Qatar pumps up its cash reserves as gas flows



Qatar is expected to spend tens of billions of dollars in the year ahead as it expands its investments around the world.

Fuelled by the largest exports of liquefied natural gas in the world, the country is already well known for its recent acquisitions of trophy assets such as the London department store Harrods and a stake in a fund that owns most of the posh business towers of the city's Canary Wharf.

Qatar's broader role in the world today can be traced back to a bloodless coup in 1995 by Sheikh Hamad bin Khalifa Al Thani, the current emir, and his bold move to expand the country's natural gas facilities with debt.

The change of government and energy investments later allowed the country to start exporting natural gas on a scale never previously considered.

"There's a gusher of money coming into Qatar now," says Karim Souaid, the managing partner of the Bahrain-registered private-equity company GrowthGate Capital. "You have all these investment bankers swirling around them, dying for fees."

Qatar is looking to increase liquefied natural gas export capacity to 77 million tonnes a year, from about 69 million tonnes currently. Eventually it wants to raise total oil and gas output to 5 million barrels of oil equivalent per day, from 2.8 million last year.

Mr Souaid says Qatar's image as a "trophy hunter" is only part of the picture. The country has become a political player in the region by not aligning itself with the dominant Egyptian and Saudi camps in regional affairs.

Instead, it has made a name for itself as a mediator in disputes, a proponent of US involvement in regional security and a centre for debate and journalism, as it has shown with its Al Jazeera television news channels and the Doha Debates on the BBC.

Sheikh Hamad's early efforts have led to a group of interconnected funds and companies that have begun ploughing the country's savings into assets around the world and into the local economy.

Since he came to power, a business district full of skyscrapers has risen in Doha, and there are ambitious plans to host the 2022 FIFA World Cup.

But the country is better known for its investments abroad. Its seven-year-old sovereign wealth fund, the Qatar Investment Authority, may have only about US$85 billion (Dh312.18bn) - considerably less than its Gulf neighbours have saved - but it has increased its activity in the international markets since 2008.

Credit Suisse, in which Qatar owns a stake, has emerged as the country's preferred deal maker.

Some of Qatar's recent acquisitions include Raffles Hotel in Singapore, bought for $275 million, a $2.5bn stake in Banco Santander Brazil, and the Chancery building in London.

The steady flow of cash has spilled over into companies across Qatar. QInvest, an investment bank 45 per cent owned by Qatar Islamic Bank, is flush with capital, says Anuj Khanna, its head of investment management.

"Until four or five years ago, Qatar was relatively low-profile," Mr Khanna says. "Now it is emerging as a large and disciplined investor. We are a subset of that as the largest local investment firm. Capital is not a constraint for us."

QInvest, which has $750m in paid-up capital, has recently invested in the Indian brokerage Ambit, the investment bank Panmure Gordon in London, and the UAE catering company Intercat.

"We are in an aggressive ramp-up mode," Mr Khanna says.

With a population of just 1.7 million, of whom fewer than 20 per cent are nationals, analysts say only so much of the country's growing wealth can be reinvested locally. Vast amounts of rials are already being spent on education and sports initiatives, the arts and property development, but the surplus is likely to be tens of billions of rials.

"You will be hearing a lot about Qatar in the years ahead," Mr Khanna says.

In the original on-line version of this story we said Qatar expected to produce 22 million tonnes of gas a year by 2012. We also said that would be equivalent to about 8 million barrels per day of oil. In fact, Qatar produced 80.4 million tonnes of gas last year, equivalent to 1.6 million barrels per day of oil. Its government is seeking to increase the emirate’s liquefied natural gas export capacity to 77 million tonnes annually by the end of this year from about 69 million tonnes currently, and in time to raise total oil and gas output to 5 million barrels of oil equivalent per day from 2.8 million last year.

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