Qatar: the gas ’empire’ and its role as mediator are in crisis

After the attacks of United States e Israel against theIranthe emir of Qatar he spoke twice with Donald Trump to plead the cause of diplomacywarning against the “dangerous escalation“. This was revealed by the Financial Times, according to which this is the natural reaction of a State that has carved out a role of mediator in conflictsincluding those between Washington and Tehran. And what thanks to gas exports has gone from near bankruptcy more than thirty years ago to becoming one of the richest nations in the world.

However yesterday theIranin retaliation for the Israeli bombing of the South Pars power plant, its main one gas fieldinflicted serious damage on Ras Laffan facilitiesthe largest plant in liquefied natural gas of the world and lifeblood of Qatar’s economy. “It’s one huge setback: the worst nightmare for the Qatar” said Mehran Kamrava, a political science professor at Georgetown University’s Doha campus. “The damage is not just economic. From the point of view economic and industrialil Qatar can recover. The most important issue concerns the image of the country as safe haven e growth engine“.

The damage to Ras Laffan deposit will take three to five years to repair and will affect plants that produce 17% of the LNG export capacity of the state company QatarEnergydeclared the energy minister of QatarSaad al-Kaabi. This will have repercussions on supply markets in Europe and Asia and it will result in a loss of revenue of about $20 billion a year, he added. “This is huge negative shock to the systemwith far-reaching implications that will continue for a long time,” said Tarik Yousef, senior researcher at the Doha-based Middle East Council on Global Affairs.

Impact on operations and development plans

QatarEnergythe second global LNG producerhad already suspended operations after a drone attack a Ras Laffan in the first days of the war. Farouk Soussa, economist for the Middle East and North Africa of Goldman Sachs, said it expects the Qatar represents about half of the 12 billion dollars of total losses suffered by the six Gulf countries during the war. In practice it is a blow to the heart which will put a strain on i development plans of the emirate. Before the start of the war, Doha was preparing for a huge economic boom arising from aexpansion of production of his North Fieldthe largest gas field in the world, worth 30 billion dollars. This would have brought the Qatar’s production capacity to 126 million tonnes per year by 2027, equivalent to approximately 30% of global demand for LNG in 2024. In anticipation of these revenues, the Qatar Investment Authorityil sovereign fund of $550 billion and the main beneficiary of gas revenues, has initiated a massive hiring campaignalmost doubling its staff in the last five years. It predicted that assets under management could double in five years and was preparing to close larger deals entity and more frequently. But now all this risks falling apart. Even before this week’s attack, Minister Kaabi told the Financial Times that theexpansion of the LNG project would have been delayed due to the conflict.

The historical role of LNG and future challenges

Il LNG it was the fundamental pillar of the State since the Qatar he bet on the development of his team gas fields more than thirty years ago, when the country was heavily in debt. Others were skeptical: BP pulled out of the project in the 1990s because it feared it would never generate decent profits. But the Qatar he persevered, using his wealth to build a modern metropolis and become one of the more active investors to the world. In 2022 he proved the skeptics wrong by successfully hosting the Football World Cupandexpansion of the gas sector should lay the foundation for its next phase of development. Over the years, Doha has accumulated significant financial reserves per manage crises and if the suspension of production was relatively short, the high gas prices could help offset the revenue losses. But the longer the war lasts, the moreIran closes it Strait of Hormuzthe more difficult it becomes. In practice, if stop production lasted for a long time, to counteract the effects of decline in revenueDoha should o drastically reduce spendingwhich would slow down theinternal economic activityor finance the gap by drawing on its reserves. This could bring the Qatar a liquidate assets abroad and to repatriate the proceeds.

The mediation strategy and new vulnerabilities

After theSaudi Arabia they United Arab Emirates they imposed a regional embargo al Qatar in 2017, partly because of his relations with Iranwith which Doha has better relations than most Arab states, the QIA has repatriated over $20 billion in deposits for stabilize its finances. The frustration of the leaders of the Qatar derives from the fact that, fromHamas attack against Israel of 7 October 2023, Doha was one driving force in efforts to end the cycles of conflict in the region. “It’s about the more serious setback probably suffered in the last 30 years. They have overcome the lockdown with some success, but this represents a severe blow to physical infrastructure“, said Kristian Coates Ulrichsen, expert on Middle East from Rice University in Texas. “What happened represents the worst case scenario for Qatar and what years of mediation they had tried hard to avoid”. The small State, which has long been aware of its own vulnerabilityhas developed a defense strategy based on the maintenance of what Qatari officials define balanced relationships. At the same time, he carved out a role of mediator to ensure its relevance towards the United States and of European powers: the trusted interlocutor willing to talk to everyone, from Hamas ai Taliban up to Venezuela Nicolas Maduro. But over the last year he has realized that this, and his relationship with Washingtonthey were not one safety guarantee.