03 December 2018, Sweetcrude, Lagos — The Organization of the Petroleum Exporting Countries, OPEC will lose yet another member on January 1, 2019, after Qatar announced its intention to leave.
Indonesia, a former member returned to full-fledged OPEC membership in December 2015, after it had suspended its membership in December 2008, when its oil-exporting capabilities had started to wane, only to be suspended in November 2016, finally tendering its exit letter in December amidst the crude oil cut crises.
In a statement on Monday, the country said it was living to enable it to focus and grow its gas market and increase liquefied natural gas, LNG production to 110 million tonnes by 2024.
Qatar had been a member of OPEC for 57 years, has oil output of just 600,000 barrels per day (bpd).
The country ranked 14th on World Atlas’ top-20th countries with the highest reserves, with 25,244 billion barrels.
Qatar exports mostly liquefied natural gas (60 percent of total exports), making it the world’s largest LNG exporter, with just 30 percent crude oil export. Main exports partners are Japan (28 percent of total exports), South Korea (19 percent) and India (11 percent). Others include China, Singapore, Twain, and United Arab Emirates.
Apart from petroleum, Qatar’s other natural resources include natural gas and foodstuffs, oil and natural gas account for a substantial share of the country’s gross domestic product.
Petroleum has made Qatar one of the world’s fastest-growing and highest per-capita income countries. Its currency is the rial.
Analysts have argued that its decision to exit OPEC especially at the time when the organization is expected to meet to decide on whether or not to make more cuts, is due to protracted diplomatic row with Saudi Arabia, also a member of OPEC, and some other Arab states, although Qatar said its decision was not based on politics.
Saudi Arabia and the United Arab Emirates, and other Arab states Bahrain and Egypt imposed a political and economic boycott on Qatar since June 2017 following the accusation of supporting terrorism. The country later denied the accusation, saying the boycott was to infringe on its rights and sovereignty.
“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,” he said.
The minister said Qatar its decision to exit “was communicated to OPEC” but said the country would still attend the group’s meeting on Thursday and Friday and would abide by its commitments.
According to him, the country would focus on its gas potential, adding that it was not practical for Qatar “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.”
Qatar exiting OPEC would cast a doubt in the market that is expecting the organization to put up a united front, and then come up with a viable cut quota at its next meeting later this month.
OPEC has been under pressure to bring down crude oil prices but there are speculations the group would now cut about 1.4 million and no longer 1 million as earlier thought. However, shale producers in the United States have continued to pump more than any other country in the world.
According to the latest oil industry studies released by BP, global oil production totaled 92.65 million barrels per day (b/d) or a total 4,387 million tonnes in 2017, increasing marginally 0.7% from previous year, which was also one of the lowest production growth rates since 2013.
The U.S now produces around 15.6mb/d.
Benchmark Brent is trading at around $62 a barrel, down from more than $86 in October.
“A lot of people will politicize it,” Al-Kaabi said. “I assure you this purely was a decision on what’s right for Qatar long term. It’s a strategy decision.”
He added that the country plans to boost its petroleum production capability from 4.8 million barrels per day to 6.5 million barrels in the next decade, and would “make a big splash in the oil and gas business”.