The tiny, energy-rich Arab nation of Qatar has announced it will withdraw from Opec.
The move blends the country’s aspirations to increase production outside of the Vienna-based cartel’s constraints with the politics of slighting the Saudi-dominated group amid the kingdom’s boycott of Doha.
The surprise announcement from Qatar’s minister of state for energy affairs, Saad Sherida al-Kaabi, again throws into question the role of the cartel after it called for non-members to push through a production cut in 2016 after prices crashed below 30 US dollars a barrel.
It also marks the first time a Middle East nation has left the cartel since it was founded in 1960.
In a statement, Mr al-Kaabi said Qatar, the world’s largest exporter of liquefied natural gas, planned to increase its exports from 77 million tonnes of gas per year to 110 million tonnes.
He also said Qatar wants to raise its oil production from 4.8 million barrels of oil equivalent a day to 6.5 million barrels.
Mr al-Kaabi said: “In light of such efforts and plans, and in our pursuit to strengthen Qatar’s position as a reliable and trustworthy energy supplier across the globe, we had to take steps to review Qatar’s role and contributions on the international energy scene.”
There was no immediate comment from Opec, which is scheduled to meet this month and discuss possible production cuts.
Qatar, a country of 2.6 million people where citizens make up over 10% of the population, discovered the offshore North Field in 1971, the same year it became independent.
It took years for engineers to discover the field’s vast reserves, which shot Qatar to number three in world rankings, behind Russia and Iran, with which it shares the North Field.
It has also made the country fantastically wealthy, sparking its successful bid for the 2022 Fifa World Cup.
Qatar’s wealth also has seen it take on a larger importance in international politics. Its political stances have drawn the ire of its neighbors, particularly Saudi Arabia, Opec’s largest exporter.
In June 2017, Bahrain, Egypt, Saudi Arabia and the United Arab Emirates began a boycott of Qatar in a political dispute that continues to this day.
Michael Burns, oil and gas partner at law firm Ashurst, said: “Qatar’s decision to leave OPEC is a very interesting development but perhaps the bigger question is whether other OPEC members may look to follow suit?”
Fiona Cincotta, senior market analyst, City Index, said: 2In contrast to crude oil, gas prices are on the slide as Qatar, the world’s largest exporter of liquid natural gas, has decided to sever ties with oil cartel OPEC from next year to focus more on gas.
“The Middle Eastern country surprised the market with its decision before the scheduled OPEC meeting in Vienna at the end of this week where oil producers are due to discuss production cuts to their crude oil output.
“However, in a signal that some major production decisions will be taken outside of OPEC, Russia and Saudi Arabia also met at the G20 and agreed to keep production at bay to help prices.
“No particular time frame has been outlined yet and the level of cuts has yet to be confirmed by either of the producers.