By Tim Daiss
Qatar’s Minister of Commerce and Industry said on Sunday that the country’s trade surplus reached $52 billion in 2018. This amount comes as the gas-rich kingdom pushes back against a Saudi-led boycott put in place in 2017 over allegations that Qatar has funded terrorist groups and over claims it is seeking better ties with Saudi arch-rival Iran to underline Riyadh. Doha vehemently denies both claims. Egypt, the United Arab Emirates, and Bahrain have also taken part in the boycott.
Qatar has also sold bonds worth $12 billion, its finance ministry said last Thursday. Media in the region said the kingdom was still attracting strong demand despite the economic and diplomatic boycott by its former Gulf allies. In 2018, Qatar raised $12 billion in its first dollar bond sale in two years, bypassing Saudi Arabia’s $11 billion bond issue the same year.
Both developments point to the tenacity of Qatar against geophysical headwinds that might have caused more severe problems for other nations. However, with its back against the wall in the region, Qatar has expanded its trade relations after the blockade effectively cut its access to an estimated 60 percent of the goods it imported, according to a CNBC report. Trade between Qatar and Pakistan increased more than 230 percent in 2018, while trade between Iran and Turkey, both countries that often find themselves on opposite sides on numerous issues in the region with Saudi Arabia, also increased – a dynamic likely not lost on leaders in Saudi Arabia.
Moreover, in December the Guardian reported that the rift among Gulf states was exposed when Saudi Arabia’s allies rounded on Qatar for snubbing a personal invite from King Salman and sending a relatively junior foreign minister to the annual Gulf Cooperation Council (GCC) meeting in Riyadh. Bahrain’s foreign minister openly criticized Qatar’s emir, Tamim bin Hamad Al Thani, in a tweet at the time for his no-show. “Qatar’s emir should have accepted the fair demands [of the boycotting states] and attended the summit,” he said.
Other areas of conflict between Qatar and Saudi Arabia include Doha’s support of the 2015 Iranian nuclear deal, its criticism of Saudi Arabia’s role in the ongoing battle in Yemen, as well as Doha’s open criticism of Saudi Arabia over the alleged murder of Saudi dissident journalist and U.S. resident Jamal Khashoggi in the Saudi consulate in Turkey in October.
Qatar’s ace in the hole
However, Qatar’s ability to fend off the Saudi-led boycott has one crucial advantage, its LNG sector. Qatar is the world’s largest LNG exporter, though briefly bypassed by Australia recently, with some 77 million tons per annum (mtpa) of liquefaction capacity in place. Within the next five years, amid new gas production, Qatar’s LNG liquefaction capacity will reach a staggering 110 mtpa – likely putting its top slot out of reach for both Australia and the U.S., as both countries also continue to develop their respective LNG sectors.
Qatar has also been flexing its muscles with a significant oil and gas investment push abroad. In December, news broke that Qatar was aiming to invest billions in the North American energy patch, including a new deal with Italian energy company Eni for three oil fields in Mexico, as well as making an investment decision by the end of the year or January on the Golden Pass LNG project proposal in Texas. State-run Qatar Petroleum is the majority owner of the Golden Pass LNG terminal, while U.S. oil major Exxon Mobil and U.S.-based independent oil company ConocoPhillips hold smaller stakes.
In February, Qatar and ExxonMobil formally announced that they had made a final investment decision (FID) on the Golden Pass project. Construction will begin in the first quarter of 2019, and the facility is expected to start up in 2024.