You are here
Saudi blockade vexes Qatar's US$200b World Cup projects
[DOHA] Qatar is spending US$500 million a week to bring the world's biggest sporting event to the Arab world for the first time. Its neighbours, the intended spectators, are blocking supplies from cement to door handles that the country needs to pull off the feat.
The road to soccer's 2022 World Cup has been mired in controversy since Qatar won its bid seven years ago. But the world's richest nation per capita has soldiered on, committing US$200 billion to develop at least eight new stadiums, a US$35 billion metro and rail system, and a new city for 200,000 people. It also plans to double the size of its airport to handle as many as 53 million passengers a year.
Construction continues for now despite a blockade that's stranding trucks in Saudi Arabia and cargo in ports in the United Arab Emirates. Both countries, along with Bahrain and Egypt, cut transportation links with Qatar, including roads across the peninsula's only land border.
Qatar's neighbours accuse it of destabilising the region by supporting proxies of Shiite Muslim Iran and the Sunni militants of al-Qaeda and Islamic State, charges the sheikhdom has repeatedly denied.
All countries in the energy-rich region depend on imports, but Qatar's main trade routes connect by land with Saudi Arabia and by sea via ports in the UAE All but one of the 26 container ships that called on Qatar last month stopped at one or more ports in the UAE, Bloomberg tracking data show.
To restore reliable access to imports, "dedicated feeder services would have to be set up to and from Qatar, which may take time to effect," Neil Davidson, senior analyst of ports and terminals at London-based Drewry Shipping Consultants Ltd, said by email.
"The cost of any alternative routing would undoubtedly be higher than the current set-up."
Qatar's dependence on UAE ports and logistics chains is significant. The smaller nation accounted for almost 30 per cent of the UAE's non-oil exports in the third quarter of 2016, according to the latest data from the UAE's Federal Competitiveness and Statistics Authority.
Those shipments consisted mostly of sulfur, earths and stones, plaster, lime and cement used by the construction industry, according to the data.
More pressing than a soccer tournament in five years is the task of keeping Qatar's oil and gas industry humming, and energy companies are stockpiling materials and equipment, two distributors in Doha said, asking not to be identified due to political tensions in the country.
Qatar is the world's biggest exporter of liquefied natural gas and, like Saudi Arabia and the UAE, a member of the Organization of Petroleum Exporting Countries.
One of the distributors said his biggest clients, state-run Qatar Petroleum and its LNG subsidiaries, are buying up all his supplies and asking for confirmation that he can fulfill future orders. He said he's hustling to arrange for 47 cargoes stuck in Jebel Ali port in the UAE emirate of Dubai to be re-exported via Oman or Kuwait.
One shipment on a vessel from China was diverted to stop first in Qatar rather than the UAE so as to bypass the blockade, he said.
There is "a looming and tangible risk" that Saudi Arabia and other countries seeking to isolate their neighbor could exert pressure on companies working in the region not to do business in Qatar, Citigroup Inc analysts including Christopher Main and Ed Morse said in a note.
"Oil services and drilling companies may be a particular area of contention."
Qatar Petroleum didn't immediately respond to a request for comment. The nation's Hamad port, which opened recently south of Doha, is big enough to accommodate large cargo ships, and companies are looking for alternative supply sources, foreign minister Mohammed Al Thani told reporters at his office on Thursday.
A manager at a building supplies company, who also asked not to be identified given the political tensions, said he ordered trucks that were marooned at the Saudi border to drive instead to Oman, more than 500 kilometres in the opposite direction.
From there, he plans to arrange for ships to load the goods at Sohar or another Omani port and deliver them by sea. Some items in Jebel Ali that he needs to complete a project will come to Qatar via air freight, he said.
Qatar will endure the worst of the cut in trade links, but Saudi Arabian and UAE companies can also expect some pain. The winners in the Gulf dispute appear so far to be nearby countries that are sitting on the sidelines: Oman, Kuwait and Iran.
"Jebel Ali is likely to be most affected, as it is the main hub for Qatar," Mr Davidson said.
"Sohar and Iranian ports, Bandar Abbas in particular, stand to benefit."