QATAR - QP's Expansions & QPI/QIA's Int'l Thrusts.

QP is raising $27 bn in debt over the coming three years to support its capital investment programme. More than $7 bn worth of financing was close in the second quarter of this year covering the QatarGas-IV LNG venture, the Mesaieed IPP and the Qatar Fertiliser Co. (Qafco) expansion. They are being followed in this quarter by the closure of $2.5 bn debt package on the Qatalum aluminium smelter. Over the next five years, QP's capital expenditure will total $100 bn, excluding GTL projects put on hold. The bulk of the spending will be in North field-related industries.

Qatar Petroleum Int'l (QPI) is aggressively to grow beyond Qatar's borders, flush with petroleum income. QPI's CEO Nasser al-Jaidah says: "Qatar has to see itself playing in the energy sector much more actively beyond its border". In combination with QIA's capital range of $40-50 bn to spend overseas, the two bodies are making their impact felt around the world (see QPI's investments in omt11QatrExprtSep10-07).

The QIA, formed in 2005, is in the midst of a hiring frenzy as it seeks to add 40 members to its current staff of 110 over the next year. The QIA will then open overseas offices, given the ambitions of its acquisition targets.

The GCC's sovereign wealth funds - established ones in Abu Dhabi, Kuwait and Saudi Arabia and newer faces in Dubai and Qatar - are investing for the long-term health of the countries' fast-growing populations. Qatar, like Dubai, has emerged as a brasher version of the GCC sovereign wealth funds, chasing high-profile trophy assets. The QIA now is considering buying Nasdaq's stake in the London Stock Exchange.

QIA's assets under management pale in comparison with estimates of $500 bn-$1,000 bn for the Abu Dhabi Investment Authority (ADIA) and of $250 bn for Kuwait Investment Authority (KIA) - earned after decades of careful management of stocks and bonds and, in KIA's case, strategic investments in companies such as BP. Estimates of Saudi assets held by the Saudi Arabian Monetary Agency (SAMA) and pension funds usually hover around $300m-$400m, but bankers say they could be much higher, while even greater sums may well be held privately.

Increasing revenues from gas will fund the QIA's future well beyond oil's last days. Qatar borrowed heavily from capital markets in the 1990s to develop the third-largest gas reserves in the world. This gamble caused domestic unease at the time but has paid off: Qatar is now on the brink of becoming the richest country on the planet. The FT recently quoted a "person familiar with QIA's thinking" as saying: "We're building up capacity to cope with the expected inflow of funds from the gas economy".

Hussein al-Abdullah, director of the QIA, is one of the high-powered executives dedicated to achieving Minister Kamal's goal of diversifying Qatar's overseas assets. The QIA's board is drawn from ruling family members and technocrats who are also deeply involved in the development of Qatar's gas industry.

The QIA's board defines the markets and opportunities. Under the "hands-on" control of both Qatar's PM and long-standing Foreign Minister, Shaikh Hamad bin Jassem, and Minister Kamal, the QIA will identify and work with partners in these markets, in marked contrast to the more established GCC funds, such as ADIA, which generally rely on vast internal resources. That is how the firm came to work with Paul Taylor, who is leading the QIA-backed Delta Two bid for J. Sainsbury.

The QIA's portfolio remains rooted in the West. But it is increasingly looking to Asia, a region of higher growth and the GCC's biggest energy customer. Speaking at a recent conference in Dubai, Kenneth Shen, head of the authority's strategic and private equity, said the QIA - while building on its dollar holdings - planned to diversify by focusing investment on several Asian hotspots, such as China. He said: "London remains a key market for us, yes, but Asia is becoming very important".

The FT on Sept. 15, 2006, quoted Minister Kamal as saying the QIA's investment strategy would also seek a geo-political balance. He said tghe QIA then was already active in China, India, Malaysia, and Singapore. It was seeking increased exposure in Europe and the US. A consortium led by the QIA then was a frontrunner in bids for Britain's Thames Water.

On Sept. 10, 2006, Barclays Capital became one of the first big western institutions to win a licence to operate in the Qatar Financial Centre (QFC), which has ambitions to rival Dubai as the Gulf's preferred centre. Morgan Stanley was earlier granted a licence to open a Qatar office. Cyrus Ardalan, vice-chairman of Barclays Capital, said the bank was seeking to secure its position as a lead provider of project finance in Qatar. It was seeking a part in Qatar's evolving acquisitions strategy, he said, having won a prominent position in financing deals in the UAE, including Dubai Ports World's $10 bn acquisition of P&O.