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Qatar in Transition: the "Most Treacherous World Cup"​

Updated: Dec 5, 2022

World Cup 2022 kicked off on November 21; this world-renowned international competition is in full swing. As the first and largest soccer gala after COVID-19, the game has attracted millions of soccer fans and tourists worldwide. As the hosting country of the World Cup 2022, Qatar is a traditional energy-based country. What kind of transition is it currently making?

Qatar, a country rich in natural resources

Qatar, home to 3 million people, has spent over $200 billion on improvements across this energy-rich country. Although Qatar has a small land area of about 11,521 square kilometers, it is rich in oil and gas resources, contributing 1/3 of the country's GDP in recent years.

According to Statista, in 2021, natural gas production in Qatar amounted to around 177 billion cubic meters. Qatar's natural gas reserves are one of the largest in the world, after Russia and Iran. Most of its reserves are located in the offshore North Field, shared with Iran, a part of the largest natural gas field in the world.

It is necessary to mention that the local heavyweight enterprise - QatarEnergy

QatarEnergy, formerly known as Qatar Petroleum Company, was founded in 1974 and is a state-owned energy company. According to the official website, QatarEnergy covers all aspects of the oil and gas value chain as a fully integrated energy company - from exploration to production, from processing and refining to sales and delivery. Qatar Energy Minister Saad Sherida al-Kaabi, the company's president and CEO, said that QatarEnergy would become the world's largest LNG trader within the next five to ten years.

On November 21, Sinopec and QatarEnergy Company signed a 27-year long-term purchase and sale agreement for liquefied natural gas (LNG). QatarEnergy will supply 4 million tons of LNG to Sinopec every year. It is reported that this is the second long-term LNG purchase and sale agreement signed between Sinopec and QatarEnergy.

Qatar, a country in transition

Oil and gas resources and trade have stabilized the country's economy for a long time. "However, with the development of low-carbon strategies in various countries, the world's energy structure has begun to adjust from traditional energy to new energy. Qatar is also undergoing an economic transformation. One is new energy, and the other is the entertainment economy. From these two aspects, the World Cup can inject new engine power into it.” said Wei Xiang, a researcher and professor at the Institute of Financial and Economic Strategy, Chinese Academy of Social Sciences.

"Qatar's National Vision 2030" clearly states that so far, Qatar's progress has mainly relied on exploiting oil and natural gas resources. Still, oil and gas resources will eventually be exhausted, and it proposed to achieve a balance between development needs and environmental protection.

Qatar launched its first non-fossil fuel power plant project as part of this vision. This Al-Kharsaah Solar P.V. Power Plant project officially went into operation in October this year. This World Cup also has low-carbon elements. For example, the 974 Stadium is constructed with detachable materials such as containers; several new energy buses have also been introduced in transportation operations.

"Great" investment

This World Cup is called the Most Treacherous World Cup; on December 2, 2010, the president of FIFA announced the voting results in Zurich, Switzerland. After fierce competition, Qatar finally won the right to host the World Cup.

This event has several unique features, including the first time held in the northern hemisphere winter, the first FIFA World Cup held in the Middle East and the Arab region, and the most compact event in history. Watch multiple matches; also, six female referees were introduced, including three primary and three assistant referees.

Under the halo of multiple "firsts", Qatar has invested tremendous money in preparation for the World Cup. Regarding the issue of investment funds, the organizing committee and the Qatari government have yet to disclose precise data, and the widely reported investment amount is more than 220 billion U.S. dollars.

The 2022 FIFA World Cup in Qatar will be the most expensive tournament in the competition’s history after the host nation prepared for the event by spending more than 16 times the amount the previous host, Russia, invested.

According to a report by the Qatar News Agency in September, Nasser Al Khater, CEO of the Qatar World Cup Organizing Committee, said that the infrastructure and construction costs of the World Cup had reached 8 billion U.S. dollars, which is relatively close to the price of previous World Cups. The profit of the World Cup is expected to reach $17 billion or so.

The annual economic report queried at the Central Bank of Qatar shows that from 2011 to 2020, the country spent about 690.3 billion riyals on significant projects. According to the 2020 economic annual report, the estimated value of Qatar's major project expenditures in 2021 is about 72.1 billion riyals. According to local media The Peninsula, Sheikh Khalifa bin Jassim Al Thani, chairman of the Qatar Chamber of Commerce, said that major projects in 2022 will be 74 billion riyals. Based on this calculation, Qatar's significant project expenditure in the past 12 years is about 836.4 billion riyals (about 229.7 billion US dollars). However, it should also be noted that in recent years, major project expenditures are only partially equal to the funding for the World Cup.

Judging from the investment in previous World Cups, Qatar's investment can be called "proud." According to relevant statistics, from the 1994 World Cup in the United States to the 2018 World Cup in Russia, a total of about 44.3 billion U.S. dollars was spent. If calculated at 229 billion U.S. dollars, it is equivalent to five times that of the previous seven World Cups. Moreover, in 2021, Qatar's GDP will be 653.9 billion riyals (about 179.6 billion U.S. dollars), and the estimated total project investment is more than 40 billion U.S. dollars higher than last year's GDP.

From this point of view, Qatar seems to be "regardless of cost" for this undertaking. However, the so-called "regardless of cost" depends on how to measure the cost, and you can also discount the future cost to today.

According to World Bank data, Qatar's GDP (current US dollars) has been rising since the beginning of this century, reaching a peak of US$206.2 billion in 2014 and then gradually declining. The GDP in 2021 will be US$179.6 billion. From the perspective of per capita GDP (current US dollars), between 2011 and 2014, it exceeded 80,000 U.S. dollars and then showed a downward trend. It will be about 60,000 U.S. dollars in 2021, but it is still relatively "rich".

On the one hand, Qatar, like other economies, is also facing recession expectations after the epidemic outbreak. On the other hand, in recent years, Qatar has also faced pressure from a resource-dependent country to a diversified economy. Under such circumstances, hosting the World Cup boosts development confidence and economic expectations. It can also convey the achievements and ambitions of its economic transformation to the world.

What do you think of Qatar's significant investment in the WORLD CUP 2022?

Disclaimer: The source of data in this article is obtained from the internet. Monisight, an industry insightful ideas-sharing platform, will not bear any legal compliance from it.

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