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Hamad Port

Qatar now pays 10 times as much money to import food and medicine into the country due to the blockade, the state’s foreign minister has said.

Speaking in London this week, Sheikh Mohammed bin Abdulrahman Al Thani added that the government has been footing the bill to keep “extra costs” down for residents.

This is because “Qatar has the resources to do that,” he said while speaking about the Gulf crisis at the Royal Institute of International Affairs (Chatham House).

Chatham House

Qatar’s Foreign Minister speaking at Chatham House in London, July 5 2017

According to Al Thani:

“Qatar is paying 10 times extra costs for shipping, from government funds because there are funds available for that. But if Qatar was not in the same level of income, it wouldn’t be able to cover the needs of its own people for medicine and food.”

Protracted conflict

It’s been more than a month since Saudi Arabia, Bahrain and the UAE cut economic ties with Qatar for political reasons.

The conflict shows no sign of ending, and the US State Department even warned yesterday that escalation was imminent.

Financially speaking, this is not great news for Qatar, which before the crisis had been slashing budgets amid lower global oil prices.

But the country has the highest Gross Domestic Product per capita in the world ($127,660).

Mohammed Zuber Shaikh/Flickr

Photo for illustrative purposes only.

And some analysts have said Qatar is likely to be able to ride out an economic embargo from its neighbors for months or even years.

Qataris are certainly confident of this. Yesterday, Reuters quoted a local banker as saying, “The only thing that can really hurt us is if they block the gas exports, but then you provoke a crisis in the world.”

The unnamed official added:

“The economy will suffer, but not to the point that we Qataris will suffer. Instead of having five maids at home, we’ll have three.”

QNA

For illustrative purposes only.

Qatar’s ability to hold out for a long time is a view shared by Michael Stephens, head of the Qatar chapter of the Royal United Services Institute for Defense and Security Studies.

However, he also told Doha News that the conflict is continuing to harm the whole region.

“This isn’t a win-lose scenario in my view,” he said. Rather, “the entire Gulf suffers from a lack of confidence in stability. This notion that Dubai and Saudi are unaffected is people putting their heads in the sand.”

Lost confidence

Qatar isn’t escaping from the dispute unscathed, either.

This week, ratings agency Moody’s cut Qatar’s credit outlook from “stable” to “negative” over concerns about a protracted Gulf dispute.

However, it did maintain Qatar’s high long-term issuer rating of Aa3.

Omar Chatriwala / Doha News

Photo for illustrative purposes only.

In a statement, Moody’s explained:

“The likelihood of a prolonged period of uncertainty extending into 2018 has increased and a quick resolution of the dispute is unlikely over the next few months, which carries the risk that Qatar’s sovereign credit fundamentals could be negatively affected.”

Last month, Qatar’s long-term rating was lowered by S&P Global Ratings and put on negative watch. And Fitch Ratings said it was also considering cutting the country’s score.

The uncertainty of the economic impact on Qatar has also prompted some banks and currency exchanges abroad to stop buying Qatari riyals in recent weeks.

Reem Saad / Doha News

Photo for illustrative purposes only.

Other areas that Qatar could be hurt by the blockade include a loss of tourism from its usual Gulf visitors.

Travel restrictions are also affecting the profitability of Qatar Airways, as well as businesses such as international consultancies.

“Moody’s thinks that a prolonged period of uncertainty will negatively affect business and foreign investor sentiment and could also weigh on the government’s long-term diversification plans to position the country as a hub for air traffic, tourism, medical services, education, and sports through a higher risk perception among foreign investors,” the agency said.

However, Qatar’s position is helped by its high level of wealth and assets, as well as its extensive hydrocarbon resources.

Thoughts?

QP/Facebook

Photo for illustrative purposes only.

Qatar Petroleum (QP) will ramp up production at the world’s biggest gas field by 30 percent to 100 million tons per year, it announced this morning.

Production facilities will be doubled at Qatar’s section of the North Field, which it shares with Iran, reporters were told at a news conference.

By 2024, output levels will increase by the equivalent of 1 million barrels of oil a day. Once increased, production would be equivalent to 6 million barrels a day.

The new targets will be a significant expansion from the 77 million tons per year Qatar currently produces at the site.

In a statement, Saad Sherida Al Kaabi, QP’s President and chief executive, said:

“This new project will strengthen Qatar’s leading position. We will remain the leader of LNG for a very long time…

The planned production increase will also contribute to monetizing Qatar’s resources and to stimulating the domestic economy as well as the country’s overall development.”

Gulf crisis

Al Kaabi reportedly said he hoped the development expansion would happen through a joint venture with an international company.

But boycotting nations have warned further economic sanctions on Doha that could include making international firms choose between them and Qatar.

Qatar Petroleum

Saad Sherida al Kaabi, QP President and CEO

However, Al Kaabi maintained Qatar could undertake the project alone if other states do not collaborate, AFP reports.

“If there are no companies willing to work with us, we will do the 100 million tons,” he said.

Qatar is the world’s top exporter of liquefied natural gas.

Today’s announcement comes amid an escalating dispute led by Saudi Arabia, the UAE, Bahrain and Egypt.

QNA

For illustrative purposes only.

Those countries have served Qatar a list of 13 demands, including closing Al Jazeera and ending diplomatic ties with Iran.

They say Qatar must agree to meet these conditions before they lift the economic blockade, which began a month ago.

And the announcement has further strengthened local support for Qatar.

North Field development

The North Field was discovered in 1971, and is known as South Pars in Iran.

Spanning an area of 6,000 square km – half the size of Qatar – it has 900 trillion standard cubic feet of recoverable gas, making it part of the world’s largest non-associated natural gas field.

RasGas

Photo for illustrative purposes only.

The announcement to expand comes just three months after Qatar ended its 12-year, self-imposed moratorium on development of the North Field. It is currently the source for the majority of Qatar’s gas exports.

At the time, Al-Kaabi discussed ramping up production 10 percent, Reuters reported.

The uplift in production was to meet projected increased demand for gas, he had added.

New Iran-China deal

Meanwhile, since the end of economic sanctions, Iran has already made clear its intentions to develop production in its section of the field.

Last November, it signed a preliminary agreement with French energy company Total to increase production.

Hamed Malekpour/Wikicommons

South Pars facilities

And yesterday, details of the deal were revealed. Total will be the developer, with a 50.1 percent stake, while the Chinese national energy company CNPC will take a 30 percent share.

Iranian National Oil Company subsidiary Petropars will hold the remaining 19.9 percent, Reuters reported.

Thoughts?

Neha Rashid / Doha News

Photo for illustrative purposes only.

US dollars are in short supply at many foreign exchange houses in Qatar, due to increased customer demand and disrupted shipments, employees said.

Last week, the UAE, Saudi Arabia and Bahrain severed diplomatic ties with Qatar and closed their air, land and sea borders with the neighboring peninsula state.

The uncertainty over the situation has spurred some residents to exchange their riyals for US dollars in recent days.

Doha News

No dollars at currency exchange in Doha’s Landmark Mall

This, combined with disrupted transportation to Qatar, has left some currency exchange centers with little or no stock of USD.

To mitigate the problem, some houses are imposing limits on the amount of dollars individuals can exchange.

No cause for concern

The run on US dollars appears to have been a knee-jerk reaction by some residents to the past week’s events.

Omar Chatriwala / Doha News

Photo for illustrative purposes only.

However, Qatar’s Riyal has been pegged at around 3.64 to the dollar for years and analysts say this is unlikely to change.

Even if the situation deteriorates, Qatar can use its massive reserves of foreign assets to support their currency.

Additionally, Qatar’s Finance Minister said in an interview with CNBC yesterday that there is no reason for concern, and that he was “extremely comfortable” with the country’s economic position.

Out of stock

Doha News spoke to 11 branches of seven different exchange companies across the city about their stock of US currency this week.

Seven outlets had no dollars, including Trust Exchange in Al Messila, Al Jazeera Exchange in Al Sadd and in Bin Mahmoud, and the City Exchange in Bin Mahmoud.

Al Mana Exchange in Al Muntazah was also out of all currency, a staffer told Doha News.

photosteve101/Flickr

Photo for illustrative purposes only.

“We have no stock, and we’re not getting anything tomorrow. There’s no availability in the market,” he said.

Meanwhile, long queues could be seen this week outside the Landmark Mall branch of Al Dar Exchange Works, as residents sought to send money to families back home.

This is not unusual given summer and Eid holidays are when many people travel.

But one of the booths had posted a sign advising customer that it had no dollars for exchange.

In comparison, all the exchanges had a good supply of Euros and UK pounds. And there were no limits for customers exchanging to these currencies, staff said.

Limited transactions

Three exchanges said they had small amounts and were limiting customers to between $500 and $2,000 per person. Just one said it had an adequate supply of dollars.

Neha Rashid / Doha News

Photo for illustrative purposes only.

Al Zaman Exchange in Al Mamoura had a limited supply of dollars, and customers were only allowed up to $500 per person, a dealer there said.

Meanwhile, a staffer at the Qatar-UAE Exchange in City Center mall said they were limiting customers to $2,000 per person.

“Lots of people have come in recently wanting dollars – they’re taking all our stock,” the dealer said.

The Qatar-UAE Exchange branch on Airport Road also had a small supply, and was imposing a $1,000 limit per customer.

“You should come early, as we will run out, and we don’t know when we will get more in. Maybe tomorrow, Insha’Allah (God-willing),” an employee said.

The Dar Al Salam mall branch of the same exchange company had no dollars and an employee there said they did not know when they might get more.

Patrick Gage/Flickr

Photo for illustrative purposes only.

Speaking to Reuters this week, the president of UAE Exchange, which has 10 branches in Qatar, said that his firm hadn’t seen any major change in remittance volumes due to diplomatic tensions.

However, Sudhir Kumar Shetty added that the dollar supply was not meeting demand in Qatar, partly due to flows of the US currency from other Gulf countries being disrupted.

“Everywhere, all the banks and exchange houses, there are no dollars. All the exchange houses are trying to get currencies from other countries,” he said, adding that his firm was hoping for a shipment from Hong Kong.

No limits

Notably, the shortage does not appear to have affected all exchange houses.

Residents who need to stock up on dollars ahead of their summer travels may have better luck waiting until they arrive at the airport.

Hamad International Airport

Sanjiban Ghosh/Flickr

Hamad International Airport

Travelex branches airside and landside at Hamad International Airport (HIA) had dollars in stock.

And they are not imposing any exchange limits on customers, an employee told Doha News.

Have you had any trouble changing your money? Thoughts?

Note: Stock levels at money houses change frequently and residents who wish to change currency should call ahead to confirm availability.