by QP (70%) and ExxonMobil (30%), with an option for Petronet to take up a 5% stake. Train 4, constructed by a consortium consisting of Japans Chiyoda Corporation, Mitsui, Italys Snamprogetti and Qatari Almana Group, became operational in October 2005, with the first LNG cargo bound for India being loaded in the same month. Train 4 is currently the worlds largest and most technically advanced LNG train. In June 2004, RasGas II signed a SPA with Fluxys LNG of Belgium for the supply of 3.4 mtpa of LNG, commencing in 2007. In March 2005, RasGas II signed a SPA with Distrigas of Belgium for the supply of 2.1 mtpa of LNG.
7. Ras Laffan Liqueed Natural Gas Company 3 (RasGas 3) In October 2003, QP and ExxonMobil announced the setting up of RasGas 3, a joint venture company in which QP will take a 70% stake and ExxonMobil a 30% stake. A HoA was signed for the supply of 15.6 mtpa of LNG to the US, with deliveries set to start by 2010. Total project costs, including ships and downstream developments are estimated at $14 billion. The project envisages the construction of two LNG trains with a capacity of 7.5 mtpa each, with commissioning set for 2008 and 2009. The onshore EPC contract for the two LNG trains (6 & 7) were awarded in September 2005 to a joint venture of Japanese firm Chiyoda Corporation and French firm Technip. The offshore EPC contract was awarded to J Ray McDermott Middle East. QP and ExxonMobil as mentioned earlier are also working together at arranging the necessary transportation of the LNG to the US and thereafter at setting up regasification facilities in the US. November 2005 marked the ninth anniversary for Qatar as an LNG producer. LNG production capacity was around 25.2 mt in 2005, compared to 20.2 mt in 2004. Actual LNG production in 2004 was 19.1 mt, compared to 14.6 mt in 2003. With the various expansion projects currently under way and expected in the coming years, production capacity will increase to about 75.9 mtpa by 2011 (Table 3.10). Qatar has established itself as the Gulfs leading gas exporter, delivering since 1997 around 105 million tonnes of LNG to customers in the Far East, Europe and the US. In 2005, Qatar exported 22.9 million tons of LNG.
Qatargas
Table 3.10 LNG Summary (Mtpa) Qatargas
Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Production Capacity 4.4 6.6 6.6 6.6 7.5 8.0 8.5 8.9 9.2 10.2 10.2 17.7 25.2 32.7 40.2
Production Capacity Increase From Trains 1 and 2 Train 3 --Debottlenecking Debottlenecking Debottlenecking Debottlenecking Debottlenecking --Train 4 (Qatargas II) Train 5 (Qatargas II) Train 6 (Qatargas 3) Train 7 (Qatargas 4) RasGas
Contracted LNG Exports 4.4 4.4 5.9 5.9 6.0 7.5 7.5 8.8 9.9 10.2 10.2 15.5 28.6 38.9 41.5
Actual LNG Exports 2.2 3.6 5.9 6.6 7.5 7.5 8.0 8.9 9.9 -------
LNG Summary (Mtpa) RasGas
Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Production Capacity 6.6 6.6 6.6 6.6 6.6 11.3 16.0 16.0 20.7 28.2 35.7 35.7 35.7
Production Capacity Increase From Trains 1 and 2 ----Train 3 (RasGas II) Train 4 (RasGas II) -Train 5 (RasGas II) Train 6 (RasGas 3) Train 7 (RasGas 3)
Contracted LNG Exports 0.6 3.3 4.2 4.9 4.9 9.3 13.2 14.6 18.7 23.8 32.1 37.2 36.6
Actual LNG Exports 0.7 3.9 5.3 6.0 6.4 9.5 13.0 -------
Qatargas and RasGas

LNG Summary (Mtpa) Qatargas and RasGas
Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Production Capacity 4.4 6.6 13.2 13.2 14.1 14.6 15.1 20.2 25.2 26.2 30.9 45.9 60.9 68.4 75.9
Contracted LNG Exports 4.4 4.4 6.6 9.2 10.2 12.4 12.4 18.1 23.1 24.8 28.9 39.3 60.7 76.1 78.1
Actual LNG Exports 2.2 3.6 6.6 10.5 12.8 13.5 14.4 18.4 22.9 -------
Source: QP, Qatargas, RasGas and QNB.
The Dolphin Project

The Dolphin Project is the first export oriented pipeline project in the GCC region and paves the way for the creation of a GCC gas grid originating in Qatar. Promoted by the UAE Governments Offsets Group (UOG), the Dolphin project has already received outline commitments from UAE for up to 2 billion cubic feet per day (bn cf/d) of gas. In June 2000, UOG announced the formation of a company Dolphin Energy Ltd (DEL), to manage the project on its behalf. The ownership structure of the company is 51% UOG and 24.5% each by TotalFinaElf and Occidental Petroleum. Frances TotalFinaElf and Occidental of the US were selected as strategic partners for the project, with TotalFinaElf responsible for the upstream part of the project and Occidental for the midstream and downstream marketing. Two upstream MoUs have been signed, one with ExxonMobil and the other with TotalFinaElf. The Dolphin Project is scheduled in two phases. The first phase of the project valued at $3.5 billion will involve production and distribution of 2 bn cf/d of gas, through a sub-sea pipeline that will extend over 400-km from Qatars North Field to Taweelah in Abu Dhabi and Jebel Ali in Dubai. DEL and QP signed the final field development plan for the Dolphin Project in December 2003. The main EPC contract for the gas processing and compression plant was awarded in January 2004 to Japans JGC Corporation, with platform package awarded to J Ray Mcdermott Middle East, and the gas turbines to be supplied by UKs Rolls Royce. Construction on the Dolphin project is nearing completion and gas deliveries are set to start by the first quarter of 2007. The second phase of the project involves increased volumes of piped gas to the UAE.
Figure 3.4 Dolphin Project Location and Pipeline Map
Source: UOG Publications.
Al Khaleej Gas Project A Development and Production Sharing Agreement (DPSA) to tap additional North Field gas for domestic projects and regional exports was signed in May 2000 by QP and ExxonMobil Middle East Gas Marketing Limited, a subsidiary of ExxonMobil Corporation. Under the Al Khaleej Gas Project, additional North Field gas will be developed through a new upstream gas development, with power generation (Ras Laffan IWPP), the Oryx GTL project, and the Mesaieed Industrial Complex representing initial major users. The first phase of the project (AKG-1) began production in November 2005. ExxonMobil intends to extend the Khaleej Gas Project to meet the domestic demand relating to electricity, petrochemical, and other Qatari industrial uses.
Natural Gas Liquids (NGL) NGL-1: The first NGL plant, commissioned in 1974, was established with the aim of utilising onshore associated gas from the Dukhan field. This facility provides for the NGLs stripped from the Fahahil Plant (degassing, compressing and NGL stripping plant located along the Dukhan field) to be separated into ethane rich gas, propane, butane, and condensate. NGL-2: The second NGL plant, commissioned in 1980, was established with the aim of utilising offshore associated gas. This plant obtains NGLs stripped from three offshore crude oil production platforms and separates it into methane rich gas, ethane rich gas, propane, butane, and condensate. NGL-3: Also referred to as the North Field Gas Plant (NFGP), this plant was commissioned in 1991 and debottlenecked in 1997, to process an additional 240 mn cf/d of gas from Qatargas. The NFGP was originally designed to process raw gas and unstabilised condensate, separated from the North Field Alpha Offshore field. NGL-4: The NGL-4 project is designed to increase the recovery of Natural Gas Liquids from the Dukhan Arab D reservoir and the North Field. The plant more than doubles QPs NGL capacity and is dedicated both to export markets and to domestic demand which includes demand from the QAPCO and Q-Chem projects. NGL-4 increases Qatars recovery of natural gas liquids from North Field Phase 1 of Ethane (875,000 tpa), Propane (735,000 tpa) and Butane (490,000 tpa) to meet growing demand for these products as a petrochemical feed-stock.
Gas to Liquids Projects (GTL) QP continues to research other avenues for the utilisation of the countrys natural gas resources. Technologies for the direct conversion of natural gas into globally marketable and more easily transportable liquid products have evolved significantly in recent years and are of particular interest as a potential adjunct to direct exports of LNG and natural gas. QP has allocated QR 40 billion in its five year plan, starting 2006 for GTL projects. QPs aim of progressing rapidly on GTL projects can be seen through the following Oryx GTL project, and five other projects which are at various levels of negotiation.
Oryx GTL Project Oryx GTL, the worlds largest GTL plant became operational in June 2006. In July 2001, QP and South Africas Sasol Synfuels International (Sasol) signed a joint venture agreement to develop a GTL project at Ras Laffan with estimated costs of $1 billion. The project which is based on Sasols slurry phase distillate technology, converts natural gas into 34,000 bpd of high grade fuels from two trains. The GTL plant uses as feed-stock about 330 mn cf/d of gas from the Al-Khaleej Gas Project, and has a capacity to produce around 24,000 bpd of high purity diesel, 9,000 bpd of naphtha and 1,000 bpd of LPG. The project gets its power requirements from the Ras Laffan IWPP, and its cooling requirements from the Ras Laffan common sea water intake. QP and Sasol Chevron has signed a MOU for the expansion of the Oryx GTL project, from 34,000 bpd to 100,000 bpd by 2010.
Pearl GTL Project In July 2004, QP and Shell signed a DPSA for a GTL plant that will eventually have a capacity of 140,000 bpd. The project is based on Shells proprietary technology and is planned for a two-phase implementation, wherein the first phase will involve the construction of a plant with a 70,000 bpd capacity, that will come on-stream by the end of 2009. Construction has started, with current project costs being estimated in the vicinity of $12 billion, from the earlier estimates of $6 billion in 2004.
Other Proposed GTL Projects: The other companies proposing GTL projects are ExxonMobil, Sasol/Chevron and ConocoPhillips.
3.3 Gas-Based and Other Major Industrial Projects:

In addition to its roles as the basis for the LNG industry, and as a fuel input for power generation, natural gas is utilised in a wide range of industries as a feed-stock to produce various value-added products for both domestic consumption and export. These projects include the following:
Qatar Fertiliser Company (QAFCO) QAFCO is a joint venture between Yara International of Norway, with a 25% stake and Industries Qatar (QP - 70%, Qatari Shareholders - 30%), with the majority 75% stake. It was established by an Emiri Decree in 1969 to produce ammonia and urea. Currently the QAFCO complex in Mesaieed comprises of four completely integrated trains; QAFCO-1 (1973), QAFCO-2 (1979), QAFCO-3 (1997), and QAFCO-4 (2004), with each train being made up of two units, one for the production of ammonia and the other for urea. QAFCOs production capacity now stands at 6,150 tons per day (tpd) of ammonia and 8,250 tpd of urea. The company is now the largest producer of fertiliser in the Middle East, with total production in 2005 reaching 2.14 million tons (mt) of ammonia and 2.99 mt of urea (Table 3.11).
Table 3.11 QAFCOs Production (mt)
Product Ammonia Urea Total

Source: QAFCO.
2001 1.41 1.69 3.10
2002 1.42 1.74 3.16
2003 1.44 1.78 3.22
2004 1.78 2.24 4.02
2005 2.14 2.99 5.13
In 2005, QAFCOs Net Profit rose by a record 92.0% to reach QR 1.8 billion, compared to QR 942.2 million in 2004. This increase was mainly a result of increased production and exports and higher ammonia and urea prices. The average price for ammonia increased by 6.2% in 2005 to reach $257 per ton, while the price of urea increased by 26.6% to reach $233 per ton. In 2004, QAFCOs ammonia exports increased by 20.5% to reach 463,969 tons, while urea exports increased by 25.8% to reach 2,131,937 tons. QAFCOs ammonia exports in 2004 were mainly directed to India (80%), Jordan (10%), and South Korea (3%), while urea exports were destined mainly for USA (24%), Thailand (14%), Australia (13%), and South Africa (12%). Further expansion plans at QAFCO, referred to as QAFCO-5, will see the addition of 3,000 tpd of ammonia and 3,200 tpd of urea to existing capacity. QAFCO has already signed a letter of intent (LOI) with Yara International for QAFCO-5 and production is set to start in 2010.
Qatar Steel Company (QASCO) QASCO is a wholly owned subsidiary of Industries Qatar (IQ), which was initially set up in 1974 as a joint venture. The plant was commissioned in 1978 as the first integrated steel plant in the Arabian Gulf region. In 2005, QASCO produced 1.1 million tons of steel billets, 850,000 tons of re-inforced steel bars, and 140,000 tons of coil. QASCO recorded a Net Profit of QR 705.5 million in 2004, compared to QR 326.1 million in 2003. Expansion plans at QASCO saw the signing of an agreement in February 2005 between QASCO and Kobe Steel of Japan, to build a new Direct Reduction Iron plant with an annual production capacity of 1.5 million tons. The plant is set for completion by mid-2007.
Qatar Fuel Additives Company (QAFAC) QAFAC is owned by Industries Qatar (50%), OPIC Netherlands Antilles N.V. (20%), LCY Investments Corporation (15%) and International Octane Ltd. of Canada (15%). QAFACs plant in Mesaieed has a production capacity of 610,000 tpa of Methyl Tertiary Butyl Ether (MTBE), and 832,500 tpa of methanol. The plants development costs were in the vicinity of $650 million, with production of methanol and MTBE starting in June and July 1999 respectively. In 2005, QAFAC produced 700,000 tons of MTBE and 900,000 tons of methanol, compared to 630,000 tons of MTBE and 840,000 tons of methanol produced in 2004. QAFAC posted a Net Profit of QR 794 million in 2005, compared to QR 273 million in 2004. In 2005, MTBE product prices averaged $560 per ton, compared to $396 per ton in 2004, while Methanol prices averaged $211 per ton in 2005, compared to $208 per ton in 2004. In December 2004, QAFAC signed a Heads of Agreement with existing partners for establishing a new project called QAFAC II. Project costs are estimated at $800 million, with commissioning expected in 2008.
Qatar Petrochemical Company (QAPCO) Industries Qatar owns 80% of QAPCO with the remaining capital of 20% held by Total Petrochemicals (Chemical arm of Frances TotalFinaElf). QAPCO commenced full commercial operations in 1981 and produces high quality Ethylene, Low Density Polyethylene (LDPE) and Sulphur. QAPCO is currently the largest producer of LDPE in the Middle East with a production capacity of 390,000 tpa. Ethylene design production capacity stands at 535,000 tpa. In 2005, QAPCOs Net Profit increased by 9.5% to reach QR 1,343 million, compared to QR 1,226 million in 2004. In 2005, QAPCO produced 550,000 tons of Ethylene, 420,000 tons of LDPE and 45,000 tons of Sulphur (Table 3.12).
Table 3.12 QAPCOs Production (tons)
Product Ethylene LDPE Sulphur

Source: QAPCO.
2001 535,000 382,000 41,000
2002 495,066 379,173 43,998
2003 525,000 385,000 47,000
2004 500,000 370,000 44,000
2005 550,000 420,000 45,000
In December 2004, QAPCO started construction work for the debottlenecking of the existing ethane cracker plant, so as to further increase the capacity from the current 535,000 tpa to 720,000 tpa, by mid-2007. Concurrently, LDPE production is expected to rise to 420,000 tpa. QAPCO is also looking at the possibility of adding another LDPE line to increase LDPE production by 200,000 tpa.
Qatar Vinyl Company (QVC) QVC is a joint venture between QAPCO (31.9%), QP (25.5%), Norsk Hydro of Norway (29.7%) and Total Petrochemicals of France (12.9%). Krupp Uhde of Germany constructed the core process unit of the plant, while Italys Technip covered the development of a 130 MW power generation facility. Project costs were estimated at $680 million. In 2005, QVC produced 240,000 tons of EDC, 270,000 tons of VCM and 350,000 tons of Caustic Soda. QAPCO provides the Ethylene feed-stock and also supplies facilities to the company through horizontal integration. South East Asia and Australia buy a large part of QVCs production. QVC has already started looking into expansion prospects, with studies to expand capacity currently underway.
Qatar Chemical Company (Q-Chem) In November 1997, QP (with a 51% interest) and Chevron Phillips Chemical Company (with a 49% interest) signed a joint venture agreement to construct a petrochemical complex, called Qatar Chemical Company (Q-Chem), in the Mesaieed industrial area. Construction of the $1.2 billion ethylene cracker plant with a capacity of 500,000 tpa commenced in 1999, and had its first commercial operational year in 2004. The plant obtains Ethane and Butane feedstock from the NGL-4 facility. The plant has a capacity of 500,000 tpa of Ethylene, 453,000 tpa of HighDensity Polyethylene (HDPE), 47,000 tpa of Hexane-1, and 36,000 tpa of Sulphur. In 2005, Q-Chem produced 450,000 tons of Ethylene, 410,000 tons of HDPE, 35,000 tons of Hexane-1, and 36,000 tons of Sulphur.
Qatar Chemical Company II (Q-Chem II) Qatar Petroleum, with a 51% stake and Chevron Philips Chemical Company (CPC) with a 49% stake are partners in this joint-venture, which will see the construction of a world-scale high density polyethylene (HDPE) and olefins plant, adjacent to the Q-Chem plant in Mesaieed. The ethane feed-stock for the project will be sourced from the Ras Laffan Ethylene Cracker project, which will be fed with natural gas from the North Field. The project is estimated to cost well in excess of $1 billion, with a design capacity of 350,000 tpa of HDPE and 350,000 tpa of normal alpha olefins. The feasibility study for the project has been completed, with project completion scheduled for the first quarter of 2009. A Letter of Intent for building the plant was signed with Technip of France in April 2005.
QP - Shell Petrochemical Plant Qatar Petroleum and Shell Chemicals signed a Letter of Intent in March 2005 to set up a $2 billion world scale ethane cracker and derivatives complex at Ras Laffan. QP will hold a 51% stake in the venture, with Shell holding the remaining 49%. The ethane cracker project is expected to have a design capacity of 1.3 mtpa and is expected to be completed by 2010.
Qaton This is a joint venture between QAPCO (63%), Total Petrochemicals (36%) and QP (1%), which will see the establishment of a Linear Low Density Polyethylene (LLDPE) plant with a 450,000 tpa capacity. The plant will be located in Mesaieed, adjacent to the QAPCO facilities. The ethane feed-stock for the plant will be supplied from the Ras Laffan Ethylene Cracker project. The EPC contractors for LLDPE plant is Snamprogetti, with the foundation stone for the project being laid in May 2006. The plant is scheduled for start-up in the last quarter of 2008.
Ras Laffan Ethylene Cracker (RLEC) This venture between Q-Chem II (53.31%), Qatofin (45.69%) and QP (1%), is primarily set up with the aim of supplying the Q-Chem II and Qatofin projects with ethylene feed-stock. The ethylene cracker unit is estimated to have a design capacity of 1.3 mtpa and is to be located at Ras Laffan. The ethylene feedstock will be transported via pipeline from Ras Laffan to Q-Chem II and Qatofin in Mesaieed. The plant is set to become operational in the last quarter of 2008.
Linear Alkyl Benzene (LAB) Project The expansion and diversification plans of Qatar Petroleum Refinery led to the development plan for an integrated linear alkyl benzene (LAB) project. In January 2003, QP concluded deals to launch a linear alkyl benzene (LAB) project, in which the private sector will play a partnership role. QP had signed the FEED and project management consultancy contracts with UKs Foster Wheeler, and in January 2004 awarded the EPC contract to South Koreas LG Engineering and Construction Company. Linear Alkyl Benzene is produced from n-paraffin and benzene, with the plant having a design capacity of 100,000 tpa of linear alkyl benzene. The project is estimated to have cost $340 million and was commissioned in early 2006. Qatalum In March 2006, QP signed a Joint Venture Agreement with Norways Hydro for the construction of an Aluminium smelter plant with an initial capacity of around 585,000 tpa. To meet the huge power load requirement of the smelter plant, a power plant with a capacity of 1,350 MW will be constructed alongside. Project costs are estimated at around $3 billion, with expected completion in 2009.
3.4 Infrastructure Projects:

New Doha International Airport The New Doha International Airport (NDIA) will be able to handle a capacity as large as 50 million passengers a year, on completion of all three phases of the project by 2015 (Table 3.13). The greenfield project with two parallel runways is to be situated four kilometres east of the existing airport, half of which will be on land reclaimed from the sea. NDIA will be the worlds first airport to be designed and specifically built to handle the worlds largest passenger aircraft, the Airbus A380-800. The airport will also have a luxury hotel adjacent to the terminal and another one within the terminal for transit passengers. In January 2004, US company Bechtel was awarded the contract to develop the NDIA, by the State of Qatar. The first phase of the project is estimated to cost over $2 billion.
Table 3.13 New Doha International Airport
Phase Phase 1 Phase 2 Phase 3
Contact Gates 24 40 80
Remote Gates 7 11 11
Development Area 130,000 m2 219,000 m

2
Passenger Capacity 12 million 24 million 50 million
Completion 2009 2012 2015
416,000 m2
Source: Qatar Airways and Published Information.
Ras Abu Fontas B (RAF-B2) The first phase of the expansion project saw the addition of 380 MW to Qatars power grid, taking total capacity at Ras Abu Fontas B to 990 MW. The second-phase of the expansion will involve the addition of 570 MW of power and 29 million gallons of water a day of desalination capacity to the existing 33 million gallons of water a day and the installation of waste heat recovery boilers. The EPC contract for the power generation was awarded to General electric, while the contract for the water desalination was awarded to Fisia Italimpianti. Ras Laffan Independent Water and Power Projects (IWPP) The Ras Laffan Independent Water and Power Project (IWPP) is Qatars first power project developed on the build-own-operate-transfer (BOOT) basis and will meet the rising domestic and industrial demand for power and water. The plant has a capacity of 750 MW of power and 40 million gallons of water a day. The Ras Laffan Power Company (RLPC) was formed in August 2001, as a Qatari company to undertake the project, in which AES Corporation owns a 55% share, Qatar Petroleum 10%, Qatar Electricity and Water Company 25%, and Gulf Investment Corporation 10%. Italys Enelpower and Fisia Italimpianti built the plant, which became fully operational in May 2004. The Ras Laffan B Independent Water and Power Project is Qatars second project developed on the BOOT basis and has a capacity of 680 MW of power and 15 million gallons of water a day. The project has been completed and full commercial operations are expected to commence in 2008. The Qatar Power Company is undertaking the project in which Qatar Electricity and Water Company has a 55% stake, UKs International Power has a 45% stake, and Japans Chubu Electric Power has a 5% stake. Energy City Qatar The $2.6 billion Energy City Qatar (ECQ) project was launched in March 2006, with the aim of making Qatar an energy business hub. ECQ is a pioneering development that will establish Qatar as an integrated energy business centre that will cater to the needs of the hydrocarbon sector with cuttingedge facilities and services. ECQ aims to attract the worlds leading oil and gas companies, support services, infrastructure and downstream activities, shipping and trading, market and resource data, and energy trading. An energy trading platform called the International Mercantile Exchange (IMEX) will also be set up as part of the ECQ.
3.5 Health, Education and Tourism Projects:

Hamad Medical City The Hamad Medical City project is estimated to cost QR 1.5 billion and will include a 300-bed unit, a dialysis unit, medical staff accommodation and laboratories. This project forms part of the QR 12.5 billion budget of the Ministry of Municipal Affairs and Agriculture. There are plans that the hospital facilities will first be used to house athletes and officials for the Asian Games in 2006, after which it will be converted to a full-fledged hospital. Two other new hospital projects are also in the design phase; the estimated QR 220 million Southern Area Hospital at Wakrah, with a 200-bed facility, and the estimated QR 100 million Cardiology Hospital at Rumailah, with a 110-bed facility. Education City The proposed 2,400 acre multi-institutional Education City is being set up under the aegis of the Qatar Foundation for Education, Science and Community Development, which was established in 1995 by HH the Emir Sheikh Hamad Bin Khalifa Al-Thani. The facility includes higher educational institutions at the university level, specialised training in design arts and languages, and sporting facilities. The Qatar Foundation has signed a number of agreements with world renowned educational institutions to set up branches of their institutions in the Education City in Qatar. The first such agreement was signed with New York based Cornell University for establishing the Weill Cornell Medical College - Qatar. As part of the Weill Cornell Medical College - Qatar there is also a proposal to set up a hospital with a 250-300 bed capacity.
The other leading educational institutions represented in Qatar are Washington based Georgetown Universitys Welsh School of Foreign Services, Texas A&M University which offers engineering degree courses, Carnegie Mellon University which offers undergraduate programmes in computer science and business, Canada based College of North Atlantic and Canadian Bureau of International Education, among others.
Asian Games City As part of Qatars infrastructural obligations for hosting the Asian Games in December 2006, it is nearing completion of the construction of an estimated $700 million Asian Games City, that will provide additional sporting facilities and accommodation for athletes and officials.
Hotels Qatars hotel room capacity in the luxury sector is set to triple by an additional 9,318 rooms in the coming years, as a result of various up-coming projects (Table 3.14).
Table 3.14 Upcoming Hotels in Qatar (2006 - 2008)
Hotel Westbay Resort Millenium Hilton Doha Marriott Courtyard Shangri-La Rotana Al-Sharq Village Resort & Spa Dubai Towers Doha Movenpick Suites & Residence Renaissance Al Maha Sofitel Barjeel Tower Almana Suites Merweb Corniche La Cigale Al Jaidah Retaj Tower Bavaria Suites Le Mirage Qatar Silouette Tower Al Jazeera Tower Sports City Golf Course Digital Sports Oasis International Ramada Extension Total
Source: Qatar Tourism Authority.
Rooms 350 225 320 200 272 277 160 424 349 259 300 284 350 204 240 496 462 2118 186 351 369 120 150 250 346 256 9,318
4. Ination
Inflation in Qatar has witnessed a slight increase in recent years, averaging 3.9% over the past five years (2001-2005), compared to an average of 3.3% in the preceding five years (1996-2000). This increase in inflation over the past few years can be primarily attributed to the sustained increase in housing costs and the weakness of the US dollar, to which the Qatari Riyal is pegged. Figures released by the Planning Council for year 2005 shows a continuation of the upward trend in inflation as the overall general index increased by 8.8% (Table 4.1), compared to an increase of 6.8% in 2004. The main inflation driver in 2005 was the housing sector, which witnessed a steep increase by 26.2%, after an increase by 16.2% in 2004 and a rise by 18.0% in 2003. The supply gap in building materials in recent years has led to a premium surcharge and has resulted in a huge increase in construction costs, which has subsequently partly triggered rent hikes. Among the other groups of commodities and services, the group food, beverages and tobacco, which has a relatively high weight on the consumer price index, witnessed an increase of 3.1% in 2005, with the group medical care and medical services increasing by 4.5%. The group garments and footwear declined by 2.7% in 2005. QNB forecasts inflation to remain high in 2006 at over 8.0%, given the current indicators that point to the fact that rent hikes in recent years is triggering price hikes in other commodities and services.
Table 4.1 Consumer Price Index (2001=100)
2003 Groups of Commodities and Services Food, Beverages and Tobacco Garments and Footwear Housing Furniture, Textiles and Home Appliances Medical Care and Medical Services Transport and Communications Education, Culture and Recreation Miscellaneous Goods and Services General Index
2004 % % Index 104.22 104.60 139.55 101.91 98.93 95.98 102.27 110.34 109.48 Change 3.33% 8.10% 16.22% 3.35% -1.42% 3.66% 2.94% 4.11% 6.80% Index 107.48 101.81 176.19 106.67 103.34 99.70 102.16 114.89 119.13
2005 % Change 3.13% -2.67% 26.25% 4.67% 4.46% 3.88% -0.10% 4.12% 8.81%
Index 100.86 96.77 120.07 98.61 100.36 92.59 99.35 105.98 102.51
Change -0.35% -1.56% 18.00% 1.52% 2.61% -8.38% 3.60% 0.70% 2.26%
The Planning Council had conducted a Family Expenditure Survey (FES) of households in 2000/01, so as to better reflect the spending patterns of consumers, assigning the new base year at 2001 (2001=100). The previous Family Expenditure Survey was conducted in 1987/88, with the base year at 1988 (1988=100). The Consumer Price Index is based on the FES of households. The new weights for the groups of commodities and services on the Consumer Price Index (CPI), based on the FES conducted in 2000/01 shows that the group Transport and Communications now forms the largest part of household expenditures, with a weight or part of total expenditures at 23.4%, compared to 19.3% in 1987/88 (Table 4.2). The group Housing has also gained in relative importance and now accounts for 20.7% of total expenditures, from 12.4% in 1987/88. The percent spent for Food, Beverages and Tobacco declined to 18.1% in the new CPI, from a relative importance of 28.7% previously.
INFLATION 31
Table 4.2 Weightage on the Consumer Price Index
Groups of Commodities and Services
Relative Importance (Weight on 10,000) FES-1987/88 % Spent 28.7 10.6 12.4 12.6 19.3 1.2 7.7 7.5 100.0 FES-2000/01 1,812.4 804.6 2,072.0 965.2 2,337.1 229.2 1,128.6 650.9 10,000.0 % Spent 18.1 8.0 20.7 9.7 23.4 2.3 11.3 6.5 100.0
Food, Beverages and Tobacco Clothing and Footwear Housing Furniture and Furnishings Transport and Communication Medical Care and Medical Services Education, Culture and Recreation Miscellaneous Goods and Services Total Weight
2,868.0 1,063.0 1,240.0 1,258.0 1,933.0 123.0 764.0 751.0 10,000.0
Figure 4.1 General Consumer Price Index - Qatar (2001 = 100)
INFLATION 32
5. Balance of Payments
Foreign Trade
Qatars exports have grown exponentially, averaging a growth rate of 18.8% over the past five year period from 2001 to 2005. Qatars successful diversification efforts are being realised, with increased export revenues coming in from natural gas, chemicals and related products, and iron and steel (Table 5.2). Qatars exports have grown by 137% over the five year period from 2001 to 2005, to reach QR 93.8 billion ($25.8 billion) in 2005, from QR 39.6 billion in 2001. The Balance of Payments situation has been equally impressive, with consecutive surpluses being recorded since 1999.
Exports
Qatars Exports increased by 37.9% in 2005, to reach QR 93.8 billion, from QR 68.0 billion in 2004 (Table 5.1). The export figures released by the Planning Council showed significant increases in export of crude oil, LNG, chemicals and related products, and iron and steel. The huge increase in crude oil export revenues was a result of better average crude oil prices and production. This trend is likely to continue into 2006 and QNB forecasts exports to grow by a further 30% in 2006 to reach QR 122 billion.
Table 5.1 Balance of Payments (2001 - 2005)
Particulars (QR Million) Exports Imports 1. Trade balance 2. Services and Private Transfers (Net) 3. Current Account (1+2) 4. Net Capital Transfers (private and official) 5. Surplus in Balance of Payments (3+4)
Source: The Planning Council and Qatar Central Bank.
2001 39,571 (12,323) 27,248 (12,134) 15,114 (5,558) 9,556
2002 39,960 (13,287) 26,673 (12,754) 13,919 (7,408) 6,511
2003 48,712 (15,865) 32,847 (11,903) 20,944 (5,544) 15,400
2004 68,013 (19,691) 48,322 (20,833) 27,489 (13,194) 14,295
2005 93,774 (32,992) 60,782 (21,787) 38,995 (22,872) 16,123
BALANCE OF PAYMENTS 33
Qatars principal export items in 2005 were mineral fuels and products, which accounted for 88.7% of the total value of goods exported, followed by chemicals and related products (Table 5.2).
Table 5.2 Qatars Main Items of Export (2001- 2005)
Export Items (QR Million) 1. Mineral Fuels and Products (a) Petroleum and Related Products (b) Gas - Natural and Manufactured (i) LNG (ii) Propane (iii) Butane (iv) Ethylene, Propylene, Butylene & Butedine 2. Chemicals and Related Products (a) Plastics in Primary Form (Polyethylene) (b) Fertilisers (Urea) (c) Organic Chemicals (Methanol - MTBE) (d) Inorganic Chemicals (Ammonia) (e) Others 3. Iron and Steel and Related Articles 4. Cement 5. Apparel and Clothing Accessories 6. Others 7. Re-Exports Total
2001 36,020 21,099 14,921 13,769 842 228 82 1,675 792 630 -235 18 688 19 496 70 603 39,571
2002 36,083 22,482 13,601 12,756 685 152 8 1,800 928 681 -171 20 842 -388 94 753 39,960
2003 44,335 27,384 16,951 15,447 1,089 415 -2,253 945 1,014 -271 23 996 -311 127 690 48,712
2004 58,935 35,417 23,518 21,467 1,450 601 -6,444 1,442 1,436 2,578 828 160 1,363 -141 280 850 68,013
2005 83,223 51,518 31,705 28,899 2,012 794 -7,172 2,233 2,494 1,915 454 76 1,463 -114 262 1,540 93,774
Qatar exported 22.9 million tons (mt) of LNG in 2005 which accounted for 30.8% of overall export earnings. LNG export revenues have increased by 109.9% over the past five years to reach QR 28.9 billion in 2005, from QR 13.8 billion in 2001. With increased LNG production and exports it is anticipated that LNG export revenues will match that of oil by 2010. LNG export destinations have increased over the years with new SPAs being signed with major international companies. Japan is the leading importer of LNG and in 2005 received 6.2 mt of LNG, followed by South Korea with 5.0 mt, India with 4.4 mt and Spain with 3.6 mt (Table 5.3).
Table 5.3 LNG Exports (2001 - 2005)
Country (Million Tons) Japan South Korea India Spain USA Others Total
2001 6.1 4.9 -0.6 0.5 0.7 12.8
2002 6.3 5.1 -1.3 0.7 0.1 13.5
2003 6.8 5.8 0.3 1.5 --14.4
2004 6.9 6.0 2.0 3.2 0.2 0.1 18.4
2005 6.2 5.0 4.4 3.6 -3.7 22.9
Qatars leading export trade partner in 2005 was Japan, accounting for 40% of the total value of exports. Exports to Japan has been on a steady increase over the years, mainly due to increased LNG exports. South Korea, Singapore, the UAE and India were some of Qatars other main export trade partners during 2005 (Table 5.4). India had entered the top export trade partners list for the first time in 2004,
and continues to be in the list in 2005 with exports to India increasing from QR 570 million in 2001, to QR 3,262 million in 2005, primarily due to increased quantities of LNG being shipped to India.
Table 5.4 Exports to Main Trade Partners (2001 - 2005)
Country (QR Million) Japan South Korea Singapore UAE India Taiwan Thailand USA Philippines Spain
2001 20,176 7,804 2,685 849 570 84 937 1,397 700 205
2002 18,657 6,323 3,702 1,587 371 99 1,366 1,033 462 82
2003 22,416 9,019 4,636 1,344 538 318 1,452 819 578 548
2004 28,315 10,677 6,169 2,243 3,661 929 1,863 873 783 1,262
2005 37,506 14,771 7,686 4,280 3,262 2,382 1,903 1,156 1,096 898
Imports
Qatars imports (fob) increased by 67.5% in 2005 to reach QR 33.0 billion, from QR 19.7 billion in 2004 (Table 5.1). Details of imports released by the Planning Council show that Qatars main items of import in 2005 consisted of machinery and mechanical appliances, base metals, vehicles and transport equipment, and food products (Table 5.5). Machinery and mechanical appliances gained top spot in the list of import items due to the various energy sector, infrastrcture and industrial projects that are ongoing. Qatar continues to import substantial quantities of base metals, primarily iron and steel, to keep pace with the needs of the burgeoning construction industry. Qatars imports have nearly tripled over the past five years, from QR 12.3 billion in 2001, to QR 33.0 billion in 2005. This increase was primarily driven by the rapid industrial and infrastructure expansion.
Table 5.5 Qatars Main Items of Import (2001 -2005)
Import Items (QR Million) 1. Machinery and Mechanical Appliances 2. Base Metals and Articles of Base Metals 3. Vehicles and Other Transport Equipment 4. Food Products 5. Chemicals and Related Products 6. Cement, Iron Ores, Earths and Stone 7. Optical, Photographic and Measuring Equipment 8. Textiles and Textile Articles 9. Furniture 10. Plastics and Related Articles 11. Pearls and Precious Stones 12. Aircrafts and Parts
2001 4,881 1,543 1,760 1,343 861 493 399 223 308 239 36 323 1,269 13,678
2002 4,515 1,731 1,975 1,533 961 588 478 620 335 271 183 398 1,162 14,750
2003 5,707 2,654 2,220 1,537 1,031 837 695 645 385 302 178 489 1,146 17,826
2004 4,630 2,717 1,402 1,438 1,010 850 700 632 374 410 336 6,136 1,221 21,856
2005 12,053 6,058 5,200 2,064 1,932 1,838 1,342 858 801 631 501 493 2,850 36,621
* Values at CIF ( including customs, insurance and freight).
13. Others Total*

In 2005, Qatars main import trade partner was Japan, accounting for 11.6% of the total value of imports, followed by USA with 11.5% and Germany with 9.2% (Table 5.6). Imports from Japan increased rapidly in 2005, mainly as a result of imports of vehicle and transport equipment, oil and gas pipelines, and machinery and mechanical appliances.
Table 5.6 Imports from Main Trade Partners (2001 - 2005)
Country (QR Million) Japan USA Germany Italy UAE UK Saudi Arabia China South Korea France
2001 1,303 1,884 1,255 1,339 716 1,103 733 396 602 611
2002 1,553 1,923 1,032 1,333 1,039 1,124 918 467 528 614
2003 1,866 2,171 1,720 1,326 1,187 1,430 1,060 605 883 592
2004 1,141 2,102 1,149 740 1,381 1,119 2,079 668 409 5,846
2005 4,263 4,232 3,362 2,365 2,356 2,096 2,093 1,892 1,658 1,547
Current Account
Qatars trade balance grew by 26% in 2005 to reach QR 60.8 billion, from QR 48.3 billion in 2004. Qatars trade balance has more than doubled over the past five years ending 2005 as a result of increased industrial exports in the form of oil, LNG, petrochemiclas and fertilisers, with an accompanying rise in commodity prices. The net outflow of services and private transfers has steadily increased over the years and in 2005 reached QR 21.8 billion. Preliminary figures published by the Qatar Central Bank for the year 2005 indicates a current account surplus of QR 39.0 billion ($10.7 billion), compared to a surplus of QR 27.5 billion ($7.5 billion) in 2004 (Fig. 5.1).
Overall Balance of Payments

Net capital transfers amounted to QR 22.9 billion in 2005, resulting in an overall Balance of Payments surplus of QR 16.1 billion (Fig. 5.2). The current trend in Balance of Payments surpluses are likely to continue in the coming years on the back of strong exports and relatively high commodity prices.
Figure 5.1 Qatars Current Account Balance (QR Million)
Source: The Planning Council & QCB.
Figure 5.2 Qatars Balance of Payments (QR Million)
Source: The Planning Council & QCB.
6. Monetary Policy
The monetary management in Qatar is implemented by Qatar Central Bank (QCB) which was established by Law No. 15 for the year 1993, from what was formerly called the Qatar Monetary Agency (QMA). The main objective of the QCB is to regulate the monetary, credit and banking policies in accordance with the general plans of the State, in order to support the national economy and the stability of the currency. QCB has full powers over the monetary policies of the State, and supervises and controls banks and financial institutions. An effective monetary tool utilised by the QCB is the imposition of minimum reserve requirements for commercial banks. In February 2000, QCB instructed banks to maintain cash reserves equal to 2.75% of total deposits (including foreign deposits) instead of 19% of total demand deposits, previously in effect. Another important monetary tool used by the QCB is the loans-to-deposit ratio limit applied to commercial banks, which is set at 90% of the total deposits base and any bank that exceeds this limit is penalised by the QCB.
6.1 Domestic Liquidity

Domestic Liquidity increased by 21.1% during the first half of 2006 to reach a record level of QR 77.8 billion, compared to QR 64.3 billion as at year-end 2005 (Table 6.1). High domestic liquidity has resulted from an increase in energy prices. During the first half of 2006, narrow money supply (M1) increased by 21.0% to reach QR 27.1 billion, from QR 22.4 billion at year-end 2005. The increase in M1 resulted from an increase in demand deposits, which rose by 21.6% to reach QR 23.7 billion. Savings and time deposits increased by 34.6% to reach QR 35.1 billion, compared to QR 26.1 billion as at year-end 2005.
Table 6.1 Money Supply (2002 - June 2006)
(QR Million) Currency with public Demand deposits Narrow Money Supply (M1) Savings and time deposits Foreign currency deposits Total quasi money Broad Money Supply (M2)
Source: Qatar Central Bank.
2002 1,921 4,368 6,289 19,002 6,856 25,858 32,147
2003 2,148 9,130 11,278 17,958 7,987 25,945 37,223
2004 2,594 12,004 14,598 20,621 9,646 30,267 44,865
2005 2,866 19,497 22,363 26,059 15,849 41,908 64,271
June 2006 3,355 23,700 27,055 35,069 15,710 50,779 77,834
6.2 Exchange Rate Policy

The Qatari Riyal is officially pegged to the US dollar at a rate of 1 US$ = QR 3.640. During the first half of 2006, the Qatari Riyal declined marginally against major european currencies, while making a slight gain against the Japanese Yen. During the first half of 2006, the Qatari Riyal declined by 1.7% against the Euro, by 1.3% against the Sterling Pound and by 1.0% against the Swiss Franc (Table 6.2). Also during the first half of 2006, the Qatari riyal appreciated by 3.8% against the Japanese Yen. In 2005, the Qatari Riyal made moderate gains against most major currencies, further to the strengthening of the US dollar. QCB average exchange rate data for 2005 shows that the Qatari Riyal appreciated by 1.8% against the Japanese Yen, by 0.6% against the Sterling Pound, and by 0.1% against the Swiss Franc. The Qatari Riyal saw a marginal decline by 0.2% against the Euro in 2005.
MONETARY POLICY 38
Table 6.2 Change in Qatari Riyal against other major currencies (2002 - June 2006)
(Average) Pound Sterling Euro Swiss Franc Japanese Yen (Per 100)
2002 -4.3% -5.2% -8.3% 3.2%
2003 -8.8% -19.9% -15.7% - 8.2%
2004 -12.1% -10.0% - 8.3% -7.2%
2005 0.6% -0.2% 0.1% 1.8%
June 2006 -1.3% -1.7% -1.0% 3.8%
Note: An Emiri Decree (No. 34) was issued in July 2001 fixing the Qatari Riyal to the US$ at a rate of 1 US$ = QR 3.64.
6.3 Interest Rate Policy

Up until 1996, the QCB imposed a ceiling on interest rates offered by commercial banks on credits and deposits. In February 2001, the QCB removed its ceiling on interest rates for local currency deposits, freeing the banking system from all interest rate policy restrictions. In July 2001, the QCB introduced a new monetary instrument called the Qatar Monetary Rate (QMR), which allows banks in Qatar to deposit or borrow from the QCB, overnight funds of an amount not less than QR 2.0 million, at rates determined by the QCB, which are fixed on a daily basis. Short-term interest rates in Qatar follow closely those prevailing in the US, with a slight positive differential. The US Federal Reserve raised interest rates seven times during the year 2005 and four times during the first half of 2006, and as at the end of June 2006 the US Federal Funds rate stood at 5.25%. The QCB raised interest rates eight times during the year 2005 and three times during the first half of 2006. In a surprise move the QCB reduced the repo rate by 25 bp on the 3rd of July to 5.55% (Table 6.3), even though the US Federal Reserve raised its interest rates a few days earlier. Domestic inflation continues to be a key concern for the QCB over the recent past and additional policy manoeuvres could be likely in the short-medium term.
Table 6.3 US Federal Funds Rate and QCB Repo Rate Movements
Date of Rate Change 09/08/2005 11/08/2005 20/09/2005 21/09/2005 03/10/2005 01/11/2005 13/12/2005 15/12/2005 31/01/2006 01/02/2006 28/03/2006 02/04/2006 10/05/2006 11/05/2006 29/06/2006 03/07/2006
Source: Qatar Central Bank and Financial Times.
US Fed Funds Rate (%) 3.500 -3.750 --4.000 4.250 -4.500 -4.750 -5.000 -5.250 --
QCB Repo Rate (%) -4.400 -4.650 4.850 --5.100 -5.350 -5.600 -5.850
5.550
MONETARY POLICY 39
7. Banking Sector
The Qatari banking sector comprises of a combination of national and foreign banks. A total of 16 banks currently operate in Qatar, eight of which are Qatari institutions, including five commercial banks (ahlibank, Commercialbank, Doha Bank, International Bank of Qatar, and Qatar National Bank) and three Islamic institutions (Qatar Islamic Bank, International Islamic and Al-Rayan Bank). Also represented is the local branches of seven foreign banks including Arab Bank, Bank Saderat Iran, HSBC, Mashreqbank, BNP Paribas, Standard Chartered, and United Bank. A specialised government owned institution - Qatar Industrial Development Bank, was established in 1997 and provides financing to small and medium scale industries. In 2005, Islamic banking made significant inroads into the domestic banking system due to its tremendous growth potential and popularity, with commercial banks getting approval from the QCB for the first time to set up fully compliant Islamic branches in Qatar. QNB was the first commercial bank to set up a fully compliant Islamic branch, followed by Commericlalbank and Doha Bank. Another significant development in domestic banking was the entry of a commercial bank into the mutual fund arena. QNB was the first bank in Qatar to establish a mutual fund - Al Watani Fund - for both locals and expatriates.
Banking Sector - Interim Results 2006

Interim results of Qatari Banks (excluding International Bank of Qatar) for 2006 reveal another prosperous year with Net Profits showing an increase of 58.1% for the first half of 2006, to reach QR 2,818.5 million (Table 7.2), compared to QR 1,783.0 million achieved during the first half of 2005. During the first half of 2006, Total Assets of Qatari Banks increased by 19.4% to reach QR 130.8 billion, compared to QR 109.5 billion as at year-end 2005. Customer Deposits rose by 16.0% during the first half of 2006 to reach 89.3 billion, with loans and advances increasing by 17.9% to reach QR 74.9 billion. Total Shareholders equity reached QR 24.2 billion as at June 2006. The market share of QNB and other Qatari banks as at June 2006 are presented graphically in Figure 7.1, while the profit distributions of local Qatari banks during 2001-2005 is highlighted below in Table 7.1.
Table 7.1 Qatari Banks Dividend Distribution (2001 - 2005)
2001 QNB Cash Dividend (%) Bonus Shares Doha Bank Cash Dividend (%) Bonus Shares Commercialbank Cash Dividend (%) Bonus Shares Qatar Islamic Bank Cash Dividend (%) Bonus Shares ahlibank Cash Dividend (%) Bonus Shares International Islamic Cash Dividend (%) Bonus Shares
Source: Banks Annual Reports and Published Information.
2002
2003
2004
2005
40% Nil
45% Nil
52.5% Nil
60% Nil
75% 1 for 4
28% Nil
20% 3 for 10
Nil 7 for 10
Nil 7 for 10
Nil 8 for 10
25% 1 for 5
25% 1 for 4
30% 1 for 4
40% 4 for 10
40% 1 for 2
20% Nil
10% Nil
10% 1 for 5
Nil 7 for 10
25% 1 for 2
Nil Nil
10% Nil
10% Nil
18.75% Nil
Nil 1 for 3
15% Nil
10% 1 for 4
10% 1 for 4
10% 3 for 10
Nil 1 for 1
BANKING SECTOR 40
Figure 7.1 Market Share (June 2006)
Assets
Deposits
Loans & Advances
Net Prot
BANKING SECTOR 41
TABLE 7.2 Balance Sheets of Qatari Banks
Total Assets (QR Million) Qatar National Bank Doha Bank Commercialbank Qatar Islamic Bank ahlibank International Islamic Al-Rayan Bank International Bank of Qatar Total Foreign Banks 2004 39,548 10,993 12,940 7,742 4,286 4,998 -2,009 82,516 10,090 2005 50,060 15,230 22,182 9,552 6,181 6,336 -4,660 114,200 13,734 June 2006 58,186 16,632 24,869 11,019 7,829 8,203 4,034 -130,772 -2004 29,614 8,068 8,304 5,817 2,744 4,360 -1,509 60,416 7,555
Customer Deposits 2005 36,457 11,024 13,056 6,866 4,530 5,077 -3,586 80,596 10,600 June 2006 41,481 12,150 15,154 7,995 5,601 6,921 --89,302 --
Balance Sheets of Qatari Banks
Loans and Advances (QR Million) Qatar National Bank Doha Bank Commercialbank Qatar Islamic Bank ahlibank International Islamic Al-Rayan Bank International Bank of Qatar Total Foreign Banks 2004 26,591 5,437 6,714 4,263 1,445 2,621 -1,009 48,080 4,972 2005 31,478 8,295 10,884 5,973 3,490 3,397 -2,246 65,763 6,896 June 2006 36,512 9,992 13,772 6,139 5,068 3,409 --74,892 -2004 6,685 1,594 2,620 1,497 890 450 -392 14,128 1,217
Shareholders Equity 2005 8,709 2,401 5,677 2,096 1,075 882 -902 21,742 1,545 June 2006 8,071 2,502 5,222 2,286 1,069 1,029 4,030 -24,209 --
Balance Sheets of Qatari Banks
Share Capital (QR Million) Qatar National Bank Doha Bank Commercialbank Qatar Islamic Bank ahlibank International Islamic Al-Rayan Bank International Bank of Qatar Total Foreign Banks 2004 1,038 408 534 390 305 156 -94 2,925 120 2005 1,038 693 934 663 305 203 -188 4,024 120 June 2006 1,298 1,248 1,402 995 406 406 3,749 -9,504 -2004 827.5 368.4 345.9 294.1 86.2 88.9 -37.2 2,048.2 276.9
Net Profit 2005 1,536.8 789.9 749.5 511.3 141.6 465.6 -90.0 4,284.7 433.2 June 2006 1,105.2 437.5 443.1 471.2 100.6 191.8 69.1 -2,818.5 --
Note: Foreign banks Net profit is on after tax basis. Source: Banks Annual Reports and Published Information.
BANKING SECTOR 42
8. Domestic Credit Facilities

Total domestic credit facilities increased by 13.6% during the first half of 2006 to reach QR 76,558 million, compared to QR 67,367 million as at year-end 2005 (Table 8.1). During the first half of 2006, credit facilities to the Merchandise, Land, Housing and Construction, Personal and Services sectors increased, while credit facilities to the Public and Industry sectors declined. In 2005, total domestic credit facilities increased by 39.5%. In 2005, credit facilities to all sectors increased. The Personal sector currently accounts for the largest portion of domestic credit facilities and during the first half of 2006 accounted for 38.9% of total domestic credit facilities (Figure 8.1). During the first half of 2006, domestic creidt facilities to the Personal sector increased by 20.4% to reach QR 29,770 million, compared to QR 24,731 million as at year-end 2005. The Personal sector has witnessed tremendous growth in recent years with domestic credit facilities extended to this sector more than trebling to reach QR 29,770 million during the first half of 2006, from QR 9,640 million in 2002. In 2005, the Personal sector recorded a high growth of 75.6% to reach QR 24,731 million, from QR 14,085 million in 2004.
Table 8.1 Credit Facilities by Economic Sector (2002 - June 2006)
Sector (QR Million) Public Merchandise Industry Land, Housing & Construction Personal Services Others Total Domestic Credit Outside Qatar
2002 16,815 4,726 937 1,287 9,640 812 1,750 35,967 247
2003 19,932 5,532 750 3,327 11,503 1,865 437 43,346 442
2004 18,470 6,116 1,060 5,712 14,085 2,383 468 48,294 1,189
2005 18,650 8,184 2,419 9,541 24,731 2,942 900 67,367 2,368
June 2006 18,256 9,259 2,078 12,000 29,770 3,635 1,560 76,558 5,909
Domestic credit facilities to the Public sector during the first half of 2006 declined by a marginal 2.1% to reach QR 18,256 million, compared to QR 18,650 million as at year-end 2005. The marginal decline in the Public sector can be attributed to increased revenues from oil and gas ventures, which has led the government to limiting its use of short-term funding. However, the public sector is likely to continue using short-medium term financing for its various development projects. The Public sector accounted for the second largest portion of domestic credit facilities received during the first half of 2006. The share of credit facilities to the public sector as a percentage of total domestic credit facilities has been declining from a relatively high 46.0% in 2003, to 23.8% as at June 2006. In 2005, the credit facilities extended to the Public sector witnessed a marginal growth of 1.0% to reach QR 18,650 million, compared to QR 18,470 million in 2004. The credit facilities extended to the Land, Housing and Construction Sector continues to grow at a rapid pace and during the first half of 2006 increased by 25.8% to reach QR 12,000 million, from QR 9,541 million as at year-end 2005. In 2005, credit facilities to the Land, Housing and Construction Sector recorded a high growth of 67.0%, while an equally impressive growth of 71.7% was recorded in 2004. The higher spending by the State on infrastructure projects, the commitments for the upcoming Asian Games in December 2006, and various other hotel, commercial and residential construction projects will lead to a further substantial growth in this sector in 2006 and beyond. Credit facilities extended to the Merchandise sector recorded a growth of 13.1% during the first half of 2006, to reach QR 9,259 million. In 2005, credit facilities to this sector increased by 33.8% to reach QR 8,184 million, compared to QR 6,116 million in 2004.
DOMESTIC CREDIT FACILITIES 43
The Services sector recorded a growth of 23.6% during the first half of 2006, receiving QR 3,635 million out of total domestic credit facilities. In 2005, the domestic credit facilities to the Services sector increased by 23.5% to reach QR 2,942 million, from QR 2,383 million in 2004. The domestic credit facilities to the Industry sector declined by 14.1% during the first half of 2006 to reach QR 2,078 million, from QR 2,419 million as at year-end 2005. Credit facilities outside Qatar recorded an increase of 149.5% during the first half of 2006 to reach QR 5,909 million, from QR 2,368 million as at year-end 2005. Credit facilties outside Qatar has witnessed huge growth in recent years, rising from QR 247 million in 2002 to QR 5,909 million as at June 2006.
Figure 8.1 Distribution of Credit Facilities (June 2006)
DOMESTIC CREDIT FACILITIES 44
9. Public Finance
The Governments primary source of budget revenues are oil and gas related, which are generated by QPs activities. In addition to such export receipts, the Government obtains revenues primarily from dividend income of other industrial enterprises, including Industries Qatar, QNCC, QEWC and commercial enterprises and banks such as Q-TEL and QNB. Other sources of Government revenues include customs duties, taxes and charges. The principal items of Government expenditure are wages and salaries of the public sector, interest payments on government indebtedness, other current expenditures, and capital expenditures. Available data from the Ministry of Finance and estimates indicate a budget surplus in each of the past six fiscal years amounting to a total of QR 51.4 billion ($14.1 billion). These surpluses highlight the turnaround that has been achieved by the government, after almost a decade of deficits. Qatars improved fiscal position along with reduced debt servicing requirements has resulted in a better outlook and higher sovereign ratings from Standard & Poors, Moodys and Capital Intelligence.
2003/04 Budget
The actual figures of governement revenues and expenditures from the Ministry of Finance for the fiscal year 2003/2004, reveals that total revenues were QR 30,716 million, with total expenditures at QR 27,016 million, resulting in a surplus of QR 3,700 million (Table 9.1). Total revenues witnessed a slight increase by 4.3% from the preceding budget, mainly as a result of oil prices remaining high, increased oil and natural gas production, and invesment income. Total expenditures increased by 15.2%, with current expenditures rising by 15.9% and capital expenditures increasing by 12.5% respectively.
Table 9.1 The State Budget
(QR Million)
2002/03 Actual 29,453
2003/04 Actual 30,716
2004/05 Actual 55,232
2005/06* Prelim. 61,531
2006/07 Budget 56,900
Total Revenues Expenditure

* Preliminary Data
Total Current Expenditure Total Capital Expenditures Total Expenditures Surplus Surplus as % of GDP
(1)
18,791 4,661 23,453 6,000 8.4
21,771 5,245 27,016 3,700 4.3
27,810 7,798 35,608 19,624 17.1
30,676 16,141 46,817 14,714 9.6
34,600 20,000 54,600 2,300 --
Note: (1) Surplus as a % of GDP is calculated using GDP on a calendar year basis and budget figures on a fiscal year basis ending.
Source: Ministry of Finance.
2004/05 Budget
The actual figures of government revenues and expenditures released by the Ministry of Finance for the fiscal year 2004/05, shows that total revenues increased by a substantial 79.8% to reach QR 55,232 million, while total expenditures increased by 31.8% to reach QR 35,608 million, resulting in a huge surplus of QR 19,624 million. Oil prices averaged $38.5 p/b for the fiscal year 2004/05, compared to $28.1 p/b during the fiscal year 2003/04, while oil production averaged 776,000 bpd during the fiscal year 2004/05.
PUBLIC FINANCE 45
2005/06 Budget
Preliminary data on government revenues and expenditures released recently by the Ministry of Finance for the fiscal year 2005/06, shows that total revenues continue on an upward trend and increased by 11.4% to reach QR 61,531 million, while total expenditures increased by 31.5% to reach QR 46,817 million, resulting in a large surplus of QR 14,714 million. Oil prices recorded an increase of 44.7% during the fiscal year 2005/06 and averaged $55.7 p/b, compared to an average of $38.5 p/b during the fiscal year 2004/05. Oil production averaged 786,000 bpd during the fiscal year 2005/06.
2006/07 Budget
The 2006/07 State Budget that was unveiled in April 2006 was the largest in Qatars history and forecasts a surplus of QR 2.3 billion. This is the second fiscal year in which the State Budget shows a surplus, and is primarily indicative of the continued strength and outlook for the oil, gas and petrochemical sectors. The 2006/07 Budget forecasts total revenues to increase by 49.6% to reach QR 56.9 billion, with total expenditures expected to increase by 44.4% to reach QR 54.6 billion. The oil price assumption for the 2006/07 Budget is $36 p/b, compared to $27 p/b in the previous budget estimates. The 2006/07 State Budget allocations for major public projects has increased by 70.5% to reach QR 20.0 billion, compared to QR 11.7 billion in the previous budget (Table 9.2). The State is committed to keeping on track with allocations for major public projects, and as such has established a stabilisation fund in this regard.
Table 9.2 The State Budget Allocations for Major Public Projects
Details of Budget Allocations Public Services and Infrastructure:
(QR Million)
2005/06 Budget 6,710
2006/07 Budget 10,500
% Change 56.5%
(includes roads and transportation, land acquisition & reform, water and electricity, sewage works, development of new light and medium industrial area and other projects).
Education and Youth Welfare:
1,804
5,700
215.9%
Social and Health Care:
3,215
3,800
18.2%
Total
Source: Ministry of Finance.
11,729
20,000
70.5%
PUBLIC FINANCE 46
10. Doha Securities Market

The Doha Securities Market (DSM) reached a defining moment in its history on April 3rd 2005, when expatriates were for the first time allowed to trade in up to 25% (share capital) of all DSM listed stocks. The DSM is the first GCC market to allow expatriate residents to trade in shares of all listed companies. Previously expatriates were allowed to own and trade only in shares of Qatar Telecom (Q-TEL) and Salam International Investment. Another significant development was the setting up of the Qatar Authority for Financial Markets in September 2005, which will primarily be responsible for the supervision and control of the DSM. Thirty five companies are currently listed on the DSM, which include stocks in the banking, insurance, services and industry sectors. During the first half of 2006, two new stocks were listed, namely, Barwa Real Estate Company and Al-Rayan Bank. In 2005, Nakilat and Dlala were listed on the DSM. Currently, DSM listed companies are required to publish audited financial results annually, and also publish quarterly results. Six brokers have been licensed to trade on the market. Dlala, a new brokerage firm was formed through an initial public offering (IPO), and was listed on the DSM in September 2005. The total value of shares traded on the DSM during the first half of 2006 declined by 23.9% to reach QR 35.3 billion, compared to QR 46.5 billion during the first half of 2005 (Table 10.1). The value of shares traded in the Services Sector represented 42.6% of the total value of shares traded on the DSM during the first half of 2006, while the Banking Sector represented 36.1%, with the Industry Sector representing 17.5% and the Insurance sector representing 3.8%. In 2005, the total value of shares traded on the DSM increased by over four-fold, rising by a record 345% to reach QR 102.8 billion, compared to QR 23.1 billion in 2004 (Fig. 10.1).
Table 10.1 DSM Value of Traded Shares (2004 - June 2006)
Sector Services Banking Industry Insurance Total

Source: DSM.
(QR million)
2004 8,027.8 9,257.8 4,888.3 920.8 23,094.7
2005 44,552.2 28,451.3 27,323.1 2,516.2 102,842.8
June 2005 14,708.7 14,317.5 16,323.5 1,125.7 46,475.4
June 2006 15,036.2 12,769.0 6,199.3 1,336.8 35,341.3
% of Total (June 2006) 42.6% 36.1% 17.5% 3.8% 100.0%
The GCC stock markets witnessed a correction kicking in during the first half of 2006, with all the markets seeing a downward trend. During the first half of 2006, UAEs NBAI index saw the biggest drop with a 33.4% decline, followed by Qatars DSM index which went down by 31.0%, Saudi Arabias Tadawul index which fell by 21.5%, Kuwaits KSE index which declined by 12.6%, Bahrains BAX index which dropped by 6.8%, and Omans MSM index which went down slightly by 0.3% (Table 10.2).
Table 10.2 GCC Stock Exchanges
Country (Index) Bahrain (BAX) Kuwait (KSE) Oman (MSM) Qatar (DSM)
2004 Market Index 3,054.20 6,409.50 3,331.67 6,493.62 8,206.23 8,482.04 % Change 30.2% 33.8% 22.2% 64.5% 84.9% 88.4%
2005 Market Index 2,195.80* 11,445.10 4,875.02 11,053.06 16,749.95 16,867.31 % Change 23.8% 78.6% 46.3% 70.2% 104.1% 98.9%
June 2006 Market Index 2,046.17 10,001.00 4,862.05 7,627.92 13,145.26 11,236.98 % Change -6.8% -12.6% -0.3% -31.0% -21.5% -33.4%
* New Bahrain All Shares index replaced the previous index on January 1st, 2005.
Saudi Arabia (TASI) UAE (NBAI)
Source: Market Reports and QNB.
DOHA SECURITIES MARKET 47
Figure 10.1 Value of DSM Traded Shares (QR Million)
Source: DSM.
Figure 10.2 DSM Index
Source: DSM.
The DSM market capitalisation declined by 26.5% during the first half of 2006 to reach QR 233.2 billion ($64.1 billion), compared to QR 317.2 billion as at year-end 2005. The three largest companies on the DSM by market capitalisation as at June 2006, were Industries Qatar, QNB, and Q-Tel, representing 20.7%, 12.0% and 9.1% of the total market respectively. In 2005, the DSM market capitalisation more than doubled to reach QR 317.2 billion ($87.1 billion), compared to QR 147.2 billion ($40.3 billion) as at year-end 2004. The following table shows share prices and market capitalisation of listed companies as at June 2006.
Table 10.3 Doha Securities Market Capitalisation
Price at Sector Listed Companies Qatar National Bank Doha Bank Commercialbank Qatar Islamic Bank ahlibank International Islamic Al-Rayan Bank* Total Banking Sector Qatar Insurance Co. Qatar General Insurance & Re insurance Co. Al-Khaleej Insurance Co. Qatar Islamic Insurance Co. Doha Insurance Co. Total Insurance Sector Qatar Navigation Co. Qatar Cinema & Film Distribution Co. Qatar Electricity and Water Co. Qatar Shipping Co. Qatar Real Estate Investment Co. Medicare Group Q-Tel Salam International Investment Qatar Technical Inspection Co. WOQOD National Leasing Meat & Livestock Warehousing Nakilat Dlala Barwa** Total Service Sector Qatar National Cement Co. Qatar Flour Mills Co. Qatar-German Medical Co. Qatar Industrial Manufacturing Co. 260.3 29.9 28.3 104.3 150.0 56.0 277.6 70.0 77.4 107.1 64.2 31.3 239.9 29.7 48.9 126.2 63.8 28.8 42.4 48.7 121.1 -165.2 233.6 191.5 211.4 65.7 31/12/2005 (QR) 301.7 175.1 153.1 241.3 115.0 262.9 --
Price at 30/06/2006 (QR) 215.6 115.4 114.6 143.1 84.7 153.5 19.0
Capitalisation at 30/06/2006 (QR Million) 27,980 14,404 16,062 14,231 3,441 6,236 14,250 96,604
119.7 145.0 115.3 168.0 53.1
5,084 1,648 1,172 1,680 676 10,260
129.1 50.2 73.7 73.9 42.5 16.3 213.1 15.5 27.4 91.1 19.8 13.9 19.2 22.5 40.5 26.8
6,042 94 7,370 7,390 2,550 275 21,310 1,283 110 2,733 349 417 250 12,600 810 5,360 68,943
118.0 32.0 16.1 39.5 96.5 40.9
3,371 232 93 1,027 48,250 4,387 57,360 233,167
* Al-Rayyan Bank was listed in June 2006. ** Barwa Real Estate Co. was listed in February 2006.
Industries Qatar United Development Co. Total Industrial Sector Total Market
Source: DSM.
The Net Profit of DSM listed companies from 2004 - June 2006 is shown below.
Table 10.4 Net prot for DSM listed Companies (2004 - June 2006)
Net Profit Company Name 2004 Qatar National Bank Doha Bank Commercialbank Qatar Islamic Bank International Islamic ahlibank Al-Rayan Bank First Finance Company Banking and Finance Sector Qatar Insurance Co. Qatar General Insurance & Re insurance Co. Doha Insurance Co. Al-Khaleej Insurance Co. Qatar Islamic Insurance Co. Insurance Sector Q-Tel Qatar Electricity and Water Co. Qatar Navigation Co. Qatar Shipping Co. Qatar Real Estate Investment Co. Qatar Cinema & Film Distribution Co. Medicare Group Salam International Investment WOQOD Qatar Technical Inspection Co. National Leasing Meat & Livestock Warehousing Nakilat* Dlala Barwa Service Sector Qatar National Cement Co. Qatar Industrial Manufacturing Co. Qatar Flour Mills Co. Qatar-German Medical Co. Industries Qatar United Development Co. 827.5 365.6 346.8 298.2 83.9 82.8 --2,004.8 124.1 108.8 27.6 28.7 27.1 316.3 1,457.2 751.2 163.1 223.1 56.2 4.4 -10.3 31.4 90.4 4.6 9.5 -0.8 3.0 ---2,783.0 170.8 66.7 12.2 -5.2 2,498.3 31.7 2,774.5 7,878.6 2005 1,536.8 789.9 749.5 511.3 465.6 141.6 --4,194.7 285.0 104.4 42.2 80.5 123.3 635.4 1,093.5 651.7 286.2 413.9 112.5 7.7 -53.9 75.1 238.5 5.1 24.0 22.6 11.7 54.2 --2,942.8 173.8 101.4 9.9 1.8 3,217.2 185.0 3,689.1 11,462.0 (QR Million) June 2005 705.0 344.1 326.3 255.4 89.5 62.7 -24.4 1,807.5 128.7 92.0 19.2 20.8 25.1 285.8 522.4 218.4 160.0 260.0 64.8 3.1 -27.7 22.6 104.5 2.8 12.2 5.5 6.4 28.9 --1,411.6 90.7 55.4 0.7 1.7 1,533.7 78.3 1,760.5 5,265.4 June 2006 1,105.2 437.5 443.1 471.3 191.8 100.7 69.1 26.9 2,845.5 163.3 17.8 13.5 37.3 18.5 250.4 825.9 277.6 165.1 122.5 69.2 3.3 -49.1 192.1 3.0 12.9 2.1 -2.0 28.4 5.0 138.3 1,892.5 88.1 63.8 2.3 -3.3 1,580.0 101.4 1,832.3 6,820.7
* Nakilat figures for the first half of 2005 are from inception date of June 9, 2004 till June 30, 2005.
Industry Sector Total Market

Source: Annual Reports and published financial statements.
11. Investment Incentives

Qatar welcomes foreign participation in joint ventures through technology supply, market administration and equity participation. The Government offers several attractive incentives for joint ventures, such as: natural gas priced at $0.60-0.75 per mn Btu. electricity at $0.0178 per Kwh. a developed infrastructure. industrial land at a nominal rent of one Qatari Riyal per square meter per year. no custom duties on imports of machinery, equipment and spare parts. no export duties. no taxes on corporate profits for pre-determined periods. In addition to the above, the Government also offers the following incentives: no quantitative quotas on imports. no income tax on salaries of expatriates. no exchange control regulations - the Qatari Riyal is freely convertible at a parity of US$1= Qatari Riyals 3.64; an exchange rate which has been stable for over two decades. excellent medical and educational facilities. low rates of inflation. easy access to world markets with first class air and sea connections. excellent telecommunications facilities. liberal immigration and employment rules to enable import of skilled and unskilled labour. An Emiri decree was issued on 15th October 2000, which allows for foreigners to own up to 100% in Hotels, Hospitals, Power Plants, Schools and Colleges. However, the following features were considered in the New Foreign Investment Law (No. 13) for the year 2000: Foreign investors are defined as non-Qatari persons, whether natural or juristic, who invest their money in any of the projects in which direct investment is permitted by the Government. Foreign investors may invest in all sectors of the national economy provided they have one or more Qatari partners whose share shall not be less than 51% of the capital. It is however permissible by a decision from the Minister of Economy and Commerce for foreign investors to exceed the percentage of their participation up to 100% of the projects capital in the sectors of agriculture, industry, health, education, tourism and the development and exploitation of natural resources or energy or mining. It is prohibited for foreign investors to invest in the sectors of Banking, Insurance, Commercial Agencies and Real Estate (exception being the new Pearl of the Gulf Island, West Bay Lagoon and Al Khor Resort projects). The Law offers several incentives for foreign investors including the allotment of land through long term lease agreements for a period up to 50 years which may be renewed. Foreign Investors are permitted to perform whatever is required for the establishment, operation and expansion of the project. The Ministry may grant foreign investors: - Exemption from income tax for a period not exceeding ten years. - Exemption from custom duties with regard to imported machinery and equipment necessary for the establishment of the project. - Exemption from custom duties with regard to primary or semi-manufactured materials necessary for production, provided such materials are not available in the local market. Foreign Investors have the freedom to transfer investments to and from abroad without delay.
INVESTMENT INCENTIVES 51
New Laws Qatars efforts in attracting foreign investment has led to the promulgation of new laws directed at creating a favourable business environment. The following new laws were legislated Since 2002: Commercial Companies Law (Law No. 5 of 2002). Copyright Law (Law No. 7 of 2002). Commercial Agents Law (Law No. 8 of 2002). Pensions Law (Law No. 24 of 2002). Mutual Funds Law (Law No. 25 of 2002). Money Laundering Law (Law No. 28 of 2002). Judiciary Law (Law No. 10 of 2003). Labour Law (Law No. 14 of 2004). Property Law: Non-Qataris (Law No. 17 of 2004). New DSM Law (Law No. 13 of 2005). Qatar Financial Centre Law (Law No. 7 of 2005). Qatar Financial Centre The Qatar Financial Centre (QFC) opened its doors on May 1st 2005, under Law No.5 of 2005, to attract international financial institutions and multi-national firms to establish themselves in Qatar. Qatars vibrant economy and an estimated capital investment programme of over $130 billion in the coming five years provides vast opportunities for international financial institutions. The QFC has been designed to attract the premier international financial institutions and corporates to share in the wealth of Qatar and the region and to share in the vision of a long-term mutually beneficial partnership with Qatar. The QFC will provide a world-class business environment for undertaking financial services and will also promote revenue generating opportunities internationally. The QFC provides a familiar international legal and business infrastructure that is seperate from the host Qatari systems. The QFC will be led by a commercial authority and a regulatory authority - the QFC Authority and the QFC Regulatory Authority, that will be independent from each other and the government of Qatar. The QFC is currently functioning from the Ministry of Economy and Commerce building, but is in the process of finalising an independent office building. Qatar Science and Technology Park The Qatar Science and Technology Park (QSTP) was set up to be an internationally renowned centre for research excellence and commercialisation. The QSTP is part of the Qatar Foundation and aims at being a home for technology-based companies from around the world, and an ideal location for startup companies. The QSTP will operate as a free-zone, providing favourable investment incentives and access to world-class international research universities present at the Education City. The QSTP has been successful in attracting leading world-wide business establishments and current tenants include European Aeronautic Defence and Space Company (EADS), ExxonMobil, Gartner Lee, Microsoft, RollsRoyce, Shell and Total. Free Investment Zone The Free Investment Zone (FIZ) is to be established in Qatar as per an official government decree issued in September 2005. The above mentioned Qatar Science and Technology Park will be part of the new Free Investment Zone and is aimed to attract foreign companies to conduct research and development in Qatar. The new zone will allow businesses to be 100 percent foreign owned and free from tax and duties for pre-determined periods.
INVESTMENT INCENTIVES 52
12. Qatar National Bank

Qatar National Bank (QNB) was established in 1964 as the countrys first Qatari-owned commercial bank, and has steadily grown to be the largest bank in Qatar with 37 local branches and offices and a well connected network of 97 ATMs. QNB also has an international presence with branches in London and Paris. QNB subsidiary Ansbacher Holdings was the first financial institution to be granted a licence to operate in the Qatar Financial Centre and provides a wide range of wealth management services in the region and internationally. QNB achieved remarkable success in 2005 on varied fronts. In April 2005, QNB was the first commercial bank in Qatar to launch an Islamic branch, with fully compliant Islamic services. In September 2005, QNB was the first commercial bank to launch a mutual fund - Al Watani Fund - catering to the needs of all - Qatari nationals, residents, non-residents, and private or institutional investors. Further in September 2005, QNB partnered with the Doha Asian Games Organising Committee (DAGOC) to be the official bank of the Asian Games in 2006, thereby providing the best banking services to the athletes, officials, spectators and media representatives participating in the Asian Games. QNB continues to expand its expertise as mandated lead arranger in major projects and syndications not only in Qatar but also in the region with projects such as Qalhat LNG (Oman), Al Nawras (Oman), Emirates Airline (UAE), and Dolphin Energy (UAE). QNBs spectacular performance continues in 2006 and during the first half of 2006 QNBs Net Profit increased by 56.8% to reach QR 1,105 million, compared to QR 705.0 million achieved during the first half of 2005. Total assets increased by 16.2% during the first half of 2006 to reach QR 58.2 billion, compared to QR 50.1 billion as at year-end 2005 (Table 12.1). Loans and Advances increased by 16.0% to reach QR 36.5 billion, while Customer Deposits (including unrestricted investment accounts) grew by 25.6% to reach 46.1 billion. Total shareholders equity as at June 2006 totalled QR 8.1 billion. QNBs earnings per share reached QR 8.5 during the first half of 2006, compared to QR 5.4 during the first half of 2005.
Table 12.1 Qatar National Bank, Summary: (2002 - June 2006)
(QR Million) Operating Income Operating Expenses Net Profit Total Assets Total Shareholders Equity Share Price (QR) Earnings per Share (QR) Price/Earnings Multiple
Source: QNB Annual Reports.
2002 986 266 580 31,056 4,981 82.8 5.6 14.8
2003 1,060 281 641 34,789 5,608 126.9 6.2 20.5
2004 1,192 316 827 39,547 6,685 199.7 8.0 25.0
2005 2,189 648 1,537 50,060 8,709 301.7 14.8 20.4
June 2006 1,383 278 1,105 58,186 8,071 215.6 8.5 25.4
QNBs recognition as the industry leader was further enhanced with an array of awards from leading international publications, namely, Best Emerging Market Bank Award - 2005 from Global Finance, Best Bank in Qatar - 2005 from Global Finance and The Banker, Best Debt House in Qatar - 2005 from Euromoney, Best Bank in Qatar for Risk Management - 2005 from Global Finance, and Best Trade Finance Partner - 2005 from Project Finance. QNBs strong underlying financial fundamentals and customer-centric increasing range of product and services were acknowledged by leading international rating agencies as listed in the following page.
QATAR NATIONAL BANK 53
QNB Ratings
QNB is the highest rated bank in Qatar with the widest coverage and currently has a rating from Moodys, Standard and Poors, Capital Intelligence, and Fitch.
Table 1 Capital Intelligence Credit ratings for QNB
Foreign Currency Long-Term A+

Source: Capital Intelligence.
Financial Strength
Support Rating
Outlook
Short-term A1 A+ 1 Stable
In September 2006, Capital Intelligence raised the Financial Strength Rating of QNB to A+, from A. Earlier, on August 25th, 2005 Capital Intelligence had raised QNBs long-term foreign currency rating to A+, from A- and short-term foreign currency rating to A1 from A2. This upgrade was following the August 9th Financial Strength Rating (FSR) upgrade to A, from A-. Capital Intelligence mentioned that the upgrade reflects the Banks strong fundamentals and its leading position in a fast growing economy. Capital Intelligence currently gives QNB the highest rating in Qatar, with a long-term foreign currency deposit rating of A+, and a support rating of 1 (Table 1).
Table 2: Moodys Credit ratings for QNB
Bank Deposits Long-Term A1

Source: Moodys.
Financial Strength Short-Term P-1 C-
Outlook
Stable
On October 11th, 2005 Moodys upgraded QNBs long-term foreign currency bank deposit ratings by two notches to A1 from A3, and QNBs short-term foreign currency bank deposit ratings to P-1 from P-2 (Table 2). Moodys mentioned that the ratings were set at the country ceiling and that the action recognises the banks importance within the domestic banking system.
Table 3: Standard and Poors Credit ratings for QNB
Bank Credit and Deposits Long-Term A

Source: Standard and Poors.
Outlook Short-term A1 Stable
On October 10th, 2005 Standard and Poors in its first interactive rating on a bank in Qatar assigned a long-term counterparty bank credit and deposit rating of A and a short-term rating of A1 (Table 3). Standard and Poors stated that the ratings reflect QNBs dominant position in Qatar, strong income generated by high-quality earning assets, and solid liquidity and capital positions. Standard and Poors also made note of QNBs importance to the economy.
Table 4: Fitch Credit ratings for QNB
Long-Term ASource: Fitch.
Short-Term F2
Support 1
Individual B/C
On February 7th, 2005 Fitch upgraded QNBs Support Rating to 1 from 2 (Table 4), affirming all other ratings. Fitch mentioned that the upgrade in the support ratings reflects the support by the Qatari authorities and the other ratings reflect the banks consistent profitability, sound asset quality, good capitalisation and adequate liquidity.
QNB RATINGS 54
APPENDIX Qatar Statistical Summary

1
The Economy (QR Million) GDP (nominal) % change Inflation Rate Exchange Rate ($:QR) Total Exports (fob) Total Imports (fob) Balance of Trade Current Account Balance Capital & Finance Account Balance Overall Balance 2001 2002 2003 2004 2005
63,840 -1.2% 1.5% 3.64 39,571 (12,323) 27,248 15,114 (5,558) 9,556
70,484 10.4% 0.2% 3.64 39,960 (13,287) 26,673 13,919 (7,408) 6,511
85,663 21.5% 2.3% 3.64 48,712 (15,865) 32,847 20,944 (5,544) 15,400
115,512 34.8% 6.8% 3.64 68,013 (19,691) 48,322 27,489 (13,194) 14,295
154,564 33.8% 8.8% 3.64 93,774 (32,992) 60,782 38,995 (22,872) 16,123
Public Finance (QR Million) Government Revenue Government Expenditure Budget Surplus/Deficit Budget Surplus/Deficit as % of GDP
2002/03 Actual 29,453 23,453 6,000 8.4
2003/04 Actual 30,716 27,016 3,700 4.3
2004/05 Actual 55,232 35,608 19,624 17.1
2005/06 Prelim. 61,531 46,817 14,714 9.6
2006/07 Budget 56,900 54,600 2,300 --
3
Oil and Gas 2001 2002 2003 2004 2005
Oil production (000 bpd) Price per barrel ($) LNG Exports (mtpa)
681 23.6 12.8
640 24.5 13.5
714 27.9 14.4
759 35.2 20.3
779 51.7 22.9
APPENDIX 55
APPENDIX Qatar Statistical Summary

4
Monetary Survey (QR Million) Currency in Circulation Demand Deposits Narrow Money Supply (M1) % change M1 Savings and Time Deposits Foreign Currency Deposits Quasi-Money Money Supply (M2) % Change M2 2002 2003 2004 2005 June 2006
1,921 4,368 6,289 20.5% 19,002 6,856 25,858 32,147 11.8%
2,148 9,130 11,278 79.2% 17,958 7,987 25,945 37,223 15.8%
2,594 12,004 14,598 29.4% 20,621 9,646 30,267 44,865 20.5%
2,866 19,497 22,363 53.2% 26,059 15,849 41,908 64,271 43.2%
3,355 23,700 27,055 21.0% 35,069 15,710 50,779 77,834 21.1%
Deposits of Commercial Banks (QR Million) Private Sector Deposits: Demand Deposits in Qatari Riyals Time and Saving in Qatari Riyals Demand Deposits in Foreign Currencies Time and Saving in Foreign Currencies Total Private Sector Deposits Public Sector Deposits: Demand Deposits in Qatari Riyals Time and Saving in Qatari Riyals Demand Deposits in Foreign Currencies Time and Saving in Foreign Currencies
2002
2003
2004
2005
June 2006
4,334 17,309 326 5,128 27,097
8,814 15,339 1,947 4,610 30,710
11,626 17,595 1,744 6,209 37,174
16,977 26,045 2,706 7,147 52,875
22,924 33,550 3,159 7,847 67,480
622 6,695 168 11,189 18,673 -45,770
2,206 9,558 2,299 7,912 21,975 279 52,964
3,619 8,070 2,340 9,061 23,090 535 60,799
5,793 7,031 5,123 13,809 31,756 769 85,400
7,873 7,137 3,728 17,720 36,458 1,431 105,369
Notes: (M1) Currency in Circulation + Demand Deposits. (M2) M1 + Savings and Time Deposits + Foreign Currency Deposits.
Total Public Sector Deposits Non Resident Deposits Total Commercial Banks Deposits
Sources: Ministry of Finance, Ministry of Economy and Commerce, Qatar Central Bank, Planning Council, Middle East Economic Survey and QNB Estimates.
APPENDIX 56
QNB Branches and Ofces

Head Office
P.O.Box 1000, Doha, State of Qatar Tel. (+974) 440 7407, Fax (+974) 441 3753 Website www.qnb.com.qa, E-mail ccsupport@qatarbank.com
Branches
Main Branch West Bay Al Khor Al Rayyan Al Sadd Al Sadd-Ladies Branch Shahaniya Al Shamal Al Gharrafa Air Force Base Industrial Area The Mall Wakra Qatar Foundation Branch Qatar University Mens Campus Qatar University Ladies Campus Ras Laffan Industrial City City Center-Doha Grand Hamad The Ritz-Carlton Doha Sheraton Doha Hotel & Resort Doha Marriot Gulf Hotel Hamad Hospital Mesaieed Musheireb
Telephone
440 7236 440 7979 472 0127 480 7090 442 0424 442 3654 471 9595 473 1246 486 2900 462 2016 460 0344 467 7888 464 6255 482 1851 485 2619 485 2586 473 9550 483 5700 437 8500 483 9009 483 1878 432 8606 442 1917 477 1529 442 3464
Fax
441 5020 440 7975 472 1625 480 6909 444 6296 442 1206 471 8635 473 1503 486 2151 462 2724 460 0427 467 7086 464 5679 482 1842 483 5082 483 5137 473 9554 483 1228 437 8501 483 5694 483 1469 432 9041 441 5022 477 1062 441 5021
QNB Al-Islami
Salwa Road Grand Hamad St. 443 3786 425 2000 435 5021 431 4727
Offices
RasGas Qatargas Qatar Petroleum - Head Office Doha Qatar Petroleum - Al Sadd Exhibition Centre Airport Departures Terminal Ministry of Education Q-Post Urban Planning
Telephone
473 8433 473 6001 483 1218 447 8294 483 4784 462 1100 483 9828 493 0343 483 5176
Fax
473 8066 473 6002 483 1081 447 8295 483 4774 462 1929 483 9093 493 0371 483 5174
Other Offices
Investment Department Vehicle Finance
Telephone
440 7111 437 8560
Fax
440 7105 437 8559
24-Hour call centre International Branches and QNB Subsidiaries

United Kingdom
51 Grosvenor Street London W1K 3HH Tel. (+44) 207 647 2600 Fax (+44) 207 647 2647
440 7777
France
58 Avenue dlena 75116 Paris Tel. (+33) 153 23 0077 Fax (+33) 153 23 0070
Ansbacher
Two London Bridge, London SE1 9RA, UK Tel. (+44) 207 089 4700 Fax (+44) 207 089 4850 info@ansbacher.com

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HEAD OFFICE Qatar National Bank SAQ, P.O. Box 1000 Doha, Qatar Tel.

Qatar Economic Review

Qatar Economic Review

Qatar Economic Review

Sovereign Ratings: State of Qatar

Government Bonds Foreign Currency Aa2

Foreign Currency Long-Term A+

Local Currency Long-Term A+ Short-term A1

Local Currency Long-Term A+

Foreign Currency Long-Term A+ Short-term A-1

Sovereign Bahrain Kuwait Oman Qatar Saudi Arabia UAE

Moodys A2 Aa3 A2 Aa2 A1 Aa2

Standard and Poors A A+ BBB+ A+ A+ N/R

Fitch AAAN/R N/R A N/R

Capital Intelligence BBB+ A+ BBB+ A+ A+ A+

Source: Moodys, Standard and Poors, Fitch and Capital Intelligence.

1. Overview of the State of Qatar

Table 1.1 Geographical Distribution of Population

Population 264,009 169,774 24,283 18,392 17,793 27,772 522,023

OVERVIEW OF THE STATE OF QATAR 6

1997 Census Population Males Females Total

342,459 179,564 522,023

Population by Age Groups

Source: The Planning Council.

OVERVIEW OF THE STATE OF QATAR 7

Economically Active Population by Gender and Employment Status

Source: The Planning Council.

Economically Active Population by Economic Activity

OVERVIEW OF THE STATE OF QATAR 8

1.3 Constitution and Legal System

1.4 Foreign Relations and International Organisations

OVERVIEW OF THE STATE OF QATAR 9

2. The Economy of Qatar

2.1 Gross Domestic Product (GDP)

THE ECONOMY OF QATAR 10

Source: The Planning Council and QNB.

2005 92,071 46.3% 62,493 18.8% 154,564 33.8%

2006* 119,090 29.3% 77,360 23.8% 196,450 27.1%

2007* 136,677 14.8% 93,169 20.4% 229,846 17.0%

THE ECONOMY OF QATAR 11

The Non-Oil and Gas Sector

Municipality Doha Al-Rayyan Wakrah Umm Slal Al-Khor Total

2001 1,545 1,305 184 369 153 3,556

2002 1,579 1,418 217 468 192 3,874

2003 1,581 1,372 262 409 287 3,911

2004 1,930 1,741 302 586 262 4,821

2005 2,082 2,373 407 700 388 5,950

THE ECONOMY OF QATAR 12

THE ECONOMY OF QATAR 13

3.Key Economic Sectors

(Billion barrels) Crude Oil Condensates Total

Dec. 2005 4.3 22.7 27.0

QR Billion 8.5 122.0 40.0 17.0 16.5 204.0

Current Production Dec. 2005

QP QP QP Occidental Occidental Maersk Oil TotalFinaElf Anadarko QPD BOC

KEY ECONOMIC SECTORS 14

Exploration/Development and Production Sharing Agreements (EPSAs/DPSAs)

Idd Al Shargi (Offshore)

Al Shaheen Field - Block 5 (Offshore)

Al Khaleej Field - Block 6 (Offshore)

Al Rayyan Field (Offshore)

Al Karkara Field (Offshore)