Qatar’s $11bn Germany deal alarms analysts

German Chancellor Angela Merkel and the Emir of Qatar Tamim bin Hamad Al Thani at an investment forum in Berlin on Friday. (AP Photo)
Updated 07 September 2018
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Qatar’s $11bn Germany deal alarms analysts

  • One analyst said that Doha could find it difficult to fulfil the deal due to the boycott on Qatar by the Anti-Terror Quartet
  • Qatar could also saddle British taxpayers with a bill for billions of pounds by defaulting on payments for military equipment

LONDON: Doubts have been cast over a multibillion-dollar investment Qatar plans to make in Germany, with one analyst warning that Doha could struggle to fulfil its financial pledge.
Qatar said on Friday it would invest €10 billion ($11.6 billion) in Germany over the next five years, including the possible creation of a liquefied natural gas terminal, Reuters reported.
“To express our trust in the strength of the German economy and the importance of investing in it, I announce the intention of Qatar to pump investments that amount to €10 billion into the German economy in the next five years,” Qatar’s Emir Tamim bin Hamad Al-Thani was reported as saying.
One analyst said that Doha could find it difficult to fulfil the deal due to the boycott on Qatar by the Anti-Terror Quartet. Saudi Arabia, the UAE, Egypt and Bahrain have imposed sanctions on Doha over its alleged support of terror groups. Doha denies the charges.
Ghanem Nuseibeh, founder of Cornerstone Global, a management consultancy focused on the Middle East, said that Qatar is making the German investment “partly from a political standpoint.”
He added: “They will not be no-strings-attached investments and whichever Germany project they invest in, (people need) to be aware of that.”
Nuseibeh said that Qatar is known for failing to fulfil its investment pledges. “Given the financial pressure the Qatari economy is under due to the sanctions, Qatar may find it difficult to carry out whatever it has promised Germany,” he said.
“In addition, contractors working for Qatar including for FIFA 2022 are known to have faced delays in payments, and the most notable case is Carillion which has collapsed, despite senior British government intervention with the Qatari government.
“The Germans need to be very cautious about Qatari promises and be aware of serious risks that such collaboration would entail.”
News of the pledged Germany investment follows another warning over Qatari deals in Europe.
Qatar could saddle British taxpayers with a bill for billions of pounds by defaulting on payments for military equipment ordered from the UK, it emerged this week.
A leaked UK government document revealed that a deal to sell Typhoon fighter jets to Qatar will require “unprecedented” support from the British taxpayer, The Telegraph reported on Monday. Officials expressed concern that underwriting the £6 billion deal risked “billions” of government funding if Qatar defaulted on the agreement.
The documents indicated that there is concern over whether Qatar can meet its obligations,
with Qatar reportedly missing a July deadline for the first instalment.


Saudi Aramco discussing investments in India’s Reliance Industries

Updated 50 min 18 sec ago
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Saudi Aramco discussing investments in India’s Reliance Industries

  • World's biggest oil company targets petrochemicals
  • India is a top investment priority for Saudi Arabia

NEW DELHI: Saudi Aramco’s CEO Amin Nassar said on Wednesday that the company is in talks with India’s Reliance Industries for possible investments and is seeking other opportunities in the country.
Saudi Aramco signed an agreement in April with a consortium of state-owned Indian refiners to participate in a $44 billion refinery project on the country’s west coast.
“We are looking at additional investment in India so we are in discussions with other companies as well, including Reliance and others,” Nasser said in a panel discussion in New Delhi.
“We are looking at it. We are not limited to that investment which is the mega refinery,” Nasser said, referring to the west coast project, which would process 1.2 million bpd of crude and produce 18 million tons per year of petrochemicals.
Nasser is part of the entourage traveling with Saudi Arabia’s Crown Prince Mohammed bin Salman, who is in India for a one-day visit.
Reliance Industries, controlled by Asia’s richest man Mukesh Ambani, is India’s biggest refining and petrochemicals company and runs a 1.4 million barrels per day (bpd) refinery in western India. It plans to expand the capacity to 2 million bpd by 2030, according to plans shared with the Indian government.
Saudi Arabia, the world’s biggest crude oil exporter, is keen to expand further into oil refining and petrochemicals.
India would provide a fast growing market for oil and fuels and is already a steady buyer of Saudi oil.
“India is an investment priority for Saudi Aramco. India takes from us almost 800,000 barrels a day and by 2040 India’s total consumption will be around 8.2 million barrels per day,” Nasser said.
India is currently world’s third-biggest crude oil consumer with demand of 4.7 million bpd, according to government figures.
However, Aramco is already facing delays for the refinery project, planned for the western state of Maharashtra, as thousands of farmers have refused to surrender land for it.
Reuters reported on Tuesday the Maharashtra government is looking to move the refinery location.
Yousef Al-Benyan, the chief executive officer for SABIC, the Saudi Arabia-based petrochemical company that is the fourth largest in the world, was also on the panel. He said SABIC wants to expand its business and presence in India.