Qatar ‘well-placed to meet Japan’s rising LNG needs’
Last month, Qatargas 1 signed a contract to deliver 1mn tonnes of LNG a year, under a long-term contract with Tokyo Electric Power Company
Nuclear-disaster hit Japan will continue to offer attractive near to medium-term opportunities for Qatar gas exports, says Standard Chartered, which also sees the country “well-placed” to meet the Asian country’s growing liquefied natural gas demand because of its significant fleet of LNG tankers.
Referring to the recent contract signed between Qatargas and Tepco, the bank said it highlights Japan’s need for LNG as an alternative source of power to compensate for some of the 50 nuclear power plants that remain offline following the Fukushima disaster.
Last month, Qatargas 1 signed a contract to deliver 1mn tonnes of LNG a year, under a long-term contract with Tokyo Electric Power Company (Tepco).
This is the first long-term bilateral agreement between both companies. Qatargas 1 supplies a total of 200,000 tonnes of LNG a year to Tepco and seven other firms, under a contract running from June 1999 to December 2021.
“Since the beginning of 2012 Qatar has been actively signing LNG contracts with a number of Asian countries, such as South Korea, Taiwan and Pakistan. This is not surprising given the challenging market conditions in Europe, and the self sufficiency of US markets on the back of shale gas,” Standard Chartered said in its latest Mena focus.
While growth rates will slow over the coming year as gas production approaches capacity, this phase of Qatar’s growth story will be driven by investment in its non-oil and gas sectors. Oil and gas proceeds finance the infrastructure and diversification projects that the economy needs.
In the budget that covers the period up to March 2013, Qatar plans to boost spending by 28% to $49bn, from $38bn in 2012. In the current financial year the government projects revenues of $56bn and a surplus of $7.6bn.
The latest budget is based on an oil price of $65 versus $55 previously and it targets a surplus of 23% of GDP. (Actual revenues in 2012 were $44.7bn, with a surplus of 16% of GDP.)
As expected, project spending receives the highest allocation in the budget: about $17bn will go to major projects, including the New Doha International Airport, the Doha Port, the rail network, urban development and other infrastructure related to the FIFA World Cup being held in Qatar in 2022.
Health and education are two other sectors that benefit in the current budget, the report said. A sum of $6bn has been earmarked for education.
Qatar has invested extensively in higher education, mainly through the Qatar Foundation.
“We believe Qatar would now benefit from greater investment in primary and secondary school education, to provide Qatari students with the necessary grounding to attend some of these top universities,” Standard Chartered said.
The budget also includes provisions for wage increases that were awarded last year. In September 2011 the government raised salaries and social benefits for civilian state employees by 60%, while military staff received salary increases of between 50% and 120%.
Funding for public-sector salaries has risen 48% to $10bn, accounting for almost one-fifth of total spending this year.
“In an environment of high oil and gas prices, such wage increases can be accommodated; however, they create distortions in the labour market and can make it more difficult for the private sector to attract qualified Qataris,” Standard Chartered opined.
Fuente: Gulf Times