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Your Subtitle text
Business in Qatar
         

About Qatar

Ruled by the al-Thani family since the mid-1800s, Qatar transformed itself from a poor British protectorate noted mainly for pearling into an independent state with significant oil and natural gas revenues. During the late 1980s and early 1990s

Country Name

conventional long form: State of Qatar
conventional short form: Qatar
local long form: Dawlat Qatar
local short form: Qatar
note: closest approximation of the native pronunciation falls between cutter and gutter, but not like guitar

Administrative divisions

10 municipalities (baladiyat, singular - baladiyah); Ad Dawhah, Al Ghuwayriyah, Al Jumayliyah, Al Khawr, Al Wakrah, Ar Rayyan, Jarayan al Batinah, Madinat ash Shamal, Umm Sa'id, Umm Salal

Capital

name: Doha
geographic coordinates: 25 17 N, 51 32 E
time difference: UTC+3 (8 hours ahead of Washington, DC during Standard Time)

National Day

3 September 1971 (from UK)

Ruler

chief of state: Amir HAMAD bin Khalifa al-Thani (since 27 June 1995 when, as heir apparent, he ousted his father, Amir KHALIFA bin Hamad al-Thani, in a bloodless coup)

Prime Minister

head of government: Prime Minister HAMAD bin Jasim bin Jabir al-Thani (since 3 April 2007)

Political System

Qatar is an emirate with a conventional hereditary system. It is ruled by the Al Thani family whose presence in the peninsula dates from the eighteenth century. The Al Thani are named after the doyen of the family Sheikh Thani bin Mohamed who is the father of Sheikh Mohamed bin Thani, the first ruler of the Qatar peninsula in the mid nineteenth century. Al Thani are a branch of the Arab tribe of Beni Tameem.

Constitution

ratified by public referendum on 29 April 2003, endorsed by the Amir on 8 June 2004, effective on 9 June 2005

Area

total: 11,437 sq km
land: 11,437 sq km
water: 0 sq km

Irrigated land

130 sq km (2002)

Land use

arable land: 1.64%
permanent crops: 0.27%
other: 98.09% (2005)

International Dialing Code

+974

Currency

Qatari rial (QAR)

Exchange Rate

Qatari rials per US dollar - 3.64 (2007), 3.64 (2006), 3.64 (2005), 3.64 (2004), 3.64 (2003)

Language

The official language is Arabic. English is widely understood and ranks alongside Arabic as the language of commerce

Religion

Islam. Practice of all religious beliefs is allowed

Population

907,229 (July 2007 est.)

GDP per Capita

$75,900 (2007 est.)

Real GDP Growth

7.8% (2007 est.)

Industries

Oil & Gas, Aluminum, Cement, Fertilizers, Commercial Ship Repair, Petrochemicals,
Construction Materials, Pharmaceuticals, Tourism

Oil Production

1.111 million bbl/day (2005 est.)

Oil Proven Reserves

15.21 billion bbl (1 January 2006 est.)

Natural Gas Production

43.93 billion cu m (2005 est.)

Natural Gas Proven Reserves

24.73 trillion cu m (1 January 2006 est.)

Fiscal Year

1 April - 31 March

Weekend

Friday and Saturday for government institutions. Many private companies operate a six-day week (with Friday as an off day)

Exports

$33.28 billion f.o.b. (2007 est.)

Exports - commodities

liquefied natural gas (LNG), petroleum products, fertilizers, steel

Imports - commodities

machinery and transport equipment, food, chemicals

Imports

$15.32 billion f.o.b. (2007 est.)

Industries

crude oil production and refining, ammonia, fertilizers, petrochemicals, steel reinforcing bars, cement, commercial ship repair

Legal system

based on Islamic and civil law codes; discretionary system of law controlled by the Amir, although civil codes are being implemented; Islamic law dominates family and personal matters; has not accepted compulsory ICJ jurisdiction

Stock of direct foreign investment - at home

$10.63 billion (2006 est.)

Flag

maroon with a broad white serrated band (nine white points) on the hoist side

Current and Projected Projects

General

Sheikh Hamad's liberal policies have encouraged foreign companies to invest billions of dollars to develop the Ras Laffan field and to set up a string of costly liquefied natural gas (LNG) and other hydrocarbon-based projects.
Qatar plans to invest up to US$18 billion in developing its gas production and export infrastructure by the turn of the century, as well as boosting crude oil exports. Phase 2 of its development plan involves the construction of a gas liquefaction plant and port at Ras Laffan by state-owned Qatargas. This US$6 billion development is set to have an output of 6 million tons/year by the turn of the century. Other projects involve the construction of a joint venture ten million tons/ year plant by Rasgas, a planned five million tons/year plant by Enronand and a four million tons/year plant by Elf and Sumitomo. By the year 2000, Qatar hopes to be exporting sixteen million tons/year, mainly to the Far East.
Funding the development has, however, been a problem. Qatar has structured its investment plans such that the government has a majority stake in most projects, meaning that Doha has an insatiable demand for capital. Although state spending has been cut in some categories in recent years in order to save money, most of the investment has come in the form of commercial loans.
The Qatar Liquefied Gas Company started to export to Japan in January 1996. Ras Laffan LNG Company (Qatar's second gas exporting venture) has also broken new ground in project financing by tapping the international bond market, to the tune of US$1.2 billion.

Germany's Uhde is involved in an ammonia-urea project for Qatar Fertilizer Company. The German turbine manufacturer ABB Kraftwerke was tapped for a US$1.1 billion electrical project at the Ras Abu Fontas plant, where capacity is being doubled to 1,250 MW.

Qatar concluded a large arms deal with the UK in September 1996 valued at over US$800 million and involving the purchase of patrol boats, personnel armored carriers and missiles.

Project Finance

To promote its ambitious development plans, Qatar taps the international money markets on a regular basis. Even though the national debt is equivalent to 77 percent of GDP, international financiers are still lining up to lend substantial sums. General syndication closed on a US$250 million sovereign loan for balance of payments support. In March 1996, commitment letters were signed with a banking group headed by Industrial Bank of Japan to provide non-recourse financing for up to 75 percent of the US$1 billion liquefaction plant contract for Rasgas.
Qatar enjoys high credibility in the international markets because it has painstakingly built up an impressive portfolio of project financing deals over the past three years. Its economic prospects over the medium-to-long term are bright, given the revenue forecasts for Qatargas and Rasgas.

Franchising

Qatar has no special rules or regulations governing either licensing or franchising operations. Moreover, there are no restrictions on the payment of fees and royalties. Firms interested in licensing or franchising their operations in Qatar, however, should identify local agents. The restrictions and precautions which apply in the case of appointing local agents for products and services also apply in franchising. Presently, there are few franchise operations in Qatar (mainly fast food services), and all are reported to be doing well in a market of no more than 400,000 inhabitants.

Investment and Trade Issues:

Foreign Investments
The Law Regulating the Investment of Non-Qatari Capital in Economic Activities No. 25 of 1990 governs the area of foreign investment in Qatar. Under this law, non-Qataris are allowed to engage in trade, industry, agriculture and services under the condition that the non-Qatari investor must have one or more Qatari partners whose share in the business capital is at least 51 percent and that the business relationship with the Qatari partner must be carried on through a commercial company incorporated according to the Companies Law No.11 of 1986 (see section on Business Forms and Structures). The law does not permit non-Qataris to own shares in a joint stock company unless the shareholder is a national of an Arab country which has reciprocal agreements with Qatar or if there is a need for foreign capital or experience, and a license to that effect is obtained from the Minister of Finance, Economy and Commerce. Non-Qataris meeting the above requirements may also carry on contracting business upon the fulfillment of additional conditions. A special license from the Minister of Finance, Economy and Commerce must be issued following consultation with relevant government authorities. This requires an application to be made to the Minister supported by all relevant documents. If thirty days elapse without a reply from the Minister, the application is presumed to have been rejected. Applicants whose applications were rejected may appeal to the Minister within thirty days. The decision in the appeal is final. In determining applications, one of the factors considered is the demand for the type of business for which an application is made. Businesses engaging in fields for which there is a high demand in Qatar include businesses with high technology expertise. In 1997, Qatar finalized legislation to abolish the requirement of 51 percent Qatari ownership. This step is aimed at attracting foreign investment in small and medium scale businesses. The new legislation will come into force pending the Emir's approval.


Why Invest in Qatar?

While the Law Regulating the Investment of Non-Qatari Capital specifically denies the right of non-Qataris to engage in commercial agencies and import businesses, investment by non-Qataris in any project and field which aims at enhancing economic development in the countries, or to facilitate public services, or to realize a public benefit, may be made under an Emiri Decree. Such Emiri Decrees may also allow non-Qataris to import materials and equipment required for such projects if unavailable locally. Applications supported by documents for issuing Emiri Decrees are made to the Minister of Finance, Economy and Commerce. If the application is approved, the Emiri Decree will be issued within sixty days "See How SCS can help your company to obtain the Emiri Decree".

Commercial Agency

The Law 4/1986 Concerning the Regulation of Activities of Local Commercial Agencies and their Foreign Principals includes Guidelines for Execution, which were re-issued in 1994 by the Ministry of Finance, Economy and Commerce. This law provides that the commercial agent is permitted to distribute and sell the goods or to provide certain services in return for profit commission. The principal has no right to be supported by more than one agent for the same commercial business included in the agency. An agent is not allowed to practice the commercial agency on behalf of a principal who has another agent in the same area running the same business. Compensation for any damage that may be caused by isolation or termination in critical time without a justified reason is compulsory. An unlimited contract may not be terminated by any of the chartered parties, unless one of them commits a malpractice justifying termination. All commercial agency relationships must be registered, and the principal may withdraw at the end of a fixed period upon the execution of a new termination agreement or with the Ministry's approval.

Banking

Central Bank

The Qatar Central Bank was established in 1973 as the Qatar Monetary Agency. In addition to supervising, coordinating and controlling the banking sector, the QCB also regulates insurance and controls the circulation of currency. The QCB sets interest rates for deposits and credit facilities maintained in QR.

Commercial Banks

There are more than a dozen commercial banks operating in Qatar. A banking license may be issued to a banking entity whose paid-up capital is at least QR 5 million. If the banking entity is a foreign subsidiary, it must maintain that amount of retained or operational capital in Qatar. Banking entities are required to retain a reserve of 100 percent of their paid-up or operational capital in Qatar. Deposits and credit facilities in foreign currency are subject to variable interest rates determined by the banks in accordance with prevailing market terms.

Taxation:

The Income Tax Law of Qatar, Law No. 11/1993, imposes income tax on the taxpayer (natural persons and corporate bodies) arising from activities in Qatar, including profits from any contract executed in Qatar, profits realized from the sale of any asset of an establishment, agency commissions, regardless of whether the contract with respect to which a commission is due is executed inside or outside of Qatar, consultation fees, amounts from the sale, rent or concession of intellectual property rights, bad debts which are collected by the taxpayer and net profits upon dissolution of a company.

Taxable income is determined after allowable deductions are made for interest payments, rentals, salaries and bonuses, taxes and fees (other than income tax), depreciation, losses from the sale of assets and humanitarian or scientific donations.

Revenues relating to projects in Qatar, even if executed outside of Qatar, are declared for Qatari tax purposes. Evidence that the work was implemented outside of Qatar is necessary to avoid tax liability with respect to the profits of the project.

Salaries, wages, personal bank interest and other forms of personal income are not subject to tax.

Tax is calculated on a progressive scale rising to a maximum rate of 35 percent on taxable income above QR 5 million. The tax rates are as follows:

Amount                               of Income                             

Tax Rate

Less than QR 100,000

exempt

QR 100,001 to QR 500,000

10%

QR 500,001 to QR 1,000,000

15%

QR 1,000,001 to QR 1,500,000

20%

QR 1,500,001 to QR 2,500,000

25%

QR 2,500,001 to QR 5,000,000

30%

QR 5,000,001 and above

35%


Qatar's oil is produced from both onshore and offshore fields.

ONSHORE
The largest reserves of crude oil are to be found onshore, at the Dukhan field. 49% of Qatar's crude oil currently comes from this source, which is operated solely by QP. Production began here in 1949 and the present processing facilities - separation of crude oil, gas and water - can handle up to 280,000 b/d of oil, 310 MBPD of gross liquid and 260 million standard cubic feet (MMSCFD) per day of gas. Dukhan reserves are estimated at about 2.2 billion barrels.
Dukhan crude, along with separated dry gas and raw condensate/NGLs is pumped via pipeline to Messai'eed. The crude oil is exported from there, while the gas is further processed to produce stabilised condensate and NGLs (for example propane, butane etc.).

Dukhan also produces non-associated gas from its Khuff reservoir, which is used as both feedstock and fuel.

QP is making every effort to maximise production at Dukhan, both through new discoveries of oil and gas, and through enhanced recovery techniques of existing supplies. Investment in new processing plants will augment both associated and non-associated gas production, which, in turn will assist in oil recovery procedures. Dukhan crude oil has an API of 41 degrees.

OFFSHORE
Oil was first produced offshore in 1964. Most of Qatar's offshore oil (which, prior to quota impositions achieved production levels of around 291,000 b/d) is located to the East of the Peninsula, although Western waters are in the process of being explored. The area is divided into various fields, some of which are wholly operated by QP, while others are operated by a consortium of QP and foreign partners, via Production Sharing Agreements.

The main fields are:

  • Maydan Mazham operated by QP
  • Bul Hanine operated by QP
  • Idd Al Sharqi operated by Occidental Petroleum
  • Al-Shaheen operated by Maersk Oil
  • Al-Rayyan operated by a consortium headed by Arco /Wintershall

Al-Khaleej operated by Elf Petroleum/Agip

Production sharing agreements have also been signed with Penzoil and more recently with Chevron/MOL for exploration and development of further blocks within territorial waters.

All the offshore fields have the capacity to increase their production substantially, due to improved technology and drilling methods and should contribute significantly to the oil production goal of 700,000 bpd by the year 2000, provided that current restrictions are no longer in force. Oil from the offshore fields is mostly piped to Halul island for storage and export. The oil exported is of high quality, with a blend API of about 34 degrees and a sulphur content of 1.54 percent.

Natural Gas:

Onshore natural gas production dates back to 1963, when it was used as fuel for power generation. This production expanded with the establishment of three Natural Gas Liquids plants, which deal with both on and offshore associated gas. NGL-1,2 & 3 in Messai'eed produce methane-rich gas, ethane-rich gas, propane, butane and condensate.

THE NORTH GAS FIELD
In 1971, an exploration team discovered, lying just offshore to the North East of the peninsular landmass of Qatar, what is considered to be the largest single gas reservoir in the world. Experts have estimated that the recoverable reserves are in the range of 380 trillion cubic feet (TCF) and total gas in place exceeds 500 TCF. The development, utilisation and export of these massive reserves has become a primary national goal and the cornerstone of much of Qatar's projected economic revenue.
Initially, the gas was exploited wholly by QP for local consumption, and facilities have been in place for extraction and processing since 1991. However, with a view to significantly increasing production and concentrating on export markets, QP entered into partnerships with overseas companies, forming two Qatari joint stock companies - Qatargas, formed in 1984 and RasGas formed in 1993.
Qatargas operates an offshore area of around 100 sq. kilometres and produces 1200 MMSCFD. The upstream facilities supply the downstream liquefaction plant and are run by a consortium via a Development and Production Sharing Agreement. A three-train, 6 mtpa LNG plant at the new industrial city of Ras Laffan processes the gas and condensates produced by the North Field. Additonally, Qatargas operates 10 LNG carriers, with a capacity of 135,00 cubic meters each, to export LNG from Ras Laffan.