Qatar on Monday announced intentions to leave OPEC starting Jan 1 2019 to focus on its gas production strategy.
Although the country plays a small oil role in the Organization of the Petroleum Exporting Countries (OPEC), with less than 2 per cent of the group’s 2018 oil production, Qatar will be ending its 57-year membership.
Minister of State for Energy Affairs Saad al-Kaabi said the decision was not political. It was made 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,” Reuters quoted his saying at a press event on Monday.
While the country’s oil output of just 600,000 barrels per day (bpd), compared with Saudi Arabia’s 11 million bpd makes up a small portion of OPEC 2018 production, it has a more significant role in the global LNG market with annual production of 77 million tonnes per year, based on its huge reserves in the Gulf.
Al-Kaabi said the decision was part of a long-term strategy and Qatar plans to develop its gas industry and increase LNG output to 110 million tonnes by 2024.
Lynn Morris-Akinyemi, research analyst, MENA upstream, at Wood Mackenzie, said: “The news should not come as a huge surprise. Qatar is OPEC’s smallest Middle East oil producer, and the group’s fifth smallest producer overall. Its total 2018 oil production is estimated at less than 2 per cent of OPEC’s oil output.”
Al-Kaabi also said that Qatar would attend an OPEC meeting scheduled for Thursday and Friday in Vienna and would abide by its commitments.
The 15-member OPEC and its partners are expected to discuss cutting production during 2019 to bring the market into balance and prop up oil prices.
Wood Mackenzie’s Ann-Louise Hittle, vice president of macro oils said that while Qatar has minimal spare capacity and its exit won't affect the volume of oil supply in the market during 2019 or risk OPEC's goal of reducing output next year, it does come at a time when OPEC needs to hammer out a deal in the face of market scepticism in the group’s ability to control production.
“More positive for OPEC is the statement from President Vladimir Putin in Argentina at the G20 that Russia has agreed to cooperate with OPEC to ensure production restraint during 2019 as needed,” she said.