MercoPress. South Atlantic News Agency

Abu Dhabi and Qatar create 2 billion sovereign global fund

The Managing Director of the Abu Dhabi government-owned International Petroleum Investment Co Ipic and Qatar Investment Authority (QIA) will invest 2 billion US dollars in a new fund for global acquisitions. Ipic and QIA will each spend 1 billion in the fund and investment will be leveraged to make best use of acquisition potential.

"We plan to invest in all sectors, including oil and petrochemicals" IPIC Managing director Khadem al-Qubaisi told Reuters in an interview. The fund could thus mark a new direction for IPIC, which until now has limited its investments to the energy sector. IPIC is an investment vehicle for the government of Abu Dhabi, which controls more than 90% of the United Arab Emirates' oil reserves. QIA is Qatar's sovereign wealth fund. Its assets stand at around 60 billion US dollars, according to an estimate by Standard Chartered. The tie-up fits with the ambitions of both countries for gas trade, said Mustafa al-Alani from Dubai-based think-tank the Gulf Research Centre. Abu Dhabi is short of gas, while Qatar holds the world's third-largest gas reserve. Qatar started gas exports through a pipeline to the UAE last year, but Abu Dhabi needs more to meet spiraling domestic demand from both power generators and heavy industry. Qatar has looked beyond the Gulf for years for gas markets and is the world's top exporter of liquefied gas. But as petrodollars fuel a regional economic boom, Doha is eyeing markets closer to home, Alani said. "I see this very much as a question of gas" Alani said. The UAE needs gas. The Qataris ... for the last 10 years were looking at distant markets. Now they feel that the political impact of their policy was negative, so they are moving closer to other Gulf states and are talking about joint projects and more integration." Last year, Qatar also set up joint investment funds with the governments of Oman and Dubai, the commercial hub of the UAE. Sovereign funds from the Middle East, Asia, Russia and China have poured billions of dollars into large stakes in Wall Street firms helping faltering banks but also arousing concern among U.S. lawmakers that politics may be influencing investments. Unite Sates and Abu Dhabi officials agreed last week on a set of principles for the funds to keep politics out of decisions. The Abu Dhabi Investment Authority (ADIA) is thought to be the largest sovereign fund in the world, controlling assets of over 800 billion US dollars. The UAE is the world's fifth-largest oil exporter, and its government has reaped the windfall from a five-fold increase in crude prices since 2002.