Qatar’s ‘energy sector will be the winner in Russia-Ukraine War’

By Sudeep Sonawane
Doha, March 17, 2022

The State of Qatar’s energy sector will benefit a lot by the current political uncertainty caused by Russia-Ukraine War, a Doha-based expert on international economics said Wednesday.
Speaking at an online event titled ‘Navigating Markets: From interest rates and inflation to big data NFTs, Roblox, and Air Jordans’ hosted by Georgetown University in Qatar’s Director and Chair of International Economics Dr. Alexis Antoniades said, “The current situation has implications for all of us regardless of where we are and in which country, especially for Qatar. It has some positive points for Qatar.
“Qatar has initiated the expansion of its North field where gas is produced. The plan is to increase LNG supply by 60 per cent or 1.4 billion tonnes in the next five years. Qatar will have a lot of LNG to sell to other countries in the next five years. It will have to sign contracts with them.
“What we see now, even before Qatar starts building its expansion, is a line of countries waiting to sign longer-term contracts with Qatar to secure their energy needs and provide adequate security for their people.”
Qatar is a winner in this situation because they can negotiate and finalise those contracts and have more bargaining power five years before they even start producing. The reason why they have done is because countries know that if they wait five years until LNG is available, Qatar may not have extra capacity to sell. So, everybody wants to be in the front of the line to ink a nice agreement with the State of Qatar. This will benefit Qatar in a big way, he said.
Dr Antoniades spoke at an online event hosted by US-Qatar Business Council (USQBC) Doha Office headed by Sheikha Mayes Bint Hamad Al Thani. USQBC Business Development Head Dima Wahbeh anchored event from the council’s Doha office.

Dr. Alexis Antoniades, Associate Professor and Director of International Economics at Georgetown University in Qatar.

On the ripple effect by the situation, Dr Antoniades expects many coding, gaming and other companies eventually moving to the Gulf from Europe. “We have seen Goldman Sachs moving from Russia to Dubai. I see many companies coming to Doha and the UAE. So this is another area where Qatar can benefit.
Dr Antoniades pegs his optimism on companies moving to Qatar on its good bilateral ties with its neighbouring countries. “Qatar has good relations with most of its neighbours. It is a safe haven in a good way of the word, not in a tax sense, for those companies.”
Regarding opportunities for companies from the US, he said, “In terms of relations with US, it also creates a lot of opportunities for American firms that are actively pursuing business in Qatar.
“A significant portion of the State of Qatar’s income comes from LNG. So, when its income goes up, its spending goes up. We have a fiscal policy that says when you have more money, spend more money and when you don’t have money, don’t spend. And when you spend more money, it goes to local companies as well as international.”
On the micro environment and macro-outlook for Qatar, Dr Antoniades he reminded attendees that Qatari Riyal is pegged to the US dollar. “One US dollar equals QR 3.65. This has been the exchange rate for years. The implication of this is that we have to follow the US Interest Rate (IR). If the US raises IR, Qatar has to raise its IR. If we don’t do this then all the money from the banking system here will go to the US. Why take one per cent interest in Qatar, if you can get five per cent in the US? And you don’t have to worry about exchange fluctuations because the rate is fixed. Similarly, if the US Federal Reserve lowers IR which it did in 2008 when inflation was 14pc, we (Qatar) had to lower IR.