In an analysis of Qatar, S&P Global Ratings maintained its stable outlook.
The ratings agency said that in its view, Qatar's fiscal and external buffers should continue to benefit from the country's position as one of the world's largest exporters of LNG over the next two years, further boosted by production increases through the North Field East (NFE) project between 2026/2030.
Qatar plans to increase its LNG production capacity to 126 mill tonnes per year by 2027 from 77 mill tonnes currently and further to 142 mill tonnes before 2030, an almost 85% increase above the current capacity.
In S&P’s forecast, it is assumed that actual LNG production will be largely flat until 2025 but increase by about 35% from current levels by 2027. The pivot away from Russian gas, particularly by European economies, suggested there will be demand for additional exports from Qatar.
At the same time, Qatar could be vulnerable to geopolitical developments in the Middle East, including the rising confrontation between Israel and Iran throughout this year. S&P viewed the likelihood of a protracted, direct conflict between Iran and Israel/the US as limited, but the agency thought that additional transmission channels, such as trade routes, population displacement or movements, and tourism flows were potentially more vulnerable.
Almost all of Qatar's exports currently pass through the Strait of Hormuz and more than 70% of Qatar's LNG exports go to Asia. This is expected to remain broadly unaffected by the current geopolitical tensions, including the widening war between Israel, Hamas, and Hezbollah, and the incidents in the Red Sea. Disruptions have not prevented delivery of Qatar's LNG, as shipments going north to Europe have been rerouted around the Cape of Good Hope.
Qatar exports about 20% of world's LNG and sustained disruptions to trade routes, including the Strait of Hormuz and Bab Al-Mandeb (Red Sea), could have a significant negative impact on those exports. However, S&P expected Qatar's fiscal and external inflows to remain supported by uninterrupted export flows, given that the country predominantly exports LNG to Asian buyers and cargoes have remained unaffected by the ongoing disruption of the Red Sea route.
S&P also forecast GDP per capita should increase above $80,000, once the NFE project boosts LNG production after 2026 and assumed that LNG demand is likely to peak in the mid-2030s, with increasing use of renewables in the energy market. Nevertheless, as a low-cost supplier, Qatar should remain in a strong competitive position even after 2030.
Qatar derives about 40% of its GDP, 80% of government revenue, and 90% of exports from the hydrocarbon sector. As a result, Qatar's strong fiscal and current account surpluses will persist in 2024/2027, based on S&P’s Brent oil price assumption of $81 per barrel in 2024 and $75 per barrel in 2025/2027, together with expected increases in LNG production capacity by 2027.
In addition, NFE investment costs will be largely borne by QatarEnergy.
