Qatar’s public spending may pick up this year; energy prices support revenue: Oxford Economics

Qatar’s public spending is expected to pick up this year, while elevated energy prices support its revenue, Oxford Economics has said in its latest country report.

The rise in the Brent oil price to above $85 per barrel supports the researcher’s projection that the budget surplus will average above 5.5% of GDP in 2024-2026.

Oxford Economics forecasts the 2024 Brent oil price at $82.1 per barrel, much higher than the $60/barrel assumed in Qatar’s latest budget.

“We still project a 2024 budget surplus at QR47.9bn (5.8% of GDP), similar to last year. This is a significantly better outcome than what is pencilled into Qatar's 2024 budget,” Oxford Economics noted.

According to Oxford Economics, Qatar's oil output has been "relatively flat" in recent years at around 600,000 barrels per day (bpd).

“As the country is not involved in the Opec+ pact on production quotas, we expect production to rise modestly this year,” Oxford Economics noted.

A recovery in oil production will boost the energy sector to 1.7% growth this year, up from an estimated 1.5% expansion in 2023. Commodity prices have eased but are still elevated, supporting the macroeconomic environment.

The North Field gas expansion project will have a "positive medium-term impact" on the economy. The target liquefied natural gas (LNG) capacity was raised to 142mn tonnes per year (mtpy) by the end of 2030, up nearly 85% from 77 mtpy currently and 13% on the intermediate target of 126mtpy by 2027.

The new North Field West project is in the early stages.

Last year, Qatar awarded a $10bn contract for the second phase of the project, North Field South, which will include the delivery of two LNG trains.

Qatar is also "making progress" in contracting future gas output, Oxford Economics noted. In early June, the government signed a long-term supply contract with Taiwan for 4mn tonnes of LNG annually.

It followed similar deals with India, China, France, Germany, and Hungary, with more likely in the coming months.

Oxford Economics estimates the non-energy economy will grow by 2.5% this year, up from an estimated 0.8% in 2023.

Available data showed a weak performance in the non-energy sector at just 0.7% year-on-year (y-o-y) growth in the first three quarters of 2023, with Q4-2023 data pending.