Qatar said it will quit OPEC to focus on gas in a swipe at Saudi Arabia, the de facto leader of the oil exporting group which is trying to show unity in tackling an oil price slide.
Doha, one of OPEC’s smallest oil producers but the world’s biggest liquefied natural gas (LNG) exporter, is embroiled in a row with OPEC members Saudi Arabia and the United Arab Emirates.
It said the surprise decision to exit OPEC, which has 15 members including Qatar, in January was not driven by politics and it did not name Saudi Arabia, but Minister of State for Energy Affairs Saad al-Kaabi said:
“We are not saying we are going to get out of the oil business but it is controlled by an organization managed by a country,” al-Kaabi said.
Qatar would attend an OPEC meeting scheduled for Thursday and Friday in Vienna and would abide by its commitments, he said, adding that Doha would focus on its gas potential.
This was because it was not practical “to put efforts and resources and time in an organization that we are a very small player in and I don’t have a say in what happens,” he added.
Qatar’s former prime minister, Sheikh Hamad bin Jassim al-Thani, said on Twitter that OPEC “is only used for purposes that hurt our national interests”.
The United Arab Emirates said Doha’s decision was a reflection of its declining influence.
“The political aspect of Qatar’s decision to quit OPEC is an admission of the decline of its role and influence in light of its political isolation,” Anwar Gargash, UAE minister of state for foreign affairs, said on Twitter.
OPEC’s loss of a long-standing member undermines a bid to show a united front before a meeting that is expected to back a supply cut to shore up prices. Benchmark Brent is trading at around $62 a barrel, down from more than $86 in October. LCOc1
“They are not a big producer, but have played a big part in (OPEC’s) history,” one OPEC source said.
It highlights the growing dominance over policy making in the oil market of Saudi Arabia, Russia and the United States, the world’s top three oil producers which together account for more than a third of global output.
Riyadh and Moscow have been increasingly deciding output policies together, under pressure from U.S. President Donald Trump on OPEC to bring down prices.
“It could signal a historic turning point of the organization towards Russia, Saudi Arabia and the United States,” said Algeria’s former energy minister and OPEC chairman, Chakib Khelil, commenting on Qatar’s move.
He said Doha’s exit would have a “psychological impact” because of the row with Riyadh and could prove “an example to be followed by other members in the wake of unilateral decisions of Saudi Arabia in the recent past.”
Qatar, which Al-Kaabi said had been a member of OPEC for 57 years, has oil output of just 600,000 barrels per day (bpd), compared with Saudi Arabia’s 11 million bpd.
But Doha is an influential player in the global LNG market with annual production of 77 million tonnes per year, based on its huge reserves in the Gulf.
“I assure you this purely was a decision on what’s right for Qatar long term. It’s a strategy decision,” Al-Kaabi said.
The exit is the latest example of Qatar charting a course away from its Gulf neighbors since the rift began last year. It comes before an annual summit of Gulf Arab states expected to grapple with the roughly 18-month standoff.
Once close partners with Saudi Arabia and the UAE on trade and security, Qatar has struck scores of new trade deals with countries further afield while investing heavily to scale up local food production and ramp up military power.
“There is a sentiment in Qatar that Saudi Arabia’s dominance in the region and the region’s many institutions has been counterproductive to Qatar,” said Andreas Krieg, a political risk analyst at King’s College London. “It is about Qatar breaking free as an independent market and state from external interference.”
Oil surged about 5 percent on Monday after the United States and China agreed to a 90-day truce in their trade war, but prices remain well off October’s peak.
Asked if Qatar’s withdrawal would complicate OPEC’s decision on output this week, a non-Gulf OPEC source said: “Not really, even if it’s a regrettable and sad decision.”
Al-Kaabi said state oil company Qatar Petroleum planned to raise its production capability from 4.8 million barrels of oil equivalent per day to 6.5 million barrels in the next decade.
Doha also plans to build the largest ethane cracker in the Middle East and it would still look to expand its oil investments abroad, Al-Kaabi added.
FILE PHOTO: Saad al-Kaabi, chief executive of Qatar Petroleum, gestures as he speaks to reporters in Doha, Qatar, July 4, 2017. REUTERS/Naseem Zeitoon
