Fifty-seven years after joining the Organisation of Petroleum Exporting Countries (OPEC) in 1961, gulf nation, Qatar says it is withdrawing from the cartel January 1, 2019, to focus on exploiting its huge gas reserves where it seems to enjoy some form of comparative advantage, rather than crude oil in which it also pulls some weight.
The nation’s Energy Minister, Saad Sherida al-Kaabi, who announced the decision to quit the 15-member cartel on Monday in Doha, saying: it ”reflects Qatar’s desire to focus its efforts on plans to develop and increase its natural gas production from 77 million tonnes per year to 110 million tonnes in the coming years.”
Continuing, he said the decision, which is strictly business and unrelated to the 18-month diplomatic blockade by Gulf neighbours: Saudi Arabia, the United Arab Emirates (UAE), Egypt and Bahrain, “was communicated to OPEC this morning.”
The exit, which he also described as “technical and strategic,” will be a major shock members of the group must absorb ahead of its meeting of Thursday December 6, which will be Qatar’s very last.
In June 2017, OPEC leader- Saudi Arabia, along with three other Arab states, cut trade and transport ties with Qatar, accusing the country of supporting terrorism and its regional rival Iran, claims Qatar has stridently denied, saying the boycott hampers its national sovereignty.
“We don’t have great potential (in oil), we are very realistic… Our potential is gas,” he stressed at the news conference.
“I think it’s inefficient to focus on something that’s not your core business and something that’s not going to benefit you long-term.”
Earlier this week, OPEC and Russia, who together produce about 40% of the world’s oil, said they agreed on new oil production cuts to ensure the oil price does not drop too much in the coming months.
Qatar is the world’s biggest supplier of liquefied natural gas (LNG), producing almost 30% of the world total.
Al-Kaabi stressed that the decision to increase the supply of natural gas is to “develop a future strategy based on growth and expansion, both in its activities at home and abroad.
“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,” he added.
Qatar shares the world’s largest known natural gas field, the North Field, with Iran.
In September, Qatar announced it would increase its production of natural gas by adding a fourth production line, to raise capacity from the North Field to 110 million tonnes a year.