Qatars policy of economic diversification has led to a surge in investment in projects for the export of LNG and petrochemicals. Qatars real gross domestic product (GDP) is projected to increase 6.6 percent in 2006, after growth of 6.3 percent in 2005. High oil prices, combined with rising sales of liquefied natural gas (LNG), have led to an economic boom in Qatar. Qatars oil production rose slightly in 2005, reaching 1,087,000 barrels per day. Qatar has proven recoverable oil reserves of 15.2 billion barrels. The onshore Dukhan field, located along the west coast of the peninsula, is the country largest producing oilfield. Qatar also has six offshore fields, Bul Hanine, Maydan Mahzam, Id al-Shargi North Dome, al-Shaheen, al-Rayyan, and al-Khalij. The improved terms are designed to encourage foreign oil companies to improve oil recovery in producing fields and to explore for new oil deposits. Qatar Petroleum and Cosmo Oil concluded a contract in October 2003 for the development of two small offshore oil deposits, Al-Karkara and A-North. Production from seven wells, four in Al-Karkara and three in A-North, began in 2005, and currently is about 10,000 bbl/d. In November 1997, Chevron Phillips Chemical Company signed a $1.1 billion deal with Qatar Petroleum to build a petrochemical plant, Q-Chem, which was completed in 2002. With the worlds third-largest natural gas reserves, Qatar has become a major exporter. With proven reserves of 910 trillion cubic feet (Tcf), Qatars natural gas resources rank third in size behind Russias and Irans. Qatar has two liquefied natural gas (LNG) exporters: Qatar LNG Company (Qatargas); and Ras Laffan LNG Company (Rasgas). The two major shareholders in the project are Qatar Petroleum and ExxonMobil.
In the economic sphere, Qatar has suffered from many of the same problems as other oil-dependent Persian Gulf states, especially the need to diversify economic development beyond crude oil exports and scale back the generous state subsidies for consumers. However, due to new revenue streams from rapidly increasing exports of liquefied natural gas (LNG), as well as its very small population, Qatar has not experienced the erosion of per capita gross domestic product (GDP) that has been seen in Saudi Arabia and some other Persian Gulf oil exporters in recent years. Qatars real gross domestic product (GDP) is projected to increase 6.6 percent in 2006, after growth of 6.3 percent in 2005. Inflation in Qatar has accelerated somewhat in recent years, and reached 8.2 percent in 2005, driven in large part by rapid increases in rental values for housing and commercial real estate. Inflation is forecast to fall to 4.8 percent in 2006. Qatars policy of economic diversification has led to a surge in investment in projects for the export of LNG and petrochemicals. The government expects that it will be able to earn more per barrel of crude oil produced if it can export refined products and petrochemicals, as well as create private sector jobs - in a country which has been heavily dependent on government ministries to provide employment for the population. Qatar has a relatively large foreign debt is being rapidly paid off as oil and LNG export revenues rise. Qatar accumulated this debt largely for infrastructure investment in to expand oil production capacity, build LNG export terminals, and build additional petrochemical plants. Qatar is expected to post a large budget surplus for the 2005/2006 fiscal year, which will end in March 2006. Government budget allocations for the 2005-2006 fiscal year increased by 17 percent, continuing a policy of spending heavily on infrastructure development. Surging oil and natural gas export revenues have enable Qatar to maintain a significant budget surplus despite the sharply increased spending.