How QATAR supports EU to overcome the economic crisis? …US$93billion investments

QATAR investing heavily in Europe as its Investments reach close to 93 billion USD. QATAR has strongly supported Europe to overcome its economic crisis and Europe still benefit from long-term investments. Despite the Eurozone financial crisis, the European Union and its member States are still important partners for Qatar, being key stakeholders in the Qatari efforts to achieve socio-economic development through economic diversification. In addition to that, the Eurozone financial crisis has allowed Qatar to become an important variable in regional stability. A recent study by al Sharq revealed that Qatar’s investments in the UK, France, Germany, Greece and Italy have amounted to 93 billion USD, including investments in Energy (LNG, Power/Electricity), Banking, Real Estate and Hospitality. The investments are concentrated largely in Western European countries, Greece and Italy in SE Europe region. A structural report by DR. THEODORE Theodoropoulos (ttheodoropoulos@power-globe.com), Author and MD of POWERGLOBE.

According to the study, the UK is Qatar’s main destination for foreign investment attracting $43.6 billion. The most prominent investments are London’s Shard Tower and Barclays Bank helping to prevent the nationalisation of the bank. Qatar has a 20 per cent share in the company that owns Heathrow airport. Qatar owns the Harrods department store, has a 20 per cent stake in Camden market and 26 per cent share in the Sainsbury stores. Qatar has become the largest supplier of liquefied natural gas to Britain. Over the last year, Britain’s imports of Qatari’s liquefied natural gas constituted 85 per cent of Britain’s imports.

Qatar Petroleum (QP) holds a large portfolio of energy investemnts across EU (mainly Briatain, Greece and Italy). QP and POWERGLOBE global energy and investment report 2015/16.

South Hook LNG is the major contributors to the diversity of UK energy. The South Hook LNG Terminal is one of Europe’s largest liquefied natural gas (LNG) regasification Terminals, based in Milford Haven, Pembrokeshire, West Wales. Fully commissioned in 2010, South Hook LNG has the capacity to process 15.6 million tonnes of LNG annually, representing around 20% of the UK’s current natural gas needs. South Hook LNG Terminal cost some £1 billion to build, demonstrating the long-term commitment of its shareholders to the UK market.

Liquefied Natural Gas (LNG) is shipped from Qatar to our facility where we receive and regasify the LNG. The safe and reliable regasification of natural gas is our primary purpose. Over the last few years there has been a decline in UK Continental Shelf gas reserves, raising the importance for the UK to gain more diverse and secure supplies of energy. South Hook Gas Company Ltd, a separate entity in the UK, is responsible for the importation of LNG as Base User of the South Hook LNG Terminal; it is the Base User who is responsible for the commercial arrangements of the LNG. LNG continues to offer strong benefits to the UK; it improves our security in energy supplies.  Natural gas burns more cleanly and efficiently than other fossil fuels, with carbon emissions signiicanlty lower than coal. The Terminal holds a significant role, not just by being part of the UK’s energy infrastructure, but also by strengthening the strategic relationship between the UK and Qatar.

Qatar Petroleum has acquired 25 percent of share in its Heron II Power Plant. The deal signals QPI’s first investment in Greece. The agreement was signed with the presence of H E Dr Mohammed bin Saleh Al-Sada, Minister of Energy and Industry and Nasser Al Jaidah, CEO of QPI. The signing ceremony was also attended by Sheikh Saoud bin Abdulrahman Al Thani, Executive Director for Gas and Power at QPI, and Dr Theodore Theodoropoulos, Managing Director of QENERGY Europe. Heron II is a 435 MW combined cycle gas turbine environmental friendly power plant with reduced fuel consumption and lower CO2 emission.

The Adriatic LNG terminal is a liquid natural gas offshore terminal, formally known as Terminale GNL Adriatico Srl. Located in the northern Adriatic 9 miles (14 km) offshore of Porto Levante,Porto Viro, it is the world’s first offshore gravity-based structure LNG reagsification  terminal. The terminal is operated by Qatar Terminal Ltd., a subsidiary of Qatar Petroleum (45%), ExxonMobil Italiana Gas (45%), and Edison SpA (10%). The terminal is 47-metre (154 ft) high, 88-metre (289 ft) wide, and 180-metre (590 ft) long.

Qatar’s investments in France amount to 6.5 billion USD. Qatar has recently purchased Le Brantano! stores and La Tanneur leather industries. Qatar has shares in groups listed in the CAC 40 stock market such as Total Oil, a 3 per cent share in Vivendi and a 12.8 per cent share in Lagardère, a 5.5 per cent sgare ub the First Investor and Vince store, a 5 per cent share in Veolia environmental (5%) and a 1 per cent share in LFM. Qatar’s investments in Germany amount to 15.7 billion USD, focused on the industrial sector and including leading German companies Volkswagen, Siemens and Hochtief constructions .

Qatar Investment Authority (QIA) is the 11th largest sovereign wealth fund in the world, according to the latest ranking by SWF institure (November 2013). With the country now being the largest LNG exporter in the world and accordingly banking in huge income, the assets are only expected to grow in the future. It is estimated that Qatar has between USD 30 and USD 40 billion available to invest on an annual basis.

Qatar’s march over Europe

Most of Qatar’s investments in Europe are mainly concentrated in the UK and France. Earlier this year, Boris Johnson, the Mayor of London estimated that total Qatari investments in the United Kingdom stand at around USD 30.6 billion, mostly located in the London area. Furthermore, in the beginning of the year, London Times announced that Qatar is planning to invest around USD 14, 94 billion in power plants, road projects, railways and the Thames Tunnel project.

The EMIR and LEADER of THE STATE OF QATAR, HH SHEIKH TAMIM (QATAR and EU’s economic relations were always based on the highest business principles of credibility and trust of establishing long-term economic relations, along with His Highness the Emir of Qatar Sheikh Tamim bin Hamad bin Khalifa Al-Thani and The Great Father His Highness Sheikh Hamad bin Khalifa Al-Thani missions and Qatar National Vision 2030, for a sustainable economic, social and cultural development)

Printemps, PariQatar is known as an opportunistic investor, preferring to invest through bilateral deals where it can demand additional benefits in order to ensure investments. One such example is France, which has been one of the prime targets of Qatari investment. During the mandate of the former French administration led by Nicolas Sarkozy, Qatar quickly expanded its influence in France after gaining “preferential investor treatment” exempting Qatar state-owned entities from capital gains taxes on property in France. This grant gave an enormous boost to Qatari investments in the country, as financial assets reaching  USD 15 billion were poured in the last five years alone, according to French Foreign Ministry.

Italy and Greece, both severely affected by the crisis, also warmly welcomed Qatari investors in an attempt to save their weak economies. Both governments have managed to convince Qatar to invest USD 1 billion in the near future. The joint venture between Italy’s strategic investment fund and state-owned Qatar Holding, will invest in sectors including food, fashion and luxury goods, furniture and design, tourism and leisure.  Qatar Holding  announced an intent to buy a 40 percent stake in Milan’s newly built Porta Nuova business district earlier this year, in order to expand its Italian real estate holdings. While the purchase price was not disclosed, the project is valued at about USD 2.6 billion, according to Qatar Gulf News (QGN). In Greece however, Qatar’s focus will be on the power/electricity and banking sectors.

Major Qatari Investments in Europe, mainly by QIA, QH and QP:

 

France

  • Lagardère 12.83%
  • Total 5%
  • LVMH 1%
  • Vivendi 2%
  • France Telecom 1%
  • Veolia Environnement 4.7%
  • Vinci 7%

Germany

  • Volkswagen 17%
  • Hochtief 9.10%

Greece

  • Heron Power Plant 25% (investment from QP)
  • Eurobank EFG & Alpha Bank

Italy

  • Adriatic LNG Terminal (Investment from QP)

Spain-Brazil

  • Santander-Brazil 5%
  • Iberdrola 8.40%

Switzerland

  • XStrata 7.76%
  • Credit Suisse 8.9%

United Kingdom

  • Barclays 6.33%
  • J. Sainsbury 26%
  • Harrods 100%
  • Goldfields 10%
  • Songbird Estates 24%
  • South Hook LNG Terminal (Investment from QP)
  • South Hook Gas (Investment from QP)

In general it should be noted that determining exact investment figures is difficult, due to the fact that GCC sovereign wealth funds are usually not required to openly publish or announce their investments, profits and losses and their deals are often tied-up by clauses of confidentiality.

In conclusion, QATAR invest and support Europe to overcome econimic crisis and Europe still benefit from secure and long-term investments. Qatar supports EU with its strong activist foreign policy, which became even stronger and defined since Al Thani presence. Indeed, the Qatari participation in the military intervention in Libya was a clear sign of support of the U.S. alliance and was meant to provide legitimacy also to Europe, in return for guarantees around security, as well as political and economic benefits. QATAR and EU’s economic relations  were always based on the highest business principles of credibility and trust of establishing long-term economic relations, along with His Highness the Emir of Qatar Sheikh Tamim bin Hamad bin Khalifa Al-Thani and The Great Father His Highness Sheikh Hamad bin Khalifa Al-Thani missions and Qatar National Vision 2030, for a sustainable economic, social and cultural development.

Qatar’s priorities and interests in the EU countries

Economically speaking, Qatar’s wealth is primarily based on oil and natural gas: this natural richness has boosted Qatari financial power during these years, allowing the country to dare in huge investments all over the world. Its oil and gas reserves account for over the 60 percent of its GDP, and this is the main reason why the country stands for the 48th position in terms of GDP per capita (PPP) worldwide (World Bank, 2015). According to UNDP’s data, Qatar holds reserves of up to 15 billion barrels of oil and is the world’s third largest holder of natural gas reserves. Regarding exports, Qatar is now the largest natural gas exporter in the world and it has been estimated  that Qatar is available to make annually investments for an amount of $30-40 billion.

The country’s economical decisions are regulated by the Qatar Investment Authority (QIA), according with the latest ranking of SWF Institute (2015), the 14th largest sovereign wealth fund worldwide. In the last eight years Qatar has put its priority on business and investments in the Eurozone following two main objectives: on one hand it aimed to safeguard its economy with the gathering of consistent quotas of strategic companies like in the oil and airline field in order to have long term earnings. On the other hand, Doha is also interested in building up a particular status, which is being achieved by acquiring fashion firms and worldwide famous football clubs, such as Paris Saint-Germain FC. Qatari interest for Europe is also motivated by its role in non-traditional areas of socio-economic cooperation, such as technology transfer, sustainable diversification, human capital development and investments.

Qatari economic decisions appear to be deeply linked with its foreign policy, since the Arab State is not only looking for long term assets for its own development, but it is also interested in gaining political influence in some areas, especially the Middle East and North Africa. The financial decisions are taken at élite level by QIA and, from 2013, these are in the hands of the former Emir of Qatar, Sheikh Hamad bin Khalifa Al Thani, who strategically changed the direction of the QIA’s policy with the ultimate aim of playing a key leader role in the stability of the Middle East.

One feature in the Qatari behavior overall is worth mentioning: Qatari policymakers measure the importance of individual European nations not in terms of membership or nonmembership in the European Union but, differently, on how the partners can contribute to Qatar’s interests in the areas of security, defense and socio-economic development. This perspective is important in order to the Qatar’s evolving relationship with the Eastern Europe countries. Even though currently the majority of members of this group (thirteen out of twenty-four) are not members of the EU, they are becoming essential in Qatari thinking on its engagement with Europe. An example is Russia, which is important because of its being a permanent member of the UN Security Council, one of the major players in the global gas sector and an influential actors in the geopolitics, especially on the Persian Gulf and the Middle East.

Despite the interest for Eastern partners, according to the former Qatari Minister of Foreign Affairs, Khalid bin Mohammad Al Attiyah, the European Union remains “a strategic trade partner” of the Gulf Cooperation Council, noting how the volume of bilateral trade between the two blocs had risen by €38 billion to €138 billion between 2010 and 2016. Qatar is also committed to mantling the fruitful GCC-EU relationships, also in the view of a further expansion of region-to-region cooperation in the field of energy security. Based on this data, Qatar continues to commit itself to support the long-time efforts of the Gulf Cooperation Council to sign a Free Trade Agreement with the European Union and is involved in informal talks with the European Union on this matter, given the suspension of negotiations by the Gulf Cooperation Council in 2008.

Despite the Eurozone financial crisis, the European Union and its member States are still important partners for Qatar, being key stakeholders in the Qatari efforts to achieve socio-economic development through economic diversification. In addition to that, the Eurozone financial crisis has allowed Qatar to become an important variable in regional stability even in Europe. The Qatar’s commitment to engage with all actors across the ideological spectrum may well be helping to build a new regional security concert, based on inclusiveness and power balance. As regards to investments in European countries, if the trend previously mentioned has been successful for both Europe and Qatar, nowadays the small Gulf country seems to have other priorities. One of them seems sure: Ahmad Al-Sayed, will have the duty to create a more fair and balanced strategy for investments, trying to look also towards the eastern side of the Asian continent, with a particular attention to India and Japan. This change of strategy, which surely has to deal with the sharp falling in the prices of oil and gas, will see a rise in the near future, when Europe will see the reduced commitment of Qatar in its territory. What the aftermath of such a choice will be, will only be revealed in the upcoming years, but Qatar and its holding will always behave like “investment sharks,” even in the Asia-Pacific region.

Sources: QGN, Gulf Agencies, EU Investment Report ’16, BBC, CNN, QP, QFC, PowerGlobe, GN, Reuters.

 

Dr. THEODORE THEODOROPOULOS (ttheodoropoulos@power-globe.com)

 

 

 


Changing Strategy

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