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.


Oil jumps as market tightens, more gains seen

Updated 24 September 2018
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Oil jumps as market tightens, more gains seen

  • Brent crude hit its highest since May at $80.47 per barrel
  • Commodity traders Trafigura and Mercuria said that Brent could rise to $90 per barrel by Christmas

LONDON: Oil prices rose 2 percent on Monday as US sanctions restricted Iranian crude exports, tightening global supply, with some traders forecasting a spike in crude to as much as $100 per barrel.
Brent crude hit its highest since May at $80.47 per barrel, up $1.63 or more than 2 percent, before easing back slightly to around $80.40 by 0730 GMT. US light crude was $1.18 higher at $71.96.
US commercial crude oil inventories are at their lowest since early 2015 and although US oil production is near a record high of 11 million barrels per day (bpd), subdued US drilling activity points toward a slowdown in output.
Commodity traders Trafigura and Mercuria said on Monday that Brent could rise to $90 per barrel by Christmas and pass $100 in early 2019, as markets tighten once US sanctions against Iran are fully implemented from November.
J.P. Morgan says US sanctions on Iran could lead to a loss of 1.5 million bpd, while Mercuria warned that as much as 2 million bpd could be knocked out of the market.
The Organization of the Petroleum Exporting Countries as well as top producer Russia are discussing raising output to counter falling supply from Iran, although no decision has been made public yet.
OPEC leader Saudi Arabia and its biggest oil-producer ally outside the group, Russia, on Sunday ruled out any immediate extra increase in output, effectively rebuffing a call by US President Donald Trump for action to cool the market.
“I do not influence prices,” Saudi Energy Minister Khalid Al-Falih told reporters as OPEC and non-OPEC energy ministers gathered in Algiers for a meeting that ended with no formal recommendation for any additional supply boost.
A source familiar with OPEC discussions told Reuters on Friday that OPEC and other producers have been discussing the possibility of raising output by 500,000 bpd.
“We expect that those OPEC countries with available spare capacity, led by Saudi Arabia, will increase output but not completely offset the drop in Iranian barrels,” said Edward Bell, commodity analyst at Emirates NBD bank.
JP Morgan said in its latest market outlook, published on Friday, that “a spike to $90 per barrel is likely” for oil prices in the coming months due to the Iran sanctions.
Struggling with high crude prices and a weak rupee, Indian refiners are preparing to cut back crude imports.