I BUSINESS OPPORTUNTITES IN - AND AQUACULTURE.

Dr. Per Christer Lund, Innovation Norway Dubai

EXECUTIVE SUMMARY

Qatar is well known as a small but wealthy oil nations in the Middle East. Its economy is built around its vast oil and especially natural gas resources and up until recently have heavily depended on the other gulf states for it’s supply of consumer goods, food etc. 80% of it’s trade went though and the Emirates up until 2017. It was known as a rather difficult and costly country to establish business for foreigners, and aside from Jotun, Hydro Aluminium, DNV GL and some upstream petroleum service companies the Norwegian presence is limited.

In 2017 Saudi, UAE, Kuwait (and Egypt) launched an economic and political blockade of Qatar, forcing the country to rethink its policy regarding its own economy structure and attractiveness for foreign company establishment and investment. The government has over the last two years started a number of initiatives to diversify it’s economy; increase self-sufficiency on food sector and establishing free-zones and other regulatory schemes to attract foreign investment.

In 2018, the Qatar Free Zone Authority (QFZA) was established to oversee and regulate the new free zones in Qatar, offering opportunities and benefits for businesses seeking to enter the Qatar markets. According to QFZA, Qatar is on its way to compete with e.g. Dubai as one of the most attractive markets in Middle East. Refer to appendix for more details.

Innovation Norway Middle East (IN) is cooperating with QFZA to identify and promote business areas where Norwegian companies may have advantages. Note that we are not addressing the “obvious” oil and gas market in

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I this report. Innovation Norway and Norwegian Energy Partner (NORWEP) is running a separate promotion initiative for this sector.

This report is specifically addressing the two latter segments: food and waste/water management.

AGRI- AND AQUACULTURE MARKET

Due to the climatic and geographical conditions, Qatar agriculture and seafood industries are very small – less than 0.2% of GDP (about 300MUS$/year) and would under “normal conditions” been relatively uninteresting for Norwegian companies. The economic blockade of 2017 has, however, changed the situation. Before the blockade, Qatar imported most of its food from Saudi and UAE. In a push to increase food security, the government injected 25MEURO into the agriculture industry and managed within two years to reach self- sufficiency in dairy products and fresh poultry; triple number of and significantly increase production of . The government has also started initiatives to make Qatar self-sufficient on seafood. Today fisheries production and some limited aquaculture stands at 15,000 – 16,000 tons, while the national demand is around 21,000 tons. The gap of 6,000 tons will be covered by new aquaculture facilities, mainly local species (hamour) and tilapia. The significant increase in production is largely due to high-tech solutions for vertical farming, advanced greenhouse solutions, hydroponic farming and water/energy-effective solutions.

OPPORTUNITIES FOR NORWEGIAN COMPANIES: The Qatari agriculture and aquaculture markets are small compared to e.g. Saudi, Iran and to less extent UAE and Oman. The market value for agriculture is 300 MUS$ and total demand for seafood is only about 21,000 tons/annum. However, the 2017 blockade of Qatar have motivated the government to boost the countries food production capabilities using high-tech, state-of-the art technologies and methods, of which this very rich country can afford. At the same time, the Qatari government is pushing for diversification of its oil&gas-centric economy and are actively promoting investors and foreign companies to establish in the country. This should open relevant opportunities for Norgwegian companies with advanced solutions in the food production industries: - Advanced technologies for agriculture and horticulture:

o greenhouse and vertical farming; o energy, water and fertilizer efficiency o effective food processing o recycling and reuse of food waste - Aquaculture:

o Efficient cage based aquaculture (rather limited market) o RAS / land-based systems o Seafood processing o Feed production, feed efficiency. - General waste and water management

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I HISTORY AND BACKGROUND

Source: http://emerging-markets-research.hktdc.com/business-news/article/Middle-East/Qatar-Market-Profile/mp/en/1/1X000000/1X06O28M.htm

Ruled by the Al Thani family since the mid-1800s, Qatar within the last 60 years transformed itself from a poor British protectorate noted mainly for pearling into an independent state with significant oil and natural gas revenues.

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I Following decades of siphoning off petroleum revenues by Qataris emirs permanently residing in Europe, Emir Hamad bin Khalifa Al Thani overthrow his father in a bloodless coup in 1995 and started transforming the state into its modern state as one of the economically most successful countries in the world. Although small in size, Qatar has taken a prominent role amongst the GCC states and in Middle East, serving as meditator for regional conflicts; establishing the pan-Arab news network Al-Jazeera and by 2007 obtaining the highest GDP per capita in the world. However, over the last decade Qatar’s relationships with its neighbors have been under stress. From 2011 Qatar supported regional “Arabian Spring” revolutions, stressing the relations with Bahrain, Saudi Arabia and UAE. Although the current Emir Tamim bin Hamad Al Thani worked to warm the relations, in 2017 the triplet plus Egypt cut diplomatic and economic ties with Qatar in June 2017. The main reasons include Qatar’s continued ties with Iran; its support for the Muslim Brotherhood; and the continued operation of Al-Jazeera. Please refer to appendix for illustration of the 13 demands presented by the blockading quartet to Qatar.

QATARS ECOMOMY

Qatar is endowed with rich oil and gas deposits among other natural resources, making it among the world’s richest economies. Up to 70% of government income is generated from oil and gas sales. Qatar is working to reduce its reliance on oil and gas. In the past few years, it has developed other industries such as ammonia, tourism, finance, hydrocarbons, fertilizers, petrochemicals, steel industry, cement, and commercial ship repair. See appendix for overview of export and import products and partners. The economic blockade from 2017 was expected to have serious negative impact on Qatar’s economy, given that one-sixth of import was from Saudi and UAE and that Qatari banks relied on lending from GCC peers. However, two years after the boycott, the implications of the economy have been far less severe than expected. The fiscal, external and banking sectors has fully recovered supported by government financial interventions in banking and other industries. Qatar’s economy grew 2.1% in 2017; 2.5% in 2018 and expect to grow 2.8% in 2019 according to IMF. Although the oil and gas industry has not been influenced much, tourism and real estate sectors has taken hits. The boycott has forced Qatar to be more self-reliant on many products, especially the food production, and also been a boost for the long-term strategy of diversifying Qatar’s economy from a gas-centric economy – the “Qatar First (2011-2016) and Second (2018-2022) National Development Strategies”. The boycott has furthermore motivated the government to easy regulations and constraints for attracting foreign investment and foreign company establishment. The 2018 whitepaper from Deptwire named “Qatar: A year on from the boycott” gives an excellent analysis. http://www.debtwire.com/pdf/Qatar-SpecialFeature.pdf

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I BIO-ECONOMY SECTOR – AGRI- AND AQUACULTURE

Qatar, like the five other wealthy Gulf states, imports up to 90 percent of its food requirements. It has a population of about 1.7 million people, an estimated 20 percent of them Qatari citizens and most of the remainder foreign workers. All domestic production gets consumed in the local market. Qatar has been investing in large areas of farmland overseas to ensure access to food supplies. The agricultural arm of Qatar’s sovereign wealth fund, Hassad Food, has bought land in Sudan and Australia, and has announced plans to spend hundreds of millions of dollars on agricultural projects in countries including Kenya, Brazil, Argentina, Turkey and Ukraine.

AGRICULTURE:

Agriculture in Qatar is inherently limited in scope due to the harsh climate and lack of arable land. In spite of this, small-scale farming, nomadic herding, and fishing were the predominant means of subsistence in the region prior to the 20th century. Sea-based activities such as pearling and fishing served as the primary sources of income for Qataris until the commencement of oil drilling in 1939. Despite the country’s arid climate and desert landscape, modern farming techniques have enabled the country to produce agricultural products commercially. Qatar s agriculture industry represents only 0,18% of the GDP, and only 6% (670 km3) of the land in Qatar is arable or suitable for use as pastureland, these less than 100km3 is currently used for farming. Crops include mostly date palms, while such as carrots, potatoes, onions and fodder beets are also some of the most important crops produced by Qatari farms. Water constraints, extreme temperatures and unavailability of agriculture land are the major constraints in crop production in Qatar. The limited groundwater that permits agriculture in some areas is being depleted so rapidly that saltwater is encroaching and making the soil inhospitable to all but the most salt-resistant crops. The rate of groundwater extraction in 1966 was 20 million m³/year. This increased to 120 million m³/year by 2000. Studies have approximated that aquifer storage will be completely exhausted by 2025. Qatar agriculture industry is developing due to increasing food products demand, application of advanced technologies, low water requirement in horticulture process and government initiatives. Qatar is using desalination for potable drinking water, which helped the country to increase agriculture production for almost two decades.

EFFECT OF THE 2017 BLOCKADE

In 2016, the Second Qatar National Food Security Programme (QNFSP 2016-2022) was approved with ambitions to increase the number of farms from 1400 farms covering 450 km3 to 3,000 of land up until 2022. Most of the farms will produce vegetables and fruits, using hydroponic technology for production. Horticulture is the new trend in agriculture production which have given boost to the production. Government is giving priority to production of vegetables as they are less water and soil intensive. In 2015, a local company Dar Investment Co. received a license for QR 1.3 billion from the Ministry of Economic and Commerce, to augment Qatar’s domestic production of fresh and frozen poultry by 46%. In order to increase the diary production, 4000 cows were airlifted in to Qatar by mid of 2017. Prior to the blockade in 2017, Qatar imported 80% of its food requirement from UAE and Saudi Arabia. The blockade boosted the ambitions and government initiatives significantly in 2017. The new situation forced the government to open new import corridors, find new international suppliers and not at least make serious efforts to boost its own food production. 105 Million Rials (25 million Euros) were injected into the industry, giving tangible results: • Number of farms tripled from 1,400 to 4,200

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I • Production of local vegetable increased from 50,000 ton to 66,000 ton, representing increase from 15% to 24% self-sufficiency rate. • Production of dairy products increased from 60,000 to 220,000 ton, whereas Qatar now is self-sufficient. • Fresh poultry increased from 10,000 to 22,000 ton, exceeding self-sufficiency with 24%. • Production of egg increased from 4,000 ton to 10,000 tons The 105 million QR government support is initially for providing protected houses and agricultural production requirements, which include seeds, fertilizers, pesticides and containers for vegetables and dates, and the distribution of honeybee cells on registered farms, while the livestock breeders will be supported by concentrated animal feeds, supporting animal production requirements such as wool mowers, , etc., and vaccine support for municipal birds. Fishermen will be provided by refrigerators for the conservation of fish and ice.

PROBLEM STATEMENTS AND OPPORTUNITIES The State of Qatar aims to achieve self-sufficiency in food by 2030 through development of agricultural sector by facilitating administrative procedures and encouraging partnership with the private sector. The original plan 2016 for 1,500 new farms has already been exceeded due to the blockade, and the government has even more focus on expanding the industry. In this regard, Qatar`s strategy relies on smart and precise agricultural methods which take the climate and carbon balance into account. The said methods rely on technology to increase and improve agricultural & livestock production as they encourage conducting agricultural researches to overcome current obstacles such as lack of arable land, saline water, hot weather and humidity, etc. Moreover, Qatar places great emphasis on international and bilateral cooperation-oriented relationships, sharing experiences in marketing, financing, and tenancy of foreign farmlands, aiming to meet the increasing domestic demands of food. The government and industry are pushing for advanced technologies to reach it’s ambitions expansion plans. Examples include:  The Internet of Things (IoT) can be the answer that revolutionizes the way farmers plant, fertilize and harvest.  Automated agriculture tools can collect, analyze and transmit real-time data on crop fields such as light, humidity, temperature, and soil moisture levels – all of which are linked to an automated irrigation system.  Farmers can also receive data and insights about their crops and the health of their livestock through animal tracking IoT tools, enabling them to make informed decisions about how to best utilize their plant and animal resources. This will not only increase productivity but will also save costs that would be otherwise wasted on uncontrolled irrigation and undetected livestock health issues.

LARGE STAKEHOLDERS AND INITIATIVES: Al Sulaiteen Agricultural and Industrial Complex (SAIC): One of the prototype farms, the Al Sulaiteen Agricultural and Industrial Complex (SAIC), is located in the desert a short drive from Qatar’s capital . SAIC, which started vegetable production in 2001, is growing tomatoes, cucumbers, eggplants and other vegetables through a combination of greenhouses, hydroponic systems and regular farming. It supplies supermarkets and hotels.

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I Since Qatar’s aquifers are already severely depleted, the QNFSP plans to obtain agricultural water from seawater desalination using solar parks, and only keep aquifers as strategic water reserves. The total costs for the QNFSP had not yet been calculated, but it is hoped that private sector involvement will make the program efficient and responsive to consumer demand. NAAAS for Agriculture Investment is a Qatari company, specialized in Agriculture Investment and unparalleled opportunities of investment in various fields of agriculture, livestock and fisheries through joint ventures. We are committed to provide optimal agricultural solutions, consultations & technical support to entrepreneurs and companies in the State of Qatar, aimed at demonstrating effective cooperation in various fields worldwide. http://www.naaasgroup.com/agriculture Qatar’s premier investor in the food and agri-business sectors, Hassad Food now produces 250,000 heads of and 179,000 tons of grains annually. The recent political developments in the GCC and the blockade against Qatar have provided additional impetus to accelerate these efforts. In 2018 Qatar announced that it will build a QR1.6bn food storage and processing facility at Hamad Port capable of supplying stockpile for three main commodities – rice, sugar, and edible oils, for 3mn people for two and a half years.

FISHERIES AND AQUACULTURE:

Qatar has a relatively short coastline of 563 km and coastal waters are characterized by extreme meteorological and hydrological conditions with temperatures varying from 19°C to 32°C, high evaporation rates and high salinities. Qatar waters are relatively poor in marine resources. Total capture production increased from 4,400 ton in 1999 to currently about 15,000 tons, which covers 74% of the domestic demand. The most common catch are emperor fishes (3,900 ton in 2013), followed by narrow-barred Spanish mackerel and groupers, which are a highly valuable but overexploited resource. The fisheries sector remains important from a socio-economic and traditional viewpoint in that it provides an economic activity and employment in many coastal communities. The per capita annual fish consumption is about 22.3 kg, above the world average approaching 20 kg. Imports of fish and fishery products were valued at USD 99.8 million in 2015. Exports of fish and fishery products are very limited at USD 1.8 million in 2015. Qatar imports about 20,000 ton fish fresh and processed seafood per year, valued at about 25 million UD$. Norway (salmon) is the largest source, followed by Oman and Egypt (shimp and tilapia). The National Development Strategy 2022 states: “Since fish contribute to food security, and in order to achieve 65% of the fishery self-sufficiency, it is essential to develop fisheries, promote the creation of advanced fish farms, diversify fish production, establish fishery industries, develop and equip fishing ports with essential services, establish a research center to improve fishery production, create a pilot plant for freshwater fish breeding, provide the sea with quantities of young groupers, review fishery legislation and enforce effective conservation laws. In this regard, there is a need to follow-up on the projects undertaken by the Department of Fisheries. Target: Increase the self-sufficiency ratio of fish stocks to 65% through advanced fish farms by 2022”

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I AQUACULTURE Commercial marine aquaculture started just after the blockade and existing aquaculture activities have been conducted by researchers in small-scale freshwater facilities for tilapia and hamour. By government support, Qatar is likely to become self-sufficient in fish supply within five years and the government is currently working on floating cage fish farming and shrimp farm construction projects. For environmental and resource management reasons, the government has put a upper cap for wild fish production at 14,000 tons per year. In order to meet the national annual demand of around 21,000 tons, the government will increase aquaculture production from the current 1,000 tons (summer 2019) to 6,000 tons, including shrimp, tilapia and hamour. The government is planning to license 6 offshore cage aquaculture projects covering a marine water area of 270 ha:  The coastal area of Al-Arish area of 111 hectares was opened for the Rabian farm to produce at least 1000 tons of marine shrimp annually.  The private company Al Qamra Holding Group got their licence in October 2017 to build a floating cages facility in the northern waters with the capacity 2,000 ton per year. The farmed species include the orange spotted grouper – “hamour”. www.al-qamra.com/en/business-sectors/aquaculture/ Other private companies like Layan Farms are looking at combining high-tech agriculture and aquaculture technologies. Layan Farms use a unique combination of materials and methods that suit dry and desert areas. By focusing on greenhouse farming, the recent applications combining between aquaculture and fish farming techniques is proving to be highly effective and feasible. In addition to increasing the production of fruits and vegetables inside greenhouses, soilless aquaculture reduces the consumption of water to a new record level when farming in open farms. Fish species include Tilapia, Dennis, Bass, Shrimp, Grouper/ Cod and Whiting. http://layanfarms.qa/en/ Ras Matbak Aquatic Research Centre: After 5 years of building, the 101,000 square meter, QR237.7mn (60 MUS$) Ras Matbakhh Aquatic and Fisheries Research Centre in Al Dhakira was opened spring 2018 to carry out R&D on marine finfish and shrimp, including seed production, for developing mariculture in the country. The center is a scientific institution specialized in marine environmental research and studies and fish farming, aiming to help monitor and protect marine ecosystems, develop and increase local fish production, support biodiversity and train national human force on using modern technologies in aquaculture. Activities include:

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I  developing production protocols for fish hatching and growing of most interesting marine species including all the rearing cycles.  providing good quality fish fingerlings at low prices to encourage the private sector to establish fish farm project. It is expected that the production capacity of the fish hatchery unit will reach 2.4mn larvae through four seasons per year. The production capacity of the shrimp hatchery unit is expected to reach 2mn larvae through four hatchery seasons per year and the final production of shrimp is 6 ton per year.  launching long term program to make sure that the biodiversity of the marine environment is protected. It will provide the coastal communities to develop alternative methods to meet the local fish demand through adopting aquaculture methods and thus preventing the overfishing from sea. https://www.youtube.com/watch?v=eviRVPKOpzs https://www.gulf-times.com/story/549866/Aquatic-fisheries-centre-s-work-completed

INTERNATIONAL COOPERATION  In January 2019, Qatar signed an agreement with the Centre for Environment, Fisheries and Aquaculture Science (Cefas) at the United Kingdom government Department for Environment, Food and Rural Affairs (Defra) to study legislation to regulate fish farming. This agreement is an extension to long-lasting cooperation between Cefas and Qatar University on environmental and marine research. https://www.cefas.co.uk/news/new-uk-qatar-partnership-to-promote-environmental-research-and- collaboration/

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I WATER AND WASTE MANAGEMENT

Waste management is one of the most serious environmental challenges in Qatar. Although household waste per capity is lower than GCC average (1.6 kg/day vs 2.1 – 4.1 kg), Qatar has one of the highest per capita total waste generation rates worldwide. The generation of total solid waste (construction, domestic and others) increased from eight million ton in 2008 to 12 million ton in 2013 but decreased to 8.2 million ton in 2017. The main reason behind the fall is a declining accumulation of construction waste that constitutes 70-80 percent of waste. Most of these wastes end up in landfills – in 2012, more than 90% of Qatar’s solid waste were sent to landfills although the government is intensifying its efforts to reduce this amount.

SOLID WASTE TREATMENT STRATEGY: A comprehensive solid waste management plan is being implemented which will coordinate responsibilities, activities and planning for managing wastes from households, industry and commercial establishments, and construction industry. The target is to recycle 38 percent of solid waste, up from the current 8 percent, and reduce domestic per capita waste generation. Five waste transfer stations have been setup in South Doha, West Doha, Industrial Area, Dukhan and Al-Khor to reduce the quantity of waste going to Umm Al-Afai landfill. These transfer stations are equipped with material recovery facility for separating recyclables such as glass, paper, aluminium and plastic. One of the most promising developments has been the creation of Domestic Solid Waste Management Centre (DSWMC) at Mesaieed. This centre is designed to maximize recovery of resources and energy from waste by installing state-of-the-art technologies for separation, pre-processing, mechanical and organic recycling, and waste- to-energy and composting technologies. At its full capacity, it will treat 1550 tons of waste per day, and is expected to generate enough power for in-house requirements and supply a surplus of 34.4 MW to the national grid. Qatar is home to the largest waste-to-energy facility in the GCC region, the 30 MW Mesaieed plant, which also generates 8 MW of biogas-based power.

BIOFUEL AND FERTILIZER Composting in Qatar is mainly done at the Domestic Solid Waste Management Centre (DSWMC) in Mesaieed, which houses the largest composting facility in the country and one of the largest in the world. The waste that enters the plant initially goes through anaerobic digestion, which produces biogas that can power the facility’s gas engine and generators, followed by aerobic treatment which yields the final product. Two types of compost are generated: Grade A (compost that comes from green waste, such as yard/park trimmings, leftovers from kitchen or catering services, and wastes from markets) and Grade B (compost produced from MSW). The plant started its operation in 2011 and when run at full capacity is able to process 750 tons of waste and produce 52 tons of Grade A compost, 377 tons of Grade B compost, liquid fertilizer which is composed of 51 tons of Grade A compost and 204 tons of Grade B compost, and 129 tons of biogas.

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I WATER MANAGEMENT

A recent report titled “Opportunities for Dutch businesses in the Gulf Region – Water” from 2018 gives an comprehensive description of the water situation in Qatar. www.sustainabledevelopment.un.org/content/documents/20443SDG_Qatar_En_Draft7_Landscape_3.pdf.

From the report: “Desalinated seawater is the most important source of water for Qatar residents, accounting for about half of the water used. Qatar claims that its seawater desalination capacity positions the country in a state of ‘structurally- induced water abundance’. 50 percent of water consumed is desalinated. Groundwater (36%) and recycled wastewater (14%) complement this supply. The Qatari government aims to end groundwater extraction entirely and use desalinated water to recharge its depleted groundwater reservoirs. Qatar has already implemented several desalination plant projects and is planning more. The new planned desalination plants will use advanced reverse-osmosis technology which is less energy intensive than the existing multi-stage flash process. In 2012, KAHRAMAA also began work on the Water Security Mega Reservoirs Project. The reservoir programme offers huge potential for private sector participation and will be important for Qatar’s long- term water plans across all sectors. The main objective for Qatar’s 2016 water policy is to improve water security and to establish Doha’s profile as a knowledge base for how best to recycle and reuse produced water in a cost-efficient manner. This is especially important against the backdrop of low oil prices that have reduced government revenues. The use of treated sewage effluent (TSE) for non-potable water purposes is another growing area of interest. MEED estimates that Qatar currently reuses 193 million cubic metres of TSE a year.” The analysis and recommendations for Dutch companies can well apply for Norwegian companies.

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I RENWABLE ENERGY AND THE ELECTRICITY SECTOR

For comprehensive analysis of the renewable energy and electricity sectors of the GCC states, we refer to two recent reports from IRENA and Middle East Electricity, respectively.

IRENA REPORT TITLED “RENEWABLE ENERGY MARKET ANALYSIS: GCC 2019”: https://www.irena.org/- /media/Files/IRENA/Agency/Publication/2019/Jan/IRENA_Market_Analysis_GCC_2019.pdf

From the report: “In Pillar 4 of its National Vision 2030, Qatar seeks to mitigate climate change and strike a balance between development needs and environmental protection. Therefore, Qatar has committed to promote energy efficiency, clean and renewable energy, education, and research and development. As part of its adaptation strategy, the country seeks to strengthen the management of water and waste and to develop infrastructure and transport (UNFCCC, 2015d).

MIDDLE EAST ELECTRICITY REPORT TITLED “MENA POWER INDUSTRY OUTLOOK”, OCTOBER 2018: https://www.middleeastelectricity.com/content/dam/Informa/Middle-East- Electricity/en/pdf/MENAPowerIndustryOutlook2019.pdf About Qatar renewable energy market: “Qatar’s solar energy future is steadily developing, which has set an ambitious target of 2% renewable energy contribution in the national energy mix by 2022. Qatar General Electricity & Water Corporation (Kahramaa) plans to transform Qatar into a regional solar hub. Kahramaa has targeted a generation capacity of 200 MW solar power at 60 sites across the country by 2020. A 200 MW solar power plant will be developed in Qatar by Siraj Power. The company has a capital base of US$ 500 Mn. Completion of the facility is expected in 2020, and capacity expansion to 500 MW is expected in the future.” “The FIFA World Cup 2022 is expected to require a large investment in both permanent and temporary power generation, using a mix of oil, gas and renewables. The FIFA World Cup 2022 is likely to be the world’s first fully- integrated smart grid managed event. APICORP estimates that Qatar is expected to need to invest around US$ 9 Bn to add 4.2 GW to meet rising demand in the medium term: US$ 6 Bn in generation and US$ 3 Bn in T&D. In April 2018, Kahramaa and GE Power signed Principles of Cooperation (POC) for a ‘Power Efficiency and Fuel Savings Campaign’. Under the POC, Kahramaa and GE are expected to explore ways to drive higher efficiency, flexibility and fuel savings across Qatar’s power sector by utilising the latest technologies in the power generation sector, enhancing the performance of existing assets, and supporting Kahramaa’s future plans. The power construction contractor awards in Qatar are estimated to increase from US$ 24 Mn in 2018 to US$ 3.5 Bn in 2019.”

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I APPENDIX

MAJOR INDUSTRIAL SECTORS

The Qatari government and QFZA has identified the following “new” industry sectors of interest for foreign engagement:

 Logistics – high value industrial and consumer markets (food packaging, high value spare parts – aviation and maritime, pharma supply chain etc.).  Chemicals and heavy industries – utilization of natural gas for energy production and raw material. Speciality chemicals, formulation chemicals, advanced polymers etc. Hydro Aluminium is example of JV for aluminium production. May be relevant for large Norwegian chemical/metallurgical industries – but could also be considered competition to the Norwegian market for attracting these industry players…  Automotive, marine and aviation - may be relevant for Norwegian maritime and ship management companies  Energy technologies – energy storage, energy market and systems, energy efficiency and renewable energy (solar). Hydrogen as energy storage and large-scale production for export is gaining increasing interest in Qatar oil company and government.  Pharma and medical technologies – increasingly relevant for Norwegian companies.  Food and agriculture/aquaculture technology – the focus on this report.  Water and waste management – circular technologies. Note that we are not addressing the “obvious” oil and gas market in this report. Innovation Norway and Norwegian Energy Partner (NORWEP) is running a separate promotion initiative for this sector.

Crude oil and Natural Gas: Qatar is among the leading oil and gas producing and exporting countries and prominent member of OPEC. Since first oil exploration in 1939, the petroleum sector has been the largest contributor to the economy, now accounting for more than 60% of the income. Although it’s forecasted that the oil reserves will run dry by 2023, Qatar still holds 14% of global gas reserves which will fuel the economy for many decades. Since 1984, when Qatar Gas started producing LNG, the country is the world’s leading producer and exporter of LNG – primarily to Asian markets (, China, India, Korea). Qatar Petroleum charge of extraction, production, and storage of oil resources in the country and is the dominant company in Qatar.

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I

Steel Industry: Qatar has a vibrant steel industry. Qatar Steel Company began operating in 1974, and it started producing steel in 1978. Currently, it produces hot bricked iron, steel bars, steel coils, and steel billets. Most of the steel products are exported to neighbouring Gulf nations. In 2008, Qatar Steel Company was ranked among the leading four steel manufacturers in the Middle East. Financial Industry: The financial industry is a big sector in Qatar’s economy. It is comprised of banking, insurance, Islamic finance, real estate, and capital markets. The financial industry is one of the fastest growing industries supported by oil and gas revenues, infrastructure spending, and high-income individuals. However, some of the challenges in the sector are liquidity problems and lack of investor confidence. This sector took an early hit by the economic blockade in 2017, but due to governmental intervention is now is a sound state. Maritime Sector: Qatar has a substantial ship management industry. The existence of world-class ship repair facilities in Qatar has cemented the country’s position as a key player in the global maritime industry. Its largest shipyard, The Milaha Shipyard is the leading such facility in the Gulf region. The shipyard has been operating since 1978. In the 40 years, the facility has been operating over 7,000 ships. As the global shipping industry continues to expand, Qatar’s shipyard will maintain steady growth as well.

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I Fertilizer Industry: The fertilizer industry in Qatar is one of the fastest growing sectors in the country. Qatar’s government began to invest heavily in the sector at the start of the 21st century. The fertilizer industry started as a way of diversifying from the oil and gas industries. Qatar produces the second largest amount of fertilizer such as ammonia, urea, and urea formaldehyde in the Gulf nations. The fertilizer industry continues to grow at an average annual rate of 9.4%. Heavy Industries The government considers industry to be an integral part of its plan to diversify the economy and maximize its huge natural gas reserves, which serve as the primary feedstock for the sector. The manufacturing sector made the third- largest contribution to GDP among non-oil and gas sectors, equivalent to about 7.5% of GDP. Petrochemicals and fertilizers supply make up a large portion of the industrial base, along with steel and other construction materials, through Qatar Steel and Qatar Primary Material Company (QPMC). Qatar’s petrochemical industry deals in the production of chemicals such as ethylene, sulphur, polythene, and gasoline. It is a significant income generator for Qatar providing as much as $8 billion annually. The industry is estimated to grow at 6% per annum in the next decade. Nonetheless, the industry faces stiff competition from petrochemicals produced in neighbouring nations such as Saudi Arabia and Iran. Qatar Petrochemical Company is the world’s top producer of low-density polyethylene. Hospitality and Tourism Industry: The hospitality industry in Qatar has great potential to thrive. Qatar’s government has invested heavily in the sector as an alternative income source from the oil industry. In 2008, the Qatar government invested $17 billion in infrastructure projects, hotel facilities, and cultural facilities to grow the tourism and hospitality industry. The industry is comprised of hotels, restaurants, cultural sites, sporting facilities, and education centers. Since 80% of the tourists to Qatar originated from the other GCC states prior to the 2017 blockade, the industry is suffering serious setbacks - 40% less tourists and 20% decline in air traffic since 2017.

FOREIGN INVESTMENT IN QATAR

According to QFZA, Qatar is on its way to compete with e.g. Dubai as one of the most attractive markets in Middle East due to:

 Tax and financial incentives: no income tax; transparent regulations; various free trade arrangements (not with Norway though)  Strong financial standing: sovereign fund of 320B$ (1/3 of Norway); strong financial institutions  Technologically advanced: adapting high-tech solutions; willing to invest in global high-tech firms (such as 5G networks)  Strong infrastructure and global connections – port and airport. However, according to latest World Bank assessment, Qatar ranks only 83 on a list of 190 nations on ease of doing business, where access to credit and legal protection are the major challenges. Specifically, Qatar offers:  Two Free Zones, namely the QFC and the Qatar Science and Technology Park (QSTP), have been established, with tax and duty incentives provided. Currently, Qatar's government is encouraging foreign investment by streamlining licensing and financial sector regulations, with the corporate tax rate set at 10%. More recently, Qatar has started work on the country's new special economic zones, which will be

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I divided into three projects, namely the Ras Bufontos, the Umm Al Houl and the Al Karaana, to focus on different sectors. These three zones are expected to be completed in phases between 2017 and 2022 and offer favourable tax and duty incentives.  Qatar used its trade surplus accumulated from oil and gas wealth to establish the Qatar Investment Authority (QIA). QIA and its subsidiaries invest in leading companies in non-oil sectors, such as hotels, retail, real estate and manufacturing, in the hope of lifting Qatari standards and diversifying the economy.  Massive infrastructure projects are underway, including the construction of stadiums, rail connections and highways. In an effort to increase the transparency of available investment projects, the Qatari government in June 2016 launched a new online procurement portal to consolidate information on all government tenders.  In a bid to boost non-GCC foreign investment (especially in the wake of the GCC crisis), Qatar passed a new foreign investment law in January 2018 (which came into effect from March 2018). This law has removed the 49% cap on foreign ownership of businesses in Qatar in a wide variety of sectors. Now, 100% foreign ownership is permitted, with no Qatari equity partner required. Restrictions on the purchasing of real estate and franchises still apply, and government approval for banking and insurance licenses is still required.  Foreign participation is not allowed at all in the public transportation, electricity and water, steel, cement, and fuel distribution and marketing sectors.  Quotas exist for the mandatory employment of Qatari nationals in certain sectors, such as banking and insurance.  The telecoms sector was opened to private competition from 2007, and there are some international players operating in Qatar in the critical oil and gas sector.  Foreign players hold interests in the upstream oil sector. However, the downstream sector is completely dominated by state-owned Qatar Petroleum. Qatar's large and lucrative hydrocarbons industry has historically offered the main attractions for foreign investment, with exploration and production by foreign companies permitted through production sharing contracts with Qatar Petroleum, which controls all hydrocarbons activities in the country. Foreign investment is nevertheless warmly received due to the technology and expertise that can be provided by foreign businesses. Sources: WTO – Trade Policy Review, ITA, US Department of Commerce

EASE OF DOING BUSINESS IN QATAR

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I

Source: World Bank http://www.doingbusiness.org/en/data/exploreeconomies/qatar#

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I REFERENCES AND LINKS

• WorldAtlas: www.worldatlas.com • Qatar National Development Strategy 2018-2022: www.mdps.gov.qa/en/knowledge/Documents/NDS2Final.pdf • CIA Intelligence: www.cia.gov/library/publications/the-world-factbook/geos/qa.html • HK TDC Research: www.emerging-markets-research.hktdc.com/business-news/article/Middle-East/Qatar- Market-Profile/mp/en/1/1X000000/1X06O28M.htm • https://www.bioenergyconsult.com/waste-management-qatar • https://www.gulf-times.com/story/609885/Qatar-has-made-a-huge-leap-in-agricultural-product • https://www.middleeasteye.net/features/made-qatar-how-blockade-has-boosted-gulf-states-food- production • www2.gulf-times.com/story/596260/Booming-bio-economy • www.thepeninsulaqatar.com/article/17/09/2018/Qatar-aims-to-recycle-15-of-solid-waste-by-2022 • www.gulf-times.com/story/623267/Qatar-Japan-hold-workshop-on-waste-management • www.gulf-times.com/story/596961/Qatar-achieves-goal-of-water-for-sustainable-devel • www.bioenergyconsult.com/waste-management-qatar • www.mordorintelligence.com/industry-reports/agriculture-in-qatar-industry • www.reuters.com/article/us-qatar-food/qatars-next-big-purchase-a-farming-sector- idUSTRE8051V220120106 • www.tradingeconomics.com/qatar/food-production-index-1999-2001--100-wb-data.html • www.menafn.com/1098385761/New-Zealand-offers-agriculture-expertise-to-Qatar • www.vodafone.qa/pressrelease/the-future-of-agriculture-is-here-ready • www.naaasgroup.com/agriculture • www.mordorintelligence.com/industry-reports/agriculture-in-qatar-industry • www.reuters.com/article/us-qatar-food/qatars-next-big-purchase-a-farming-sector- idUSTRE8051V220120106

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