Qatar plans to quit Opec from next year as relations with its Arab neighbours sour, ending a near six-decade-long membership of the oil price cartel.
The emirate’s oil minister told reporters on Monday the decision to leave the group of big oil exporting countries had come after Qatar reviewed the ways it could enhance its role abroad while shifting the focus of the country towards gas.
The move comes amid a deteriorating political situation between Qatar and its neighbours. Four Arab states – Saudi Arabia, the United Arab Emirates, Bahrain and Egypt – have imposed a trade and travel embargo on the country since June last year over allegations that Qatar supports terrorism.
However, Saad al-Kaabi, Qatar’s oil minister, insisted the decision to quit Opec, which the country joined in 1961, was not linked to the political and economic boycott.
Qatar, the world’s largest exporter of liquefied natural gas, is among the smallest oil producers in the group, pumping 609,000 barrels a day, according to the Opec research arm’s October oil market report. Mr al-Kaabi said the country was seeking to increase LNG production from 77 million to 110 million tonnes each year.
Price surge
The oil price surged on Monday after the US and China agreed a 90-day truce in their trade war, agreeing at a weekend meeting in Argentina of the G20 not to impose additional trade tariffs.
Brent crude was 3.88 per cent higher at $61.77 by midday in London while West Texas Intermediate, the main US contract, was 4 per cent up at $52.97.
Qatar’s decision comes as non-Opec countries, such as Russia, have become more influential in setting oil policy alongside Saudi Arabia, the largest producer within the cartel and its de facto leader.
Mr al-Kaabi said Qatar’s impact on Opec production policy was small, which had influenced its decision to leave, but the country would still comply with co-ordinated oil deals among global producers.
Still, it was his predecessor who played a crucial role in securing an agreement in 2016 among producers inside and outside the cartel for co-ordinated production cuts that helped end a multiyear downturn.
Mr al-Kaabi said Qatar would still attend an Opec meeting of ministers later this week in Vienna as they dictate oil policy for 2019, amid a slide in crude prices that has taken prices to below $60 (€53) a barrel last week, from above $86 last month.
“Qatar has worked diligently during the past few years to develop a future strategy based on growth and expansion, both in its activities at home and abroad,” said Mr al-Kaabi. “Achieving our ambitious growth strategy will undoubtedly require focused efforts, commitment and dedication to maintain and strengthen Qatar’s position as the leading natural gas producer.”
Qatar’s decision to walk away from the oil cartel was not “super” consequential for Opec, given Doha’s limited oil output, said Robin Mills, chief executive of Qamar Energy, a consultancy.
Embargo
Saudi Arabia and its key ally the UAE, two leading Opec members, have led the embargo against Qatar, but others, including their arch-foe Iran, continue to sit around the same table.
“It’s surprising that Qatar is walking away from its seat at the table. It would be better to be there than not,” said Mr Mills. “Presumably it is linked to the political dispute, but lots of Opec members are not party to the dispute.”
Nor was Opec membership preventing Qatar from focusing on ramping up LNG production, Mr Mills added.
Qatar is trying to offset the impact of its blockade by spending $200 billion on infrastructure and opening new trade routes. It has also redirected $50 billion from its sovereign wealth fund towards protecting the banking sector and exchange rate.
Saudi Arabia, the UAE, Bahrain and Egypt accuse Doha, which has long been considered a regional maverick, of financing and supporting terrorism. Qatar, which hosts the US’s largest military base in the Middle East, has repeatedly denied the allegations and the dispute has been deadlocked since it erupted.
Mr al-Kaabi, the former chief of state-owned Qatar Petroleum, was named minister of state for energy affairs in a cabinet reshuffle that took place in early November. – Copyright The Financial Times Limited 2018
