Qatar had a fiscal breakeven oil price of $48.80 per barrel this year, the lowest in the region, and expected to fall further to $45.70 next year, according to research from investment company Kamco.
In terms of the breakeven oil prices for 2019 and based on average oil prices seen in YTD (year-to-date)-2019 ($64), only Qatar and Kuwait are expected to be in a comfortable position in terms of spending on budgeted expenditure,” the Kuwait-based company said, as quoted by the Gulf Times.
Qatar is a relatively minor oil producer, with average daily output at some 600,000 bpd as of December last year: the last month for which OPEC reported Qatar production data. The Gulf state announced in the same month that it would leave the cartel effective January 2019 to focus on its natural gas industry. It had been a member of OPEC for 60 years. Related: Fracking Under Fire In California
A low breakeven price is good news for Qatar, despite its status as a minor producer. International gas prices are often tied to oil benchmarks and the country is the world’s largest exporter of LNG, so a low breakeven price for oil would also mean a low breakeven price for gas.
Last month, Doha booked its first quarterly GDP contraction but the future prospects of the economy are positive. According to a Reuters poll among 25 economists, Qatar’s GDP will expand by 2 percent, rising to 2.4 percent in 2020 and retreating some to 2.3 percent in 2021. This was a downward revision from 2.5 percent, 2.9 percent, and 3.2 percent, respectively, but it still forecast stable GDP growth.
Among the factors working in favour of Qatar’s economy are the start of the Barzan gas field by the end of this year, the expansion of drilling at the North Field that Qatar shares with neighbour Iran, and the 2022 World Cup.
Qatar has plans to boost its liquefied natural gas production to as much as 100 million tons annually, from a current rate of 77 million tons. It exports gas at a daily rate of about 11 billion cu ft and accounts for almost a third of the global LNG market. The country’s proven gas reserves are estimated at 880 trillion cu ft.
By Irina Slav for Oilprice.com
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