The Qatar Investment Authority (QIA) is set to gain a massive capital injection from soaring energy prices and output growth and it is setting out its plans for investment in blockchain, small modular reactors and a significant minority stake in Turkey’s Eurasia Tunnel.
QIA’s chief executive Mansoor Bin Ebrahim Al-Mahmoud said in an interview at the Qatar Economic Forum, “Our colleagues in Qatar Energy have been signing partnerships to expand LNG production by 60%. Most of this inflow would come to QIA… Hopefully, by 2026 we will increase this inflow and we will increase our level of activities.”
This week, ExxonMobil and QatarEnergy (QE) announced an agreement to further develop Qatar’s North Field East project, which will expand Qatar’s annual LNG capacity from 77 million tonnes per annum (mtpa) to 110mtpa by 2026 and 126mtpa by 2027 – close to the 60% Al-Mahmoud has suggested. ExxonMobil was awarded a 25% interest in North Field East (NFE) joint venture. The JV will own 25% of the entire North Field East project, including four LNG trains with a combined nameplate capacity of 32mtpa.
QE’s LNG supply contracts are typically indexed to oil and gas prices, which means it has benefitted from soaring oil and gas prices. Escalating geopolitical tension between Russia and Ukraine continues to drive global spot LNG prices upwards, supporting inflows for QIA. At current prices of US$33 per million British thermal units, the extra LNG capacity will generate US$1.6 billion per annum, divided between the partners.
It is unclear what proportion of revenue QIA will receive from growth in LNG capacity, but it is likely to add billions to the fund’s AUM over coming years – and ensure the sovereign wealth fund remains a major player in global markets.
QIA is also forging ahead with innovative energy sources. Al-Mahmoud said, in the context of ESG, “We are forming a partnership with Rolls Royce and we are really venturing our program to develop an SMR, which is an interesting space to roll out to less developed countries.”
While economic turmoil surrounds energy markets, regionally QIA remains wedded to Europe, although it is venturing further afield. Al-Mahmoud said, “It might be difficult in Europe, but in the long-run I am bullish about it. Europe as a destination of a lot of talents. They have a very good education system. It's a touristic destination as well, and on top of this, they have also an advanced program into renewables, and this will give them an advantage over any other countries.”
Other major investments include Avrasya Tüneli İşletme İnşaat ve Yatırım A.Ş. (ATAS), the concessionaire of Eurasia Tunnel. QIA has this week forged a deal with SK ecoplant, a leading Korean engineering and construction company, to acquire a 24.5% indirect equity interest for around US$160 million in ATAS from SK Group entities including SK ecoplant. The Eurasia Tunnel is a large-scale PPP project that stretches 5.4km under the Bosphorus Strait in Istanbul and is the world’s first double-deck undersea tunnel.
