Qatar is in the midst of an economic boom supported by its expanding production of natural gas and oil. Economic policy is focused on development of Qatar's nonassociated natural gas reserves and increasing private and foreign investment in non-energy sectors. Oil and gas account for more than 60% of GDP, roughly 85% of export earnings, and 70% of government revenues. Oil and gas have made Qatar one of the world's faster growing and higher per-capita income countries - equal to the EU in 2007 per-capita income. Sustained high oil prices and increased natural gas exports in recent years have helped build Qatar's budget and trade surpluses and foreign reserves. Proved oil reserves of more than 15 billion barrels should ensure continued output at current levels for 22 years. Qatar's proved reserves of natural gas are roughly 25 trillion cubic meters, about 15% of the world total and third largest in the world. Qatar has permitted substantial foreign investment in the development of its gas fields during the last decade and became the world's top liquefied natural gas (LNG) exporter in 2007.

3.1 Oil

Despite efforts to diversify, the Oil and Gas sector is still very much the back-bone of the Qatari economy. Oil was discovered in 1939 and commercial exploitation started 10 years later with the onshore Dukhan field. State owned QP was established in 1974 to oversee all aspects of the sector. Since 1995, some US $30 billion has been invested in Oil & Gas development.

Foreign oil companies have been encouraged to invest in the oil exploration under production-sharing agreements (EPSA's). The onshore Dukhan field, located along the west coast of the peninsula, is Qatar's largest producing oilfield. QP also operates the offshore field Bul Hanine and Maydan Mahzam. A number of foreign oil companies operate elsewhere on the basis of EPSA agreements Id al-Shargi (Occidental Petroleum) from the North Dome and from the South Dome, Al-Shaheen (Maersk Oil), Al-Rayyan (Anadarko), and Al-Khalij (Total).

The country's two primary export streams are Dukhan and Marine blend. Despite the country's significant oil production and reserves, oil accounts for less than 15% of domestic energy consumption.

Oil - production: 1.111 million bbl/day (2005 est.)
Oil - consumption: 95,000 bbl/day (2005 est.)

Qatar exports almost all of its oil production to Asia, with Japan by far its largest customer followed by Singapore, South Korea, Thailand & Taiwan. In the first ten months of 2003, net oil exports totaled 898,055 barrels per day (bbl/d). Besides increasing oil production, Qatar is also looking to boost its oil refining capacity, doubling output from 140,000 bpd in 2003 to 280,000 bpd in 2006. The country now has two refineries.

Production and Exports
In 2004, Qatar's average output of crude oil was 754 thousand barrels per day, of which about 28.9% was produced from the onshore fields, 70.1% from the offshore fields. The average exported amount of crude oil and oil products reached 570 thousand barrels per year.

3.2 Natural Gas

With proven reserves of 900 TCF (trillion cubic feet), Qatar's natural gas reserves rank third in size behind Russia and Iran. Qatar is gearing up to supply about 77 mn tonnes of liquefied natural gas (LNG) annually to the world market by 2010. Most of Qatar's natural gas is located in the offshore North Field, which is the largest known non-associated natural gas field in the world. The Qatari government believes that the country's economic future lies in developing this vast natural gas potential. Currently, Qatar has two liquefied natural gas (LNG) exporters: Qatar LNG Company (QatarGas), a joint venture between QP, Total, ExxonMobil, Mitsui and Marubeni, and Ras Laffan LNG Company (RasGas) with QP and ExxonMobil as its principal shareholders and Japanese and Korean investors having smaller shareholdings and RasGas-2 which was established in 2001 to supply LNG to India. QatarGas exports principally to Japan, whereas the main export for RasGas LNG is South Korea. Long term agreements have been signed to sell and supply LNG to Italy and Spain. Both QatarGas and RasGas are adding new facilities to their LNG plants and as a result Qatar hopes to increase exports to 30 million tones by 2008. Qatar's strategy includes exports by pipeline to neighboring states. The Dolphin Project will build an integrated pipeline grid for Qatar, the UAE & Oman. Asimilar project involving Kuwait & Bahrain is also under consideration. An other dimension to the LNG strategy involves the development of gas-to-liquids (GTL) projects, promoting the use of super-clean fuels. Gatars first GTL project with South Africas SASOL is due start up in December 2005. Qatar will top the list of GTL producers with a capacity of 400,00 bpd.

In 2004, the county's daily exports of gas reached 23 million tons. In 2010 Gatargas is expected to double its annual LNG output capacity by adding new trains, which will be the largest of their kind in the field. Other projects including a refinery for condensate, a power plant, a helium plant and an aluminum smelter are planned for Ras Laffan Industrial City.

3.3 Electricity

Qatar currently has an electric generation capacity of 1,864 megawatts (MW), and produces 9.3 billion kilowatt-hours of electricity per year. Most of the country's power plants are from natural gas-fired turbines, run in tandem with water desalination process.
In May 2000, the Qatari government took a major step towards partial privatization of its power sector. Assets owned by the Ministry of Electricity and Water (MEW) were transferred to the Qatar General Electricity and Water Corporation (QEWC), now called KAHRAMAA. KAHRAMAA is 57% controlled by local investors and 43% controlled by the government. KAHRAMAA has been granted the responsibility of owning, managing and operating the Ras Abu Fontas-B power & desalination complex, currently with a capacity of 610mw; 30 million gallons a day. KAHRAMAA also holds a 25% stake in the Ras Laffan Electricity Company, which is developing the country's first independent water and power project (IWPP) on a build and operate basis. In its first phase the $700 million IWPP project will have a generation capacity of 750mw and a water desalination capability of 40 million gallons a day.

The residential sector accounts for about 80% of Qatar's electricity consumption, but this share is likely to decline somewhat as power demand associated with LNG export terminals increases. In response to financial pressures, the Qatari government announced in 1999 that it would limit the provision of free electricity to Qatari-citizen households, with payment required for consumption above a set threshold. Total electricity consumption reaches 8.556 billion kWh.

3.4 Manufacturing

The most important strategic goals of the state of Qatar in the industrial field are to expand and optimize the utilization of the added value of the country's natural resources, besides diversifying the sources of income, especially from the industry in its capacity as the second mainstay of the Qatari economy; increasing the ratio of contribution of manufacturing industries in the gross domestic product (GDP); creating and spreading an industrial culture; accelerating the driving force behind sustainable development; upholding self-reliance and grasping the modern scientific and technological advances to increase the potential for competition and adaptation to the requirements of the export market.

The state encourages the investment of savings and surplus financial resources of the private sector in the stocks of the new industrial projects and privatizes part of its national basic industries to open more avenues for private investments in the industrial field.
Qatar seeks to develop its daily production capacity of crude oil, natural gas and gas-associated condensates to about one million barrel, 12 billion cubic feet and half a million barrels, respectively.

It plans to raise the annual production capacity of liquefied natural gas (LNG) from the current level of 13 million tons to about 30 million tons by the end of 2010.
The ratio of the national human resources employed in the crude production and basic and manufacturing industries is expected to rise to 50% by the year 2005 as part of the plan to achieve 75% Qatarization by the year 2010, particularly in the technical professions field.

It has also been decided that the output capacity of the three-train natural gas liquids complex be raised by adding a fourth and a fifth trains by the end of 2010.

Natural gas is being used as a feedstock for Qatar's burgeoning petrochemicals industry. A number of major projects are now producing value-added products for both domestic consumption and export. The Qatar Petrochemical Company (QAPCO), a joint venture between QP, Elf Atochem of France and Enichem of Italty, produces ethylene, low density polyethylene (LDPE) and sulphur. It is currently the largest producer of LDPE in the Middle East. The Qatar Fertilizer Company (QAFCO), a joint venture between QP and Norsk Hydro of Norway, manufactures ammonia and urea, and is the largest producer of fertilizers in the Middle East. The Qatar Fuel Additives Company (QAFAC) is a joint venture involving Canadian and Taiwanese companies, alongside QP, manufacturing methanol. Other projects currently being developed include the Qatar Vinyl Company (QVC), the Qatar Chemical Company (Q-Chem), a joint venture between QP and Phillips Petroleum, methanol and HDPE/LDPE plants in Ras Laffan, a toluene diisocyanate unit and the world’s biggest Aluminum Smelter (Qatalum) in Mesaieed.

The Qatar Steel Company (QASCO) has been a pioneer in the Gulf region in the use of natural gas in the conversion of iron ore into sponge ore, of which 90% is exported. Qatar also has significant cement, flour and consumer goods manufacturing concerns.

While the bulk of the country's heavy industry has developed as state owned enterprises or as joint ventures in which the State is a major shareholder, the government is actively encouraging the private sector to invest in the development of light industry. Some 20% of the shares in the Qatar Industrial Manufacturing Company (QIMCO) are held by the government, while 80% are quoted on the Doha Securities Market to encourage private participation in small and medium-sized industrial projects undertaken by the company. Preferential financing for small and medium sized industrial enterprises is also available through the Qatar Industrial Development Bank.