Picture: ISTOCK
Picture: ISTOCK

London/Dubai — Qatar is building a sugar refinery in a bid to avoid supply disruptions after neighbouring Gulf Arab states had severed economic and political ties more than a year ago, sources say.

In normal trading conditions, building a refinery would make little commercial sense because of depressed sugar prices, surplus world stocks and the presence of regional refineries nearby, the sources said.

But Qatar, with its huge financial resources generated from gas exports and as host of the 2022 World Cup, wants to avoid any shortfall in the desert nation that depends heavily on imports to feed its 2.7-million people.

Saudi Arabia, the United Arab Emirates, Bahrain and Egypt broke ties with Qatar in June 2017, accusing it of fomenting regional unrest, supporting terrorism and getting too close to Iran. Doha denies all.

"This will strengthen our independence and by God’s will help break restrictions imposed on our economy. Now, more than ever, we must be able to support ourselves," a senior economy ministry official said.

The refinery would be near Hamad port, 40km south of Doha, and would start up by the end of 2019 or early 2020.

Two sources with knowledge of the initiative said the new refinery would have capacity to produce 110,000 tonnes of sugar a year, exceeding annual consumption estimated at 80,000 tonnes.