We are probably looking at a potential global economic crisis if the recent stock market's volatility is a good leading indicator.The price of oil closed on 9 August 2011 at about $79 a barrel – the lowest since last September. Is this a sign whether oil price will be kept steady around this level or risks further plummeting if the world economy does goes into a recession. How will this crisis (if it happens) affect Qatar, given its heavy dependence on oil and gas of nearly 56% of GDP?
I seem to hold the medium-term view that Qatar will likely continue to be the bright spot for next seven years. While strong oil prices are important to Qatar's revenues, its abundance of natural gas reserves (910 trillion cubic feet) and existing long-term gas contract prices might be the key to Qatar's strong resilience and financial ability to pay for its World Cup's infrastructure spending estimated at billions of dollars. If we looked back at 2009, we witnessed how Qatar managed to attain its robust economic growth of 9% despite world-wide economic downturn.
What Qatar has done prudently is the current moratorium imposed on further development of its vast North Field gas reservoir, to be lifted in 2014. Qatar can easily lift the moratorium to help pay for its billions dollars worth of projects to stage the 'best ever World Cup' in 2022. In addition, its growing population and expanding infrastructure is in need of further investment for energy and water needs.
This, I believed is the Qatar's trump card to ride out the present crisis or no crisis.
No comments:
Post a Comment