Upcoming FIFA World Cup
In just over 2 weeks, Qatar will host the biggest sporting event in the world, the FIFA World Cup, a tournament that brings all eyes to its host country. This unique event, to an even greater extent than purely economically aimed events like the Expo, has the potential to stimulate the host country’s economy by inviting investments, tourism and expansion of trade, as well as expanding the country brand worldwide.
For the first time ever, the Middle East will host the World Cup. Qatar will also be the first Muslim dominated country to host the FIFA World Cup.
The records have been set since Qatar won the hosting rights. Qatar will be the smallest nation to host the FIFA World Cup – both geographically and population wise. Qatar is a small country of 11,000 square kilometres. Uruguay during the 1930 FIFA World Cup had a population of around 3.5 million. Qatar with a population of 2.6 million will replace Uruguay in the record books.
One of the most discussed facts of the 2022 FIFA World Cup is that Qatar will be hosting the most expensive world cup ever. Qatar lacked the infrastructure and facilities that many European countries possessed and had to build many things from scratch. It is estimated that infrastructure which includes stadiums, hotels, roads has cost Qatar over $220 billion US dollars. But Qataris expect this investment to pay off in the long term.
As reported by fifaworldcupmania.com, the 2022 world cup will see a record number of visitors by the time the world cup comes to an end. It is expected that over 1.5 million spectators from all over the world will enter Qatar during the FIFA World cup. Qatar’s geographical location is very accessible for many countries. Moreover, getting Visa is also easy compared to others. The cheap flight tickets are icing on cake.
Qatar’s gross domestic product in the first half of this year alone spiked by 4.3% coupled with a 7.3% growth rate of the non-oil sector, in comparison to the same period in 2021, said Qatar’s Amir Sheikh Tamim bin Hamad Al Thani at this year’s opening session of the Shura Council.
“The hike in energy prices turned a projected budget deficit at the beginning of the year into a surplus of QAR 47.3 billion in the first half of the year,” said the amir.
The multi-billion dollar North Field expansion project, the largest of its kind, is set to further contribute to Qatar’s economic growth, placing it as the leader of liquified natural gas (LNG) production on a global scale.
The project is expected to increase Qatar’s LNG production capacity to 126 million tonnes per annum by 2027.
“The North Field expansion project is one of the most important strategic projects that support our economy and the State’s public finance in the long term,” said the amir.
Qatar’s annual inflation rate reached 4.6% in the first half of the year, which the amir said is lower than global figures thanks to necessary measures taken by the Gulf state to reduce it.
“Qatar has also occupied an advanced global position at the food security level, as a result of implementing the national strategy for food security through several strategic productive projects,” said Sheikh Tamim.
The Gulf state has also worked on encouraging investors in all of its sectors by amending legislation to remove obstacles that hinder investments.
“The state is also working on amending the legislation regulating foreign investment to remove the obstacles facing that investment, projecting Qatar at the international level as an incubator for direct international investment and improving the investment environment,” said the leader.
State-owned QatarEnergy is in talks with the Lebanese government to take a 30% stake in an offshore exploration block and is also negotiating with TotalEnergies (TTEF.PA) and ENI (ENI.MI)on this matter, CEO Saad al-Kaabi confirmed on Sunday.
Two sources told Reuters last week that TotalEnergies and the Lebanese government have reached a deal handing the French oil major temporary majority control of the block and paving the way for negotiations with Qatar over a stake in the gas project.
Offshore areas in the eastern Mediterranean and Levant have yielded major gas discoveries in the past decade. Qatar is expanding upon a field where it has succeeded in recent months, especially following the outbreak of the Russia-Ukraine war, natural gas.
With a proven resource of 23.8 trillion cubic meters, Qatar has the second-largest gas reserve in the world behind Russia making it a major player in the global gas market. With a production of 171 billion cubic meters, it ranks fourth in the globe behind China, Russia, and the United States. Among the nations that export hydrocarbons in the Middle East and North Africa, Qatar takes the lead.
Despite currently occupying a leading position, all studies and analysis indicate that Qatar continues to have a significant potential for growth in the energy markets. Qatar will be the top gas producer and exporter internationally by 2026 as a consequence of its efforts to increase its own production rate, according to a report by the International Gas Union’s Global LNG.
Europe’s interest in Qatar is growing as it fights a protracted energy battle with Vladimir Putin. In order to compel European countries into giving up their financial and military backing for Ukraine against Russia’s invasion, Moscow is curtailing natural gas supplies to Europe.
While the conflict in Ukraine continues on the ground, the European Union is continuing to hold its ground and is actively working on reducing its dependency on Russian natural gas before the oncoming winter. This makes Qatar the obvious counterbalance to Russia’s monopoly on the natural gas supply to Europe.
As winter approaches, Qatar is most likely able to make up for the gap in gas imports since it supplied 21% of Europe’s energy demands last year, ascending to the position of the continent’s second-largest gas provider. In order to make up for the decline in Russian gas, which provided 18% of Europe’s yearly gas needs in 2021, additional Qatari liquefied natural gas is expected to be supplied.
Previously, the cheaper Russian gas that entered through direct pipelines was able to compete with the LNG exported from Qatar and the United States to Europe. Despite the high cost of shipment, LNG imports remain a viable option given the current energy crisis and Europe’s urgent need for gas before the winter.
The aforementioned factors prompted European countries to continue collaborating with Qatar on energy sector developments. Recently, France’s Total Energy signed a cooperation agreement with Qatar Energy for 1.5 billion dollars, making it the largest stakeholder and granting it 9.3% of Qatar’s North Field. Additionally, Total Energy resumed investing in the Qatari market by acquiring 6.25% of the North Field in a $2 billion deal.
The EU was also undertaking similar actions. To improve diplomatic ties between the EU and Qatar, its delegation offices were inaugurated in Doha in September. This allowed the EU to designate a chief of mission and an ambassador in the country with the intention of developing long-term strategic agreements with the government of Qatar. On the sidelines of the inauguration mission Charles Michel, President of the European Council, explained the relationship between this effort and the difficulties in the energy sectors as well as the desire of European authorities to explore this issue further.
Will the World Cup transform Qatar’s economy?
Many experts believe that the FIFA World Cup will act as an important pillar in Qatar welcoming a new era in its economy through economic diversification.
Commercial Bank in association with Euromoney organised a virtual event entitled ‘Qatar: Outlook and Opportunities Before and After FIFA World Cup Qatar 2022’ which shed light on Qatar’s macro-outlook – gas, tourism, finance, investment; what FIFA World Cup 2022 will mean for Qatar – economy, image, investment; and the legacy of World Cup 2022 – post event strategy and opportunity. Richard Banks, Senior Adviser, Euromoney moderated the event.
Dr Leonie Lethbridge, EGM, Chief Operating Officer at Commercial Bank said: “In terms of the World Cup it is a culmination of 12 years of activity since the bid was won in 2010 and more than $200bn has been spent on the infrastructure. The independent assessments would say that the infrastructure is world class that has created huge benefits for the economy in terms of ability to diversify and in underpinning long term sustainable growth. Also, this year there has been immediate hike in terms of benefits across many sectors such as financial services, real estate, and tourism. I think the multiplier effect across multiple sectors of the economy is very powerful.
“Qatar’s economy is very well managed which also manifested during the peak of COVID-19 when the country remained open which was remarkable. The supply chain disruptions that other countries faced were not experienced here. The growth is quite strong and projected to remain strong,” she added.
Speaking about the real estate market and its development, Basil Bachos, Residential Sales Director for United Development Company (UDC) noted that Qatar has a very strong local economy in regard to expansion, and oil and gas. “We in UDC being one of the leading development companies are specialised in the premium properties and we have seen that this has been extremely stable irrespective of all the challenges. The real estate has proven to be very effective, and the effect of FIFA has been direct on real estate. Based on our numbers we have reached an all-high occupancy rate this year, we are currently at 96 percent occupancy. It is the year of leasing; sales have been going in a very smooth way, but we can see the big influx”.
He also reiterated that hosting the World Cup gives Qatar the stand to be recognised globally and the legacy that it will leave behind for Qatar is to become the epicentre of tourism and business post-World Cup. “FIFA will be the best way to showcase the infrastructure to the world and this will attract a lot of people about what the country has to offer. In terms of the investment, Qatar is one of the safest places in the world. We are expecting to see a lot of the FDIs coming in through the government initiatives,” Bachos added.
Current figures and projections show that Qatar will almost certainly enter a new, more diversified and stable phase of its economy in the coming years as a result of the World Cup, which will also have geopolitical significance, as Qatar’s already important role formed as a mediator and strategic ally of several regional allies, will only strengthen and expand with this economic boost and transformation.