Qatar to quit OPEC in the New Year
December 3, 2018
Qatar announced on Monday that it will withdraw from the 15-member Organization of Petroleum Exporting Countries (OPEC) as of 1 January 2019, in part to focus on liquefied natural gas (LNG).
Announcing the move, Saad Sherida al-Kaabi, Qatar’s minister of state for energy, said the country wants to develop its own oil production outside of the cartel’s quotas. Middle East watchers say the decision was also motivated by strained relationship with other OPEC members, particularly Saudi Arabia. This will be the first time a Middle Eastern nation has left the cartel since it was founded in 1960.
Kaabi said Qatar plans to increase its production of LNG from 77 million metric tons/year (MMt/y) to 110 MMt/y, and it also wants to raise its oil production. “In light of such efforts and plans, and in our pursuit to strengthen Qatar’s position as a reliable and trustworthy energy supplier across the globe, we had to take steps to review Qatar’s role and contributions on the international energy scene,” Kaabi said.
In November, Saudi energy minister Khalid al-Falih said OPEC and allied oil-producing countries will likely need to cut crude supplies by as much as 1 million b/d of oil to rebalance the market. Qatar produces some 600,000 b/d of crude, making it OPEC’s 11th biggest producer, accounting for just under 2% of production. The loss of less than 2% of overall OPEC supply will not greatly affect the cartel’s position in the market, analysts say.
In June 2017, Bahrain, Egypt, Saudi Arabia, and the United Arab Emirates cut ties with Qatar because of what they claimed was Qatar’s role in supporting terrorism, an allegation that Qatar denies. They also launched an economic boycott, stopping Qatar Airways flights from using their airspace, closing off Qatar’s land border with Saudi Arabia, and blocking its ships from using their ports. Saudi Arabia is also planning to build a canal on its own territory to further isolate Qatar.
Qatar decided to quit OPEC just days ahead of the organization’s 6 December meeting. It joined the cartel in 1961, one year after OPEC was established.
By Natasha Alperowicz
Source: Chemical Week