Steve BriceRegional Head of ResearchMiddle East and South Asia

Qatar: The best is yet to come

Overview

Outstanding medium term prospects

Securing the future

Realising the country’s potential

Outstanding medium-term prospects

Nobody better positioned than Qatar

SaudiArabia

Iran

Qatar

UAE

Kuwait

Libya

Egypt

Oman

BahrainJordan

Lebanon

Syria

Hydrocarbon resources

Ref

orm

The most dynamic Middle East economyResource rich and reform orientated

Source: SCB

Bubble size = size of economy

Development of gas reserves key near-term

0

500

1,000

1,500

2,000

2,500

3,000

3,500

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Oil Gas

Source: QP, QNB, SCB

Total oil and gas production, ‘000s of barrels of oil equivalent

Securing the future

Non-hydrocarbon balance key

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005f

0

10

20

30

40

50

60

Non-hydrocarbon balance, % GDP

Fiscal balance, % of GDP

Oil price, $ per barrel OPEC (RHS)

Source: QCB, IIF, SCB

Fiscal targets consistent with inter-generational equity

Source: SCB

Policy goal Long-term oil price Target non-hydrocarbonassumption fiscal deficit

USD per barrel % of 2004 GDP(QAR bn)

Maintain constant oil 22 -30% [-31]

and gas wealth 50 -54% [-56]

80 -88% [-91]

Maintain constant oil 22 -4% [-4]

and gas wealth per capita 50 -9% [-9]

80 -15% [-16]

=

*For description of all assumptions see text

==

===

Why bother?

Electricity16%

Combustible renewables and

waste14%

Gas16%

Oil43%

Coal7%

Other*4%

2002 fuel shares of total final consumption (World)

Source: IEA* geothermal, solar, wind, heat, etc

Scope for alternative fuel growth

Realising the country’s potential

Hydrocarbon revenues as a catalyst

Exploitingenergy

resources

Exploring energy

resources

Exploring economic

potential

Exploitative economy Exploratative economy

Crude oil/gas production

Petrochemicals

Extractive industries

Energy research and development

New energy technologies

Innovative energy industries

Dynamic research and development centre

Clusters of innovative companies in the energy and non-energy sectors

Adding value to natural resources

Value Added Across the Petrochemical Production Chain ( USD / Barrel )

Tertiary petrochemicals(e.g. plastic bags)

Secondary petrochemicals(e.g. HDPE)

Primary petrochemicals(e.g. Ethylene)

Refining(e.g. Naphtha)

Crude oil

+3

+36

+132

+>200

Source: Saudi Arabia General Investment Authority (SAGIA)

Move downstream to create value

Energy research hub vs gas producer?

Recognised research but commercial potential not tapped

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Qatar

Jord

an

Tunis

ia

Egypt

UAE

Leban

on

Bahra

in

Oman

Saudi

Source: WEF

Quality of scientific research institutions 1=nonexistent 7=the best in their fields

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Tunis

ia

Jord

an

Moro

cco

Egypt

Qatar

UAE

Bahra

in

Oman

Leban

on

Saudi

Source: WEF

University/Industry Collaboration 1=minimal 7=intensive and ongoing

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Moro

cco

Tunis

ia

Egypt

Jord

anUAE

Leban

onQat

ar

Bahra

in

Saudi

Oman

Source: WEF

Capacity for innovation of national companies

1= solely license from international partners 7=R&D all in house

Current skill set weak in some key areas

0

100

200

300

400

500

GeneralSubject

Humanitiesand Social

Studies

Science Sharia Engineering Admin andEconomics

Qatari Non-Qatari

No. of students

Source: Qatar Planning Council

Region lags behind smaller economies in converted R&D

0

6,000

12,000

18,000

24,000

30,000

36,000

South K

orea

Isra

el

Hong Kon

g

Norway

Singa

pore

Irela

nd

Luxem

bourg

Mid

dle E

ast,

ex. I

l

Liech

tens

tein

GCC

Source: SCB, US Patent Office

GCC R&D ComparisonNumber of Patents filed in the US, by

inventor country (1977-2003)

Focus on non-oil sector to bear fruit

-10%

0%

10%

20%

30%

40%

1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005

GDP Trend Oil Sector Trend Non-oil Trend

Source: SCB

Nominal GDP trends, y/y Non-hydrocarbon growth has been trending down

Qatar can be competitive outside of energy

0

2

4

6

8

10

Oil an

d Gas

Petro

chem

ical

s

Finan

ce

Med

ia a

nd Mar

ketin

g

Art an

d Musi

c

Sport

Educatio

n an

d Hea

lthca

re

Touris

m

Agricultu

re

Competitive advantage Job creation Domestic consumption

DiversificationIndex, 10 is very appropriate and 1 is not appropriate

Source: SCB

Scenario analysis of GDP per capita

0

20

40

60

80

100

120

2005 2008 2011 2014 2017 2020

Low oil trend (I)Medium oil trend (II)High oil trend (III)Low oil reform (IV)Medium oil trend (V)High oil reform (VI)

Source: SCB

USD 000’s

II

III

V

VI

I

IV

Summary

Outstanding medium term prospects

Securing the future

Realising the country’s potential