Doha: Qatar’s mega Liquefied Natural Gas (LNG) expansion plan is expected to boost country’s Gross Domestic Product (GDP), according to a report released by BofA Global Research. The country’s economy is also expected to witness a surplus of QR12.5bn driven by higher oil prices.
“Qatar’s conservative 2021 budget and robust policy response to the Covid crisis support a cyclical recovery. Qatar could become the swing Liquefied Natural Gas (LNG) producer going forward, with market share focus and more flexible pricing,” said BofA Global Research in a report, yesterday. “We expect its LNG expansion plans to boost real GDP growth and fiscal surpluses to high-single digits and mid-single digits on average over 2021-27,” noted the report.
Qatar is in full steam ahead with its expansion plans in the energy sector. The country has embarked on an ambitious LNG capacity expansion plan. The two-phase North Field Expansion project will see Qatar LNG capacity to increase from 77 million tonnes per annum (mtpa) to 126mtp by 2027, showing an increase of around 64 percent. The first phase of expansion will include expansion of LNG capacity from 77 mtpa to 110 mtpa by 2025 while the second phase will take LNG capacity to 126 mtpa by 2027.
“We expect the 2021 fiscal balance to swing to a surplus of QR12.5bn, mainly on the back of a higher-than-budgeted oil price. The lagged effect on corporate taxes (including on Qatar Petroleum) should constrain revenues somewhat, and VAT will not be introduced in 2021,” noted the report.
“Overall 2021 spending is budgeted to drop by 7.5 percen year-on-year versus the 2020 budget, mostly on capital expenditure cuts. The latter partly reflects the completion of some major infrastructure projects,” added the report.
A robust policy response from the government and concerned authorities has shielded the local economy from worst effects of COVID-19 outbreak. Qatar has already started witnessing gradual lifting of restriction imposed to curb the outbreak of COVID-19 which will boost the economy. The first phase of lifting of restriction has already come into effect from May 28.
