WoodMac: Qatar exiting OPEC not ‘huge surprise’
Qatar reported Dec. 3 it would withdraw from the Organization of Petroleum Exporting Countries on Jan. 1, 2019, putting an end to its 57-year membership of the oil producers’ cartel. Qatar, which said it intends to focus on its natural gas production, made the announcement ahead of the Dec. 6 OPEC meeting.
Lynn Morris-Akinyemi, research analyst 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 600,000-650,000 b/d, less than 2% of OPEC’s oil output.”
Ann-Louise Hittle, vice-president, macro oils, said, “Qatar has minimal spare capacity so 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. However, it does come at a time when OPEC needs to hammer out a deal in the face of market scepticism in the cartel’s ability to control production.
“More positive for OPEC is the statement from [Russian] President Vladimir Putin in Argentina at the G20 that Russia has agreed to cooperate with OPEC to ensure production restraint during 2019 as needed.”
Hittle said, “Rather than being a reaction to the 18-month long regional blockade against it, Qatar’s withdrawal is more likely a result of its effort to focus on its place as one of the world’s leading gas producers. The smaller nations of OPEC have a relatively quiet role in the group’s decision-making and Qatar may also see that it has less to gain from its membership now that is not involved in the GCC.”
Morris-Akinyemi said, “Since lifting the 12-year ban on development of the North Field in April 2017, Qatar unveiled ambitious plans to increase its LNG capacity from 77 million tonnes/year to 110 million tonnes/year. This will be achieved via a new four mega-train LNG development, due onstream in 2023. Qatar’s OPEC exit underlines the country’s aim to maintain its place in the global LNG market.”
