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Beyond the Tarmac Jet fuel represents the single largest operational expense for the airline industry, which is expected to rise to 25% this year. Since jet fuel or aviation turbine fuel (ATF) represents the single biggest element of an airline's cost base, a marginal change in crude oil prices can significantly impact the industry’s profitability. Over the last 20 years, ATF averaged 25.6% of an airline’s operating costs, IATA data reveal. And that ranged from about 12.5% in 2002 up to 38% in 2008. At $192bn, fuel will be the industry’s largest cost item in 2022 (24% of overall costs, up from 19% in 2021). This is based on an expected average price for Brent crude of $101.2/barrel and $125.5 for jet kerosene, according to the International Air Transport Association. Airlines are expected to consume 321bn litres of fuel in 2022 compared with the 359bn litres consumed in 2019, the global body of airlines says. The jet fuel price started to rise sharply after Russia’s invasion of Ukraine in February. By the second week of May, the IATA jet fuel monitor showed that the price had gone over $176 per barrel, 11.6% more than a month earlier. This put the price at almost 150% more than the previous year although there were significant variations by region. Jet fuel prices were highest in North America, which accounts for 39% of global usage and where the price hit $200 per barrel. War in Ukraine is still keeping prices for Brent crude oil high. Nonetheless, fuel will account for about a quarter of costs in 2022, IATA noted. A particular feature of this year’s fuel market is the high spread between crude and jet fuel prices. This jet crack spread remains well above historical norms, mostly owing to capacity constraints at refineries. Under-investments in this area could mean that the spread remains elevated into 2023. Consequently, airlines hedge a large portion of their annual fuel consumption at lower oil prices in order to protect themselves from the volatility in oil prices. An issue that is on the minds of airline management teams at the moment relate to the rising cost of oil, and jet fuel in particular, noted Willie Walsh, IATA director general. “Fuel represents the single biggest element of an airline's cost base. So clearly, you know, this is something that airlines will be closely monitoring. “And given what we have seen over the last couple of years, it is unlikely that most airlines will have significant hedging in place to protect them against this increase in the oil price. So I think this will be a factor certainly playing into fares as we go through the year if the oil price remains high,” Walsh noted recently. According to OAG, a UK-based global travel data provider, fuel price can have a significant impact on airline costs and profitability given that it is a major cost component for airlines, and one priced in US dollars. At times of surging fuel prices one response by airlines has been to impose fuel surcharges on top of the base fares for flights. The sudden increase in the price of jet fuel in the first quarter of 2022 triggered the reintroduction of fuel surcharges by a number of airlines. The first were seen to impose fuel surcharges in March, effectively adding this element to the price of an airfare. On expectations for fuel surcharges for the rest of the year, OAG says, “Almost certainly we will see more surcharges and the levies may rise. Partly this is a function of rising demand for air travel as recovery gets underway, and therefore more demand for jet fuel, but it is also a result of supply-side issues. “Refineries, which haven’t needed to produce quantities of jet fuel that they used to before the pandemic, now need to increase production in an environment where there are competing calls on their capacity.” While fuel surcharges are not welcomed by passengers, they remain largely hidden as travellers are presented with the all-in price, OAG says. But for airlines, fuel surcharges are an effective means to address the sharp increase in fuel costs. Industry outlook remains rosy with people keen to fly in ever greater numbers around the world. Strong pent-up demand, the lifting of travel restrictions in most markets, low unemployment in most countries, and expanded personal savings are fuelling a resurgence in demand that will see passenger numbers reach 83% of pre-pandemic levels in 2022. Clearly billions of dollars will be raised as fuel surcharges this year, allowing airlines to offset the extra costs, and ward off challenges to their financial recovery.

The North Field expansion that will include carbon capture and storage is expected to see the “most responsibly produced LNG” in the world, noted Shell CEO Ben van Beurden. Speaking in Doha Tuesday, van Beurden said, “This expansion is good news for Qatar… for the world… and for Shell. “Because this responsibly produced gas is consistent with Qatar’s energy sustainability strategy, and also for Shell’s strategy to become a net zero emission energy business by 2050.” He said "natural gas plays a role an important role in world wide transition to net zero emissions energy system." “If we switch from coal to gas for production of iron or steel, that can result in a reduction of CO2 equivalent, saving 38%. And that is very significant.” van Beurden said, “I thank His Highness for taking the decision to end the moratorium of the development of NF in 2017. It was a crucial step forward towards realising Qatar’s National Vision for 2030.” "I am honoured that Shell has been selected by QatarEnergy as a partner in the NFE project. Through its pioneering integration with carbon capture and storage, this landmark project will help provide LNG the world urgently needs at a lower carbon footprint. This agreement deepens our strategic partnership with QatarEnergy which includes multiple international partnerships such as the world-class Pearl GTL asset.” “We are committed to maximise the value of the LNG expansion for the State of Qatar and continue to be a trusted, reliable and long-term partner in Qatar’s continued progress,” van Beurden noted. QatarEnergy Tuesday announced the selection of Shell as partner in the North Field East (NFE) expansion project, the single largest project in the history of the LNG industry. The partnership agreement was signed at a ceremony in QatarEnergy’s headquarters by HE the Minister of State for Energy Affairs Saad Sherida al-Kaabi, also the President and CEO of QatarEnergy, and Ben van Beurden, in the presence of senior executives from both companies. Pursuant to the agreement, QatarEnergy and Shell will become partners in a new joint venture company (JV), in which QatarEnergy will hold a 75% interest while Shell will hold the remaining 25% interest. In turn, the JV will own 25% of the entire NFE project, which includes 4 mega LNG trains with a combined nameplate LNG capacity of 32mn tonnes per year.

  HE the Minister of State for Energy Affairs Saad bin Sherida al-Kaabi said other buyers could join the $29bn North Field expansion “if they add value”. Speaking to reporters in Doha Tuesday al-Kaabi, also the President and CEO of QatarEnergy said, “We had been in discussions with several buyers – or value added partners as well call it, around the world who have shown interest… and very eager interest I would say. “It depends on the value they add…if they add value they would come in. We are proceeding with the project, regardless. There could be some, if we find good opportunities and a win-win situation. We really are not in a rush to do that…there is no big need to do that.” On the “value added partners”, the minister noted, “Basically, they need to be a buyer of LNG… so they need to demonstrate that they can give us a price that is above the market price. This is because they will be coming into the best project that exists in the LNG business from a cost perspective and from a return perspective (in the world) and the largest ever built.” Al-Kaabi said QatarEnergy has very capable marketing organisations that are working on marketing these volumes – and the likes of Shell only add to additional marketing capability. The minister said QatarEnergy had finalised the selection of IOCs in the North Field East (NFE) Expansion project following its selection of Shell as a partner. QatarEnergy and Shell will become partners in a new joint venture company (JV), in which QatarEnergy will hold a 75% interest while Shell will hold the remaining 25% interest. This agreement is the fifth and last in a series of partnership announcements in the multi-billion dollar NFE project, which will raise Qatar's LNG export capacity from the current 77mn tonnes per year (mtpy) to 110 mtpy. The North Field East (NFE) expansion project is the single largest project in the history of the global LNG industry.

  QatarEnergy Tuesday announced the selection of Shell as a partner in the $29bn North Field East (NFE) expansion project, the single largest project in the history of the global LNG industry. The partnership agreement was signed at the QatarEnergy’s headquarters in Doha by HE the Minister of State for Energy Affairs Saad Sherida al-Kaabi, also the President and CEO of QatarEnergy, and Shell CEO Ben van Beurden in the presence of senior executives from both the companies. Pursuant to the agreement, QatarEnergy and Shell will become partners in a new joint venture company (JV), in which QatarEnergy will hold a 75% interest while Shell will hold the remaining 25% interest. In turn, the JV will own 25% of the entire NFE project, which includes four mega LNG trains with a combined nameplate LNG capacity of 32mn tonnes per year. Earlier, QatarEnergy had signed agreements with TotalEnergies, Exxon, ConocoPhillips and Eni for stakes in the North Field East expansion project. The agreement with Shell is the fifth and last in a series of partnership announcements in the multi-billion dollar NFE project, which will raise Qatar’s LNG export capacity from the current 77mn tonnes per year to 110mn tpy. In remarks at the signing ceremony, al-Kaabi said, “We are very pleased to have Shell join us as a partner in this mega project, to which we have committed ourselves. We have lived up to that commitment, as well as to our global reputation as a reliable and trustworthy energy provider. Today’s announcement marks the successful conclusion of the selection of our international energy company partners in the North Field East project, through which QatarEnergy and its partners reaffirm their commitment to the energy transition and to the safe and reliable supply of cleaner energy to the world.” The Minister noted, “We value our long and fruitful relations and strategic partnership with Shell, not just within the State of Qatar, but in many other locations around the world. And, as one of the largest players in the LNG business, they have a lot to bring to help meet global energy demand and security.” Al-Kaabi thanked the working teams from QatarEnergy and Shell, as well as the management and working teams of Qatargas. “We are always indebted to the wise leadership of His Highness the Amir Sheikh Tamim bin Hamad al-Thani, and to his continued guidance and support of the energy sector,” al-Kaabi added. On his part, Ben van Beurden said, "I am honoured that Shell has been selected by QatarEnergy as a partner in the NFE project. Through its pioneering integration with carbon capture and storage, this landmark project will help provide LNG the world urgently needs at a lower carbon footprint. “This agreement deepens our strategic partnership with QatarEnergy which includes multiple international partnerships such as the world-class Pearl GTL asset.” “We are committed to maximise the value of the LNG expansion for the State of Qatar and continue to be a trusted, reliable and long-term partner in Qatar’s continued progress.” The North Field Expansion plan includes six LNG trains that will ramp up Qatar’s liquefaction capacity from 77mnn tonnes per year to 126mtpy by 2027, following a second expansion (North Field South- NFS). Four trains will be part of the North Field East (NFE) and two trains will be part of North Field South project. Last month, al-Kaabi told reporters that QatarEnergy would announce partners for North Field South (NFS) expansion by the end of the year. NFS project will further increase the Qatar’s LNG production capacity to 126mn tonnes per year by 2027. With an expected production start date in 2027, the NFS project involves the construction of two additional mega LNG trains (with a capacity of eight mtpy each) and associated offshore and onshore facilities.

Emirates NBD expects oil prices to be high over the coming quarters, targeting Brent at $120/barrel on average in third quarter (Q3) and $115/b in Q4. Opec+ agreed to increase production in August by 648,000 barrels per day (bpd), effectively endorsing a plan announced earlier in June. According to Emirates NBD, there was no commentary in the Opec+ statement about whether the production adjustment, the group’s name for its coordinated production policies, would extend beyond September as, in principle; the increase for August would unwind all of the cuts made by Opec+ during the Covid-19 pandemic. Production targets for August at a national level have Saudi Arabia at 11mn barrels per day (bpd), a level it has only reached briefly in the past and most recently in April 2020 when it was locked in a price war with its now partner Russia. For the UAE, the target level of 3.179mn bpd should be achievable given the country has made substantial investment into its upstream capacity, hitting 4mn bpd of capacity back in 2020. Russia’s target level of 11mn bpd looks like a particular challenge to achieve given the country’s crude exports are set to be under sanction from the EU and are already being disrupted by firms choosing to self-sanction trade in Russian oil. “The absence of any discussion of what happens once all the pandemic-related cuts will be a concern for an oil market that is screaming out for additional barrels. Spot prices have come off since the start of June as financial markets generally price in an imminent global recession but time spreads, both in the futures and physical market, remain exceptionally tight,” noted Edward Bell, senior director (Market Economics) at Emirates NBD. Market signals for the health of demand in H2, 2022 and beyond are mixed. Early indications that the Zero-Covid induced slump in Chinese economic activity has bottomed could set up for a bounce in activity. At the same time growth in the US is evidently slowing: personal spending has come in lower than expected for May and a trend of slower growth looks to be firming up. “Even if there are broad downside risks to demand, we don’t think that they will outweigh the supportive factors for oil prices. “Opec+ is unlikely to be able to hit its targeted increase on aggregate over the next two months given most countries have been failing to hit their lower prior levels and how long Saudi Arabia can maintain production of 11mn bpd or higher is an open question,” Emirates NBD said.  

Qatari riyal’s peg to dollar will hold as the Qatar Central Bank has large foreign exchange (FX) reserves to support the currency, Allianz Trade said in its country report. Allianz Trade expects Qatar’s exchange rate stability to be maintained and price stability to be regained in 2022-2023. The Qatari riyal (QAR) is pegged at 3.64 to the dollar. According to Allianz Trade, the currency peg has ensured relative price stability since 2010. In 2021, however, headline consumer price inflation rose to over 6% year-on-year (y-o-y) at the end of the year owing to base effects (deflation a year earlier), higher energy prices and global supply-chain disruptions. “We expect these effects to be transitory and inflation to gradually fall back to around 2% at the end of 2022,” Allianz Trade noted. Qatar’s fiscal reserves are solid but rising public debt requires monitoring, it said. The country’s fiscal breakeven point has ranged between $35 and $55 per barrel of crude oil over the past decade. Hence the government has recorded large annual fiscal surpluses in most years, except for 2016-2017 when oil and gas prices had been persistently low for some time. Even in 2020, a small surplus of +1.3% of GDP was achieved. Allianz Trade estimates the surplus to have widened to around 3% in 2021, thanks to higher gas prices, and project continued robust surpluses in 2022-2023. Meanwhile, public debt rose from 25% of GDP in 2014 to 72% in 2020, in part due to declining nominal GDP. “Even though we expect the ratio to decline gradually over 2021-2023 in the wake of the economic recovery, it will remain elevated and should be monitored closely. Overall, however, Qatar will remain a large net external creditor, thanks to the huge foreign-asset position in the Qatar Investment Authority -QIA, a sovereign wealth fund currently estimated at approximately $350bn,” Allianz Trade said. External liquidity, it said will “remain unproblematic”. Qatar has recorded large, sometimes huge annual current account surpluses for more than two decades, with the exceptions of 2016 and 2020 when global oil and gas prices were particularly low. These surpluses have contributed to the build-up of the QIA. Allianz Trade estimates that higher oil and gas prices moved back the current account into a surplus of 5% of GDP or more in 2021 and that ratio should rise further in 2022-2023. Meanwhile, external debt is relatively high, estimated at around 120% of GDP, incurred by oil and gas investments since the 2000s, but repayment obligations are unlikely to present liquidity problems. The annual debt service-to-export-earnings ratio stands at a moderate 13% or so. Financial resources will remain strong. Combined FX reserves of the central bank and the QIA represent over 200% of annual GDP and cover more than 50 months of imports, Allianz Trade noted.

Rapid expansion in Qatar’s non-oil economy is seen in record high output, new orders and purchasing activity based on June’s headline Purchasing Managers' Index (PMI), National Bank of Kuwait has said in its latest economic update. Qatar’s headline PMI hit a new high in June of 67.5 (63.6 in May), NBK said. Elsewhere in the GCC region, in Kuwait, the parliamentary budget and closing accounts committee approved the FY22/23 budget based on spending of KD23.1bn (5% higher than the initial draft) and revenues of KD23.4bn, the latter also upwardly revised, on a higher oil price assumption of $80/barrel. A small surplus of KD0.3bn is expected, NBK said. Meanwhile, Moody’s rating agency expects the government to run fiscal surpluses over the next two years. This should lead to a stronger government balance sheet and fiscal buffers, NBK said. In Saudi Arabia, the unemployment rate continued to trend lower, falling to 10.1% in Q1,22 from 11% in Q4,21, but the labour participation rate worsened to 50.1% from 51.5% in the same period. Meanwhile, it was reported that Saudi Central Bank (SAMA) placed around SR50bn with local banks to ease a liquidity squeeze caused by credit outpacing deposit growth over the past two and a half years. Through May, credit growth stood at 14.1% year-on-year (y-o-y) while deposits rose by 8.9%. In the UAE, Dubai recorded 6.2mn visitors during January-May, almost three times as many compared to the same period in 2021 and only 14% below 2019 levels. Meanwhile, petrol prices in the UAE were raised again in July, for the fifth time this year. On oil, NBK noted Brent closed down 1.3% last week at $111.6/b (+43.5% ytd), with global recession fears outweighing further supply-side tightness concerns, this time due to outages in Libya. June was oil’s first monthly loss since November. Meanwhile, Opec+ ratified its earlier decision to fully unwind supply cuts by August at the higher monthly rate of 648,000bpd (in July and Aug). Beyond that, the alliance’s next move remains uncertain, NBK noted.

Qatar’s GDP has been forecast to grow at 5.1% this year, which according to Emirates NBD, if realised would mark the fastest pace of growth since 2014 and take the economy back above pre-pandemic 2019 levels for the first time. Last year Qatar’s GDP grew at 2.5%, following the -3.6% contraction seen in 2020, Emirates NBD noted. Growth in 2022 will be broad based, with robust expansions in both the hydrocarbons (3.5%) and non-hydrocarbons (6.0%) sectors, and while we anticipate that the headline expansion rate will slow next year, at 2.8% it will remain stronger than the 10-year average. “The 6% growth we forecast for the non-hydrocarbons sector would be the strongest in the GCC this year, driven by the ongoing recovery from the pandemic as activity gradually normalises, but also preparations for the World Cup and the event itself,” noted Daniel Richards, Emirates NBD MENA economist, who is the author of the report. The Qatar Financial Centre PMI survey has reflected the surge in activity as final preparations for the major global event, which begins in November, come to a head, with the June headline reading of 67.5 marking a record for the index. This was up from 63.6 in May and marked an average of 62.2 over the year to date. Output, new orders and purchasing activity were all at record highs, largely shrugging off the inflationary pressures which drove input prices to accelerate at the fastest pace in 21 months. A high level of backlogs of work suggest that activity will remain buoyant over the next several months, but firms are clearly wary of what happens after the FIFA World Cup Qatar 2022 as business optimism for beyond 12 months remained comparatively low, the Dubai-based bank said. Aside from the preparations for the event, which have helped support growth in key sectors such as construction for years, the World Cup will also drive a significant uptick in activity through the four weeks of games over November to December, with the tourism and hospitality sector set to be a key beneficiary. Visitor numbers to Qatar have risen strongly so far as compared to last year – at 413,645 there were some six times as many arrivals over January-April as compared to the corresponding period in 2021, reflecting the loosening of any restrictions on travel both domestically and internationally (Qatar was forced to reintroduce some restrictions on activity as the Omicron wave spread at the start of the year, which will have weighed on activity in the first quarter). However, visitor numbers were still down -48% as compared to pre-pandemic 2019, leaving significant upside potential even in just a normalisation of activity. With the World Cup set to see 1.2mn visitors over the month, according to Qatari predictions, the likelihood is that 2019 visitor levels will be met by year-end, which would provide a major fillip to growth, Emirates NBD said. “Qatar is not immune from the potential drags on activity that are facing the rest of the region – namely higher-than-usual inflation, tighter monetary policy and a stronger dollar – but the likelihood is that the substantial windfall generated by high gas prices will be more than sufficient for the government to support growth as it sees fit. We forecast a current account surplus of 18.3% of GDP this year, up from 5.2% in 2021. The Qatar Central Bank has hiked its benchmark interest rate in line with the Federal Reserve this year, but the liquidity boost from higher exports should offset this, while visitors for the World Cup are likely committed despite the relatively unfavourable exchange rate for tourists,” Emirates NBD noted. For domestic consumption, at 5.2% year-on-year (y-o-y) in May price growth is high compared to the long-run average as the flurry of World Cup-related activity stimulates demand and global pressures come into play, Emirates NBD added.

The development of ‘circular’ polymers with recycled plastic content, investing in advanced recycling facilities as well as the announcement of key regional initiatives focused on sustainability demonstrate significant progress by the GCC polymer industry and the region’s leadership to adopt the circular economy, according to the Gulf Petrochemicals and Chemicals Association (GPCA). A recent GPCA report, entitled ‘The Plastic Conversion Opportunity in the GCC: Moulding a Sustainable Future Towards a Plastics Circular Economy’ and released at the GPCA Plastics Conference held in Riyadh recently, identified challenges such as an uncompetitive recycled plastics market, inadequate knowledge about the circular economy, high investment requirements and the high cost of products made in a circular economy model as barriers to further progress. The report goes on to highlight unfavourable regulations, the complex international supply chain of the plastics industry as well as a lack of collaboration between stakeholders as obstacles to achieving a circular economy in the region. The circular economy presents an enormous opportunity, with the World Economic Forum predicting that it will yield up to $4.5tn in economic benefits in the years to 2030. On a GCC level, transforming the current linear model to a more circular approach can help drive progress on the Middle East Green initiative, the GCC governments’ national visions and enable regional signatories to meet their commitments to the Paris Agreement, while lowering emissions. According to speakers at the two-day at the GPCA Plastics Conference in Riyadh, less than 10% of the plastics produced globally are ever recycled due to the diversity and variability of plastics waste, contamination, gaps in the existing infrastructure, and new demands of advanced recycling. An effective strategic response must be designed to address these issues and prevent over $120bn from being lost through plastic waste annually, experts said. GPCA secretary-general Dr Abdulwahab al-Sadoun said, “With at least 30% of plastic products not recycled because of design issues, according to the World Economic Forum, GPCA believes that the transition to a circular economy will require designing new products that are easier to reuse and recycle as well as adopting new business models and service offerings. “Furthermore, the industry must promote recycling and the reuse of plastic products, which according to the WEF can extend the life of at least 20% of all plastic products. Greater collaboration, investing in research and innovation and adopting a life cycle approach will also be needed to enact change in the plastics circular economy in the region.”  

Beyond the Tarmac A decade ago, a South Korean airline Asiana B747F crashed following a fire in its cargo compartment. The aircraft was carrying a large automotive lithium ion battery, loaded next to a large quantity of flammable liquid. The scheduled cargo flight from Incheon International Airport, Incheon, South Korea, to Shanghai Pudong International Airport in China, crashed into the international waters about 130km west of Jeju International Airport after the flight crew reported a cargo fire and attempted to divert to Jeju International Airport. Aboard the aircraft were two pilots, both fatally injured, and the aircraft was destroyed. Immediately after the accident, search and rescue operations have been initiated, and about two hours after the accident, the South Korean Coast Guard recovered some floating debris and wreckage at the accident site. The Aviation and Railway Accident Investigation Board (ARAIB) determined the probable cause of this accident as follows: a fire developed on or near the pallets containing dangerous goods but no physical evidence of the cause of the fire was found. The fire rapidly escalated into a large uncontained fire, and this caused some portions of the fuselage to separate from the aircraft in midair, thereby resulting in the crash. More recently, Qatar Airways had a close call in one of its flights from the sub-continent to Doha, from a very small lithium battery. Fortunately, the Qatar Airways pilot took decisive action and made an emergency landing in Pakistan. The airline unloaded a container that had two bags burning. “We were very fortunate that it generated enough smoke to alert our pilot. And we did an emergency landing in an airport in Pakistan,” Qatar Airways Group chief executive HE Akbar al-Baker told reporters in Doha recently. “Most of the fires we have seen in our aircraft were due to undeclared, badly packed, and sometimes refurbished lithium batteries being loaded on the aircraft,” al-Baker noted. While shortage of capacity is a challenge, the bigger problem he said is shippers not declaring their consignments correctly. “Specifically, we must address the lithium battery threat. I am afraid that the industry will only wake up to this if there is a disaster.” Qatar Airways, al-Baker said is constantly flagging up this problem and is the launch customer for new fire-retardant containers. The national airline has ordered 400,000 fire resistant containers to carry lithium ion batteries among other highly flammable products. “Over the next two years, we will replace all our containers with the fire-retardant variety. They can contain a fire for up to four hours. “But not every airline can afford to do this. We must work harder to have robust regulations in place as soon as possible. We cannot allow a few agents that simply don’t care to put dangerous goods on an aircraft without declaring them,” al-Baker noted. Meanwhile, the International Air Transport Association (IATA) called on governments to further support the safe carriage of lithium batteries by developing and implementing global standards for screening, fire-testing, and incident information sharing. As with many products shipped by air, effective standards, globally implemented, are needed to ensure safety. The challenge is the rapid increase in global demand of lithium batteries (the market is growing 30% annually) bringing many new shippers into air cargo supply chains. A critical risk that is evolving, for example, concerns incidents of undeclared or mis-declared shipments. IATA has long called for governments to step-up enforcement of safety regulation for the transport of lithium batteries. This should include stiffer penalties for rogue shippers and the criminalisation of egregious or wilful offences. It has also asked governments to shore up those activities with additional measures. IATA’s Director General Willie Walsh said: “Airlines, shippers, manufacturers, and governments all want to ensure the safe transport of lithium batteries by air. It’s a joint responsibility. The industry is raising the bar to consistently apply existing standards and share critical information on rogue shippers. But there are some areas where the leadership of governments is critical. “Stronger enforcement of existing regulations and the criminalisation of abuses will send a strong signal to rogue shippers. And the accelerated development of standards for screening, information exchange, and fire containment will give the industry even more effective tools to work with.” According to the United States Federal Aviation Administration (FAA), there were many air/airport incidents involving lithium batteries carried as cargo or baggage that have been recorded since March 1991. Most of these incidents included smoke, fire, extreme heat or explosion involving lithium batteries or unknown battery types. Incidents have included devices such as e-cigarettes, laptops, cell phones, and tablets. The severity of these incidents ranged from minor injuries to emergency landings. Unless something is done to prevent similar disasters due to fire in cargo hold caused by lithium batteries, the FAA says such crashes are all but inevitable in future!

Qatar Aircraft Catering Company (QACC) is set to scale up production capacity to 500,000 meals per day by 2026 to meet the "rapid and steady" growth of the national airline. Currently, the Qatar Airways subsidiary has the capacity to produce 175,000+ meals per day in its state-of-the-art facility at Hamad International Airport, measuring 69,000sq m, according to company’s annual report for 2021-22. QACC consistently aims to achieve the highest possible quality, safety and security standards for customers, partners and employees. Its skilled culinary experts are “dedicated to producing and delivering outstanding food experience to customers on a daily basis.” During the 2021/2022 financial year, QACC achieved our one-year sustainability target by recycling more than 1mn kilograms of plastic waste and donating more than 100,000 pieces of goods and surplus food supplies to people in need across the globe. The group’s catering company is working hard to decrease waste generation and improve rates of waste diversion from landfill. The ambition for a ”greener QACC” remains a high priority, hence it continually seeks innovative methods to reduce the overall carbon footprint by applying green building standards in its new facility construction, wherever possible. These include installing energy efficient equipment in its new state-of-the-art catering facilities, including washing systems, which significantly reduce water, energy and detergent consumption and efficient refrigeration units. Lessening the QR equipment and linen loading weight by almost 257 tonnes, which ultimately contributes to a reduction in aircraft fuel consumption and carbon dioxide emissions. Decreasing the usage of “single-use” plastic is another such green initiative. QACC has also started implementing paperless process through innovative technology. Such as automating crew handover sheets, delivery notes and Critical Control Point documents (CCP) – a procedure applied to eliminate hazard that might occur during food preparation and handling. To reduce the volume of imported goods, QACC has developed “strong relations” with local fruit and vegetable suppliers. QACC is the first in the group to achieve ISO 14001:2015 certification and to be recognised by the group for environmental sustainability programmes. The current renovations entail the installation of fully automated and sustainable industrial equipment, which will enhance product quality, improve delivery efficiency and increase production capacity, the annual report said.

Higher energy prices should see Qatar’s budget surplus widen to 12.8% of GDP this year from 0.2% of GDP in 2021, according to National Bank of Kuwait (NBK). The Ministry of Finance announced a moderately expansionary budget for FY22/23, raising spending by 5% on higher capital and current expenditure outlays compared to the previous budget, as it looks to strike a balance between greater fiscal restraint going forward and supporting economic growth and development objectives, NBK said. Realised revenues are likely to be substantially higher than budget approximations, which are based on a conservative oil price of $55/barrel. The economic recovery would allow the government to unwind the remainder of its Covid-19 support measures, including the blanket loan moratorium, NBK said in a recent country report. Qatar’s economy returned to growth in 2021, with GDP up 1.5%, on stronger consumer demand and lessening Covid-19 disruptions. The swift recovery was underpinned by government support measures (a $21bn stimulus package followed by a rapid vaccination rollout) and higher energy prices. Growth is expected to accelerate to 3.7% in 2022 as the non-oil sector expands 5.5% amid a boost to the travel, hospitality, logistics and business support sectors from the FIFA World Cup. The event could attract around 1.5mn visitors in November-December, equivalent to 50% of the country’s population of almost 3mn. Improved private sector activity was evident in the purchasing managers’ index survey reading for April, which reached an all-time high of 63.6 led by reportedly strong conditions in the construction sector and rising work backlogs. Robust and broad-based credit growth of 11% in 2021 also points to an expanding private sector, while activity in the real estate market has shown signs of recovery after several years of decline. The Qatar Central Bank’s (QCB) real estate price index gained 2.6% year-on-year in March 2022. Underpinning the medium-term outlook for the non-oil economy is the ambitious Qatar National Vison 2030 programme of large infrastructure investments in strategic sectors such as manufacturing, finance, and tourism. While some $30bn in natural gas-related projects are planned, NBK said it does not expect to see major output gains until the first phase of the North Field gas expansion project is complete in 2026, which should deliver a 43% increase in LNG volumes to 110mn tonnes per year and bolster Qatar’s position as the leading global LNG exporter. According to NBK, previously strong debt issuance ($18.6bn in bonds and sukuk in 2021) could moderate in 2022 with little need for deficit financing and amid a rising interest rate environment. “However, Qatar will still likely make sizeable debt issuances over the medium term to finance its gas expansion plans,” NBK said. A solid economic growth outlook, coupled with higher hydrocarbon receipts, should see the public debt ratio ease over the medium term. Gross central government debt (excluding GREs) is expected to fall to 47% of GDP in 2022 from 55% in 2021. Qatar’s credit standing remains robust (AA- by Fitch), backed by large external reserves and a good track record of effective policy-making, NBK noted.

Despite being based in a region prone to disruption, Gulf Co-operation Council (GCC) banking systems have remained remarkably stable, S&P Global Ratings has said in a report. In its latest report, S&P Global Ratings noted the largest funding item – private domestic deposits – has increased year-on-year over the past three decades despite a series of disruptive regional events, including Yemeni civil wars, the Arab Spring uprisings, the Iraq War, and several Houthi missile attacks. Only the 1990 Gulf War led to a decline in private sector domestic deposits and, while external funding has proven less stable, related withdrawals has only been temporary. “To test this resilience, we analysed GCC bank performance in a series of hypothetical stress scenarios,” S&P Global Ratings said. "While the nature of the threat or shock – for example whether there is a direct physical threat – is clearly important, we think various factors explain the historical resilience of GCC bank funding. Notably, large outward remittances have reduced the stock of potentially less stable deposits and confidence boosting actions by public sector entities have helped reduce domestic funding volatility during shocks," said S&P credit analyst Benjamin Young. "Even though some vulnerabilities are on the rise, including continued external funding growth, a potentially increasing proportion of expatriate deposits, and reduced coverage from potentially supportive sovereign assets to funding bases, our hypothetical stress scenarios show that GCC banks can withstand substantial external funding outflows without additional support."    

Oman Air will join the oneworld alliance, further strengthening the premier airline alliance’s leading position in the Middle East. Based in Muscat, Oman Air was elected as a oneworld member designate in Doha by the oneworld governing board, comprising the chief executives of all oneworld member airlines. oneworld member Qatar Airways will act as sponsor for Oman Air’s entry into oneworld, providing guidance and support as the airline integrates into the alliance. Oman Air is expected to be implemented into oneworld in 2024, following which it will provide the full range of oneworld benefits to customers travelling on its flights. Members of Oman Air’s ‘Sindbad’ frequent flyer programme will be able to earn and redeem miles on all oneworld member airlines, with top tier members receiving additional benefits including lounge access when travelling with other oneworld members. Oman Air’s entry into oneworld will provide even more flights and destinations to customers planning global travel across the alliance’s members, making oneworld the only global airline alliance with three members in the Middle East after Qatar Airways and Royal Jordanian. Oman Air’s joining will add new destinations to the oneworld network including Duqm and Khasab in Oman and Chittagong (Bangladesh). oneworld Emerald, oneworld Sapphire and premium cabin customers will also gain access to three Oman Air lounges at Muscat, Salalah and Bangkok. Launched in 1993, Oman Air is the national carrier of the Sultanate of Oman. From its roots as a domestic airline, it has transformed into an international carrier serving 41 destinations in more than 20 territories. It operates a modern fleet of more than 40 aircraft comprising Boeing 737s, 787s and Airbus A330s. Oman Air operates to five oneworld member airline hubs – Amman, Colombo, Doha, Kuala Lumpur and London Heathrow – and already codeshares with four oneworld member airlines: Malaysia Airlines, Qatar Airways, Royal Jordanian and SriLankan Airlines. Joining oneworld will pave the way for additional codeshare opportunities, further enhancing global connectivity across the alliance’s network. Following its entry into oneworld, Oman Air will be the third new member of the alliance in five years, marking another achievement in oneworld’s rapid growth. Royal Air Maroc joined the alliance in April 2020, adding oneworld’s first full member in the African continent. This was followed by Alaska Airlines in March 2021, making oneworld the only global airline alliance with two members in the United States. oneworld governing board Chairman and Qatar Airways Group Executive HE Akbar al-Baker said: “Today marks a new milestone in oneworld, as our friends at Oman Air become a member elect of our award-winning alliance. Passengers of Oman Air will be offered a seamless travel journey, connecting them to more than 900 destinations across 170 countries. As the chairman of oneworld, we look forward to welcoming Oman Air into our alliance as they will bring great benefits, allowing passengers to discover not just a new member with an excellent reputation, but a beautiful country.” oneworld CEO Rob Gurney said: “We are delighted that Oman Air has chosen oneworld as its global airline alliance partner. With its network in Muscat and award-winning customer service, Oman Air will reinforce our position as the premier airline alliance for global travellers. As the global travel industry continues to recover from the pandemic, the significant growth of oneworld in recent years demonstrates how important alliances and partnerships will continue to be.” Oman Air CEO Abdulaziz al-Raisi said: “Oman Air's admittance into oneworld represents a defining moment in our journey to provide passengers with greater travel options through our developing partnerships and alliances. We're delighted to be joining the world's foremost airline alliance at a time when demand for travel is on the rise. “We look forward to welcoming oneworld members onboard Oman Air to experience the height of Omani hospitality and all that the Sultanate of Oman has to offer in terms of history, culture and natural beauty.”    

* QatarEnergy's four partners in the prestigious project were chosen through a competitive process that started in 2019, which will expand Qatar’s LNG export capacity from the current 77mn tonnes per year (tpy) to 110mn tpy by 2026     The $29bn North Field East (NFE) expansion, the single largest project in the history of global LNG industry, has seen QatarEnergy joining hands with four global energy companies – TotalEnergies, ExxonMobil, Eni and ConocoPhillips. The four partners of QatarEnergy in the prestigious project were chosen through a competitive process that started in 2019, which will expand Qatar’s LNG export capacity from the current 77mn tonnes per year (tpy) to 110mn tpy by 2026. While it is Eni’s first entry ever into Qatar’s upstream sector, the three other global energy companies - TotalEnergies, ExxonMobil, and ConocoPhillips - have been QatarEnergy’s partners in the energy industry for many years. A highlight of the partner selection process is that QatarEnergy received offers for double the equity available, underscoring the high-quality investment case of the NFE project, thanks to its economic competitiveness, financial resilience, and also its unique environmental features. North Field East (NFE) project will produce significant quantities of ethane, LPG, condensate and helium besides liquefied natural gas, according to HE the Minister of State for Energy Saad bin Sherida al-Kaabi. Addressing a press conference at the QatarEnergy he said the expected production of LNG from the nearly $29bn project would be 32.6mn tonnes annually. The production of ethane from the project would amount to 1.5mn tonnes per year (tpy), LPG 4mn tpy, 250,000barrels per day of condensate and 5,000 tpy of helium. LNG is among the cleaner fossil fuels and has considerable demand globally. LPG, condensate and helium too have considerable global demand. The multi-billion dollar North Field expansion, the largest LNG development in global history, will generate substantial revenues for Qatar and hugely contribute to the country’s GDP, al-Kaabi noted. The North Field expansion, comprising of North Field East (NFE) and North Field South (NFS) will provide significant benefits for all sectors of the Qatari economy during the construction phase and beyond, al-Kaabi said in reply to a question by Gulf Times at a media event at QatarEnergy headquarters recently. NFE will expand Qatar’s LNG export capacity from the current 77mn tonnes per year (MTPY) to 110MTPY (in the first phase expected to be completed by 2025/26). Four trains will be part of the North Field East (NFE) and two trains will be part of North Field South (NFS) project. QatarEnergy would announce partners for North Field South (NFS) expansion by the end of the year, al-Kaabi noted. NFS project will further increase the Qatar’s LNG production capacity to 126mn tonnes per year by 2027. With an expected production start date in 2027, the NFS project involves the construction of two additional mega LNG trains (with a capacity of 8MTPY each) and associated offshore and onshore facilities. The NFS project was initiated as a result of QP’s successful onshore appraisal activities in the North Field and targets the monetisation of gas from the southern sector of the North Field. The North Field expansion plan includes six LNG trains that will ramp up Qatar’s liquefaction capacity from 77mnn tonnes per year to 126MTPY by 2027. Four trains will be part of the North Field East and two trains will be part of North Field South project. Stressing the importance of the private sector, the minister said Qatar’s private sector will have a huge opportunity to contribute to the project. “We will be announcing four major projects, three in gas and one in petrochemicals. Over the next seven years, we will be investing billions of dollars into many projects including one on gas-fired electricity generation,” al-Kaabi said. He said after the current phase of the construction activities, the North Field expansion and other QatarEnergy projects will keep driving the local economy. Already, QatarEnergy has embarked on the largest LNG shipbuilding programme as part of the North Field expansion project. “We have awarded a series of key offshore and onshore EPC contracts that are crucial for its timely execution,” al-Kaabi noted recently. He said QatarEnergy will be working with its reliable business partners from China and Japan in the shipbuilding programme. In April, QatarEnergy signed a series of time-charter parties (TCPs) with a subsidiary of Mitsui O.S.K Lines (MOL) for the long-term charter and operation of four LNG ships, constituting the first batch of TCPs awarded under QatarEnergy’s massive LNG shipping programme. Concurrent with the signing of the TCPs, back-to-back LNG carrier shipbuilding contracts were signed between MOL and Hudong-Zhonghua Shipbuilding Group (Hudong), a subsidiary of China State Shipbuilding Corporation (CSSC), for the construction of four new LNG carriers to serve QatarEnergy’s LNG growth projects and future fleet requirements.    

The International Air Transport Association (IATA) urged governments to work closely with the aviation industry to ensure that aviation and incumbent aviation safety systems can safely co-exist with new 5G services. While IATA recognises the economic importance of making spectrum available to support next generation commercial wireless telecommunications, maintaining current levels of safety of passengers, flight crews, and aircraft must continue to be one of governments’ highest priorities. The call came as the industry was meeting in Doha at the three-day 78th IATA Annual General Meeting, which concluded yesterday. “We must not repeat the recent experience in the United States, where the rollout of C-band spectrum 5G services created enormous disruption to aviation, owing to the potential risk of interference with radio altimeters that are critical to aircraft landing and safety systems. “In fact, many countries have successfully managed to facilitate the requirements of 5G service providers, while including necessary mitigations to preserve aviation safety and uninterrupted services. These include, for example, Brazil, Canada, France and Thailand,” said Willie Walsh, IATA’s Director General. Before deciding on any spectrum allocations or conducting spectrum auctions, IATA called for governments to ensure close co-ordination and mutual understandings between national spectrum and aviation safety regulators so that each frequency allocation/assignment is comprehensively studied and is proven not to adversely impact aviation safety and efficiency. Robust testing in co-ordination with aviation subject matter experts is critically important in providing necessary information. Measures that have already been used by some governments include: Ensure thorough testing, sufficient spectrum separation between 5G C-band deployments and 4.2-4.4GHz frequency band used by existing radio altimeters. Clearly codify and enforce the maximum power limit for 5G C-band transmission and downward tilting of 5G antennae particularly in the vicinity of flightpaths. Establishment of sufficient 5G C-band prohibition and precautionary zones around airports. IATA noted that airlines operating to and from and within the US continue to contend with the effects of the rollout of 5G, including a pending airworthiness directive from the Federal Aviation Administration requiring them to retrofit/upgrade radio altimeters at their own expense to enable the respective aircraft to continue to utilise CAT II and CAT III low-visibility approaches at many US airports where 5G C-Band service is currently or will be deployed in future. The timely availability of upgraded altimeters is a concern, as are the cost of these investments and the lack of certainty regarding the future spectrum environment. Furthermore, 19 additional telecommunications companies are scheduled to deploy 5G networks by December 2023. “FAA’s unilateral decision to require airlines to replace or upgrade their existing radio altimeters, which are approved by both the FAA and the US Federal Communications Commission – by July 2023 is deeply disappointing and unrealistic. The FAA has not even approved or certified all the safety solutions that it will require, nor have systems providers been able to say with certainty when the equipment will be available for much of the fleet. Furthermore, FAA can provide no guarantee that airlines will not have to carry out further upgrades to radio altimeters as even more powerful 5G networks are deployed in the near future. Safety is our highest priority, but it cannot be achieved with this rushed approach. The FAA needs to continue working with all stakeholders collaboratively and transparently, including the FCC and the telecom sector, to define solutions and deadlines that reflect reality,” said Walsh. The International Civil Aviation Organisation (ICAO) and the International Telecommunications Union (ITU) both have recognised and reminded their member states and administrations of the importance of ensuring that existing aviation systems and services are free from harmful interference. This will become even more critical as more and more spectrum is being allocated to new generation telecommunications services.    

The production of sustainable aviation fuels could reach 30bn litres by 2030, which would be a tipping point for SAF production and utilisation, the International Air Transport Association (IATA) said on Tuesday. At its 78th AGM that concluded in Doha Tuesday, IATA called upon governments to urgently put in place large-scale incentives to rapidly expand the use of sustainable aviation fuels as aviation pursues its commitment to achieving net zero carbon emissions by 2050. To fulfil aviation’s net zero commitment, current estimates are for SAF to account for 65% of aviation’s carbon mitigation in 2050. That would require an annual production capacity of 449 billion litres. Investments are in place to expand SAF annual production from the current 125mn litres to 5bn by 2025. With effective government incentives, production could reach 30bn litres by 2030, which would be a tipping point for SAF production and utilisation. “Governments don’t need to invent a playbook. Incentives to transition electricity production to renewable sources like solar or wind worked. As a result, clean energy solutions are now cheap and widely available. With similar incentives for SAF, we could see 30bn litres available by 2030. Though still far from where we need to be, it would be a clear tipping point towards our net zero ambition of ample SAF quantities at affordable prices,” said Willie Walsh, IATA’s Director General. In 2021, irrespective of price (SAF is between two and four times the price of conventional jet fuel), airlines have purchased every drop of the 125mn litres of SAF that was available. And already more than 38 countries have SAF-specific policies that clear the way for the market to develop. Taking their cue from these policy measures, airlines have entered into $17bn of forward-purchasing agreements for SAF. Further investment in production needs support from the right policies. This would boost supply and drive down costs. Electricity production through solar or wind power faced similar hurdles as these technologies replaced fossil fuels. With effective policy incentives, both are now affordable and widely available. By applying similar incentive-based policies to SAF, governments can support global SAF production to reach 30bn litres by the end of the decade. This would be a tipping point as it would send a clear signal to the market that SAF is playing its intended long-term role in aviation’s decarbonisation and encourage investments to drive up production and drive down the price. The market for SAF needs stimulation on the production side. The United States is setting an example for others to follow. Its SAF production is expected to reach 11bn litres in 2030 on the back of heavy government incentives. Under Europe's ‘Fit for 55’ initiative, the EU is planning to mandate that airlines uplift 5% SAF at every European airport by 2030. Decentralising production will delay the development of economies of scale. And forcing the land transport of SAF will reduce the environmental benefit of using SAF. Hydrogen and electrically powered aircraft are part of aviation’s plan to achieve net zero emissions by 2050, but they are likely to be limited to short-haul routes. SAF is the proven solution for long-haul flying. “Hydrogen and/or electric propulsion systems will most likely be available for short haul commercial flights by 2035, but the majority of emissions come from long-haul widebody flights and to tackle these emissions, SAF is the only proven solution. We know it works, and we need to double down our efforts to get all actors of the industry on board, including governments, to increase production, availability, and uptake” said Sebastian Mikosz, IATA’s senior vice president (Environment and Sustainability).    

Qatar Airways is fully geared up to meet the rush of travellers during the FIFA World Cup Qatar 2022, which the country is hosting later this year, Group Chief Executive HE Akbar al-Baker has said. “We are opening a way for airlines, where we have investments, to operate in order for us to release the capacity for deployment to some other destinations during the key global sporting event," he told reporters on the sidelines of the 78th IATA AGM in Doha on Tuesday. HE al-Baker continued, “We are also encouraging our regional friends to start having shuttles to Doha International Airport (old airport) during the World Cup. “A few weeks ago, Qatar Airways tied up with flydubai, Kuwait Airways, Oman Air and Saudia to connect FIFA World Cup Qatar 2022 match ticket holders to Doha via Match Day Shuttle Flights." By choosing to book a Match Day Shuttle flight, fans will arrive in the morning and depart in the evening, with no hotel accommodation required. Additionally, a no check-in baggage policy will “simplify an easy-in, easy-out travel itinerary” for passengers. HE al-Baker said Qatar Airways would cut flights to destinations that are irrelevant to the FIFA World Cup, so that the national airline could increase flights to countries taking part. “Some of Qatar Airways' routes to countries not involved in the 32-nation tournament would be halted and others reduced,” he said. Earlier, HE al-Baker told Gulf Times that new international airlines have already applied for scheduled flights during the winter season to start operating to Doha. He, however, did not name them. “Wait… and you will get to know. Everyone wants to come,” he said. HE al-Baker also said football fans from countries outside of the GCC will be arriving on both scheduled and charter flights. “Depending on the capacity of the runway, they will land either at Hamad International or Doha International airports. Some will land at HIA and some at Doha,” he said. More than 20,000 fans could come in each day on shuttle flights from neighbouring GCC countries of Saudi Arabia, the UAE, Kuwait and Oman. The tournament will be held across eight world-class stadiums which are designed to inspire the various symbols of Qatari and Arab culture.