Business

The Growth of Qatar—From Pearls to PSI

A quick look at how Qatar leverages its vast natural gas resources to power the growth of the country.

Qatar pinned on the map with flag
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Qatar is a desert peninsula in eastern Arabia with Saudi Arabia on its south and the remainder surrounded by the Persian Gulf (Fig. 1). The peninsula is small —only 100 miles (160 km) from north to south—and 50 miles (80 km) from east to west. It plays home to a population of just under 3 million, of which approximately 10–15% are Qataris. Despite its small size and population, Qatar wields an outsized influence on the world stage as a direct consequence of its status as the world’s largest liquefied natural gas (LNG) exporter.

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Google Maps

Before discovering oil and gas within its borders, Qatar’s population was one of the poorest in the world. Pearling, fishing, and trade were the main ways to make a living. Oil was first discovered in the Dukhan Field in 1940. Although further exploration and development was delayed by World War II, this discovery was the first step in transforming the state's economy. As reserves are exploited, native Qataris have been able to enjoy one of the highest per-capita incomes in the world; rising from $2,755 in 1970, GDP per capita reached $85,000 in the mid-2010s, although it had fallen back to $50,000 when last reported by the IMF in 2020 (Fig. 2).

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Fig. 2—Qatari GDP per capita in thousands of dollars over time.

While initial development of oil and gas discoveries was conducted by concessionaries, such as the Iraq Petroleum Company, a consortium of European and American firms, oil and gas production was nationalized in a series of steps in the 1970s. Full nationalization occurred in 1977 and former concessionaries were instead granted services contracts, with operations overseen by Qatar Petroleum (now QatarEnergy), the national oil company. Today, Qatar’s oil reserves are modest by regional standards at 25 billion barrels. This puts it ninth in OPEC and 13th in the world for reserves. Its oil production is similarly modest at 843,000 B/D.

Emergence of a Natural Gas Powerhouse

What it lacks in potential as an oil powerhouse, Qatar has more than made up for with enormous deposits of natural gas. The offshore North Field, first tapped in 1971, while not the first discovery of gas in Qatar, has turned out to be one of the largest gas fields in the world. Spanning an area roughly equivalent to Qatar itself, it holds an estimated 10% of the world’s reserves (Fig. 3). Qatar aggressively pursued a strategy of developing its natural gas reserves through joint projects with major international oil and gas companies, focusing on the North Field. Today, Qatar boasts 891 Tcf of natural gas reserves and produces 16.5 Bcf/D, ranking it third in the world behind only Russia and Iran (Fig. 4).

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Fig. 3—North Field in Qatar.

With a small population limiting domestic demand for natural gas, fully utilizing the potential of the massive reserves in the North Field necessitated the ability to export natural gas. To this effect, Qatargas was established in 1984 as a joint venture between Qatar Petroleum and various other international oil companies including ExxonMobil, ConocoPhillips, and Total to develop liquefaction and export capacity. In 1996, Qatar exported its first LNG shipment to Japan.

As additional capacity came on line, Qatargas added customers, including Spain, South Korea, and India. By 2006, just 10 years after its first export, Qatar overtook Malaysia as the world’s largest LNG exporter. In the first decade of the 21st century, natural gas surpassed oil as the largest share of the government’s revenues and the country’s GDP. Today, the natural-gas-focused strategy continues to pay dividends: Qatargas operates 14 LNG trains and a fleet of 25 tankers, which it uses to export approximately 70% to a customer base of more than 25 countries under the aegis of Qatargas.

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Fig.4—Countries with largest LNG export capacity in operation worldwide as of 2021.

The World Stage

Since the turn of the century, Qatar has notched up soft-power victories including hosting the 2006 Asian Games, winning the rights to host the 2022 FIFA World Cup, and acting as mediator in high-profile disputes. A contributing factor to these is Qatar’s ability to leverage its economic success.

Domestically, its vast wealth has been used to great effect. With a small native population, Qatar has been able to distribute state wealth to its citizens through various channels,

The country's wealth has enabled the hosting of prestigious international events by enabling the construction of the venues necessary to host them without incurring serious financial hardship or the public backlash that such costs might elicit from a tax-paying citizenry. Such events attract international attention and provides ample opportunities for developing connections. Another part of this strategy is support of the state-owned Qatar Airways, which funnels international travelers through its hub in Doha, further increasing Qatar’s visibility (and ensuring attendees have a way to get to Doha).

Qatar has leveraged its sovereign wealth fund, the Qatar Investment Authority (QIA), to raise its profile. As part of the Qatar National Vision 2030, it seeks to diversify its economy in such a way to sustain its economic success and sociopolitical stability without relying only on LNG exports. The QIA has also made high-profile investments including in European football clubs, banks, and car markets, promoting the country’s branding.

Qatar is an example of how the prudent management of a small nation’s natural resources can lay a foundation for economic prosperity, international recognition, and influence for itself and its citizens.