29/03/2015 15:11 AST
“We also affirmed the 'AA' long-term issue ratings on the bonds issued by Qatari Diar Finance Q.S.C. and SoQ Sukuk A Q.S.C. Qatar is a wealthy economy; we estimate its GDP per capita at $78,000 in 2015.
“The hydrocarbons sector creates about 55 per cent of Qatar's GDP, 90 per cent of government revenues (oil and gas taxes and royalties, plus dividends from Qatar Petroleum), and 85 per cent of exports. We view Qatar's economy as undiversified.
“In 2013-2014, the oil and gas sector expanded by about two per cent, and the non-oil sector by 12 per cent, resulting in average annual GDP growth of about six per cent. We project slower real GDP growth of about four per cent during 2015-2018 because the hydrocarbon sector will likely continue to stagnate. The non-oil sector, on the other hand, should remain buoyant, thanks to public investment and supported by the growing population.
“In our view, Qatar's high wealth means that its relatively weak per capita economic growth performance is not an immediate concern for the ratings. However, beyond our two-year outlook horizon, Qatar's economic risk position could deteriorate relative to economies that are expanding more rapidly.
“In our view, medium- to long-term challenges to Qatar's competitive position in the liquefied natural gas (LNG) market are likely to come from new shale production, Russia's gas pipeline to China, and increased pressure to delink LNG contracts from the oil price.
“Nevertheless, we see several factors that support Qatar's competitive position in the LNG market. First, we expect global demand for natural gas to remain strong, absorbing the new supply. Second, Qatar's strategy has been to diversify into all major markets, adjusting the mix of destinations and contract types according to market needs. Moreover, the majority of its exports are under long-term contracts, which provide certainty of volume off-take, while built-in diversion clauses in the contracts provide additional flexibility to manage quantity and price risks. Third, Qatar will continue to have a cost advantage over many new projects in other countries. Since Qatar produces and exports significant quantities of condensate and natural gas liquids associated with natural gas, its effective average cost ofproducing LNG is much lower.”
CPI Financial
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