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Qatar's OPEC exit rooted in diplomatic tension

December 3, 2018

Qatar is leaving OPEC. The Gulf country's government has said the move is mainly for economic reasons, but dramatically worsened ties with some of its neighbors also played a significant role.

Qatar oil refinery
Image: picture-alliance/J. Effner

After 57 years, that's it.

Qatar is withdrawing from the Organization of Petroleum Exporting Countries (OPEC), the country's energy minister, Saad al-Kaabi, said on Monday, adding that OPEC has been informed and that the move takes effect in January 2019. Qatar joined the oil cartel in 1961, a year after it was created.

Qatar, al-Kaabi noted, is a very small player in OPEC. "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," he said.

Read more: Qatar exit exposes OPEC’s decreasing relevance

Qatar's withdrawal mirrors the country's desire to focus on its liquefied natural gas production, Qatar Petroleum quoted the energy minister as saying. According to al-Kaabi, Qatar wants to increase its gas exports from 77 million tons per year to 110 million tons by 2024 at the latest. The gas is situated at the South Pars field, right off the country's coast — the largest gas field in the world. Qatar, the world's largest liquefied natural gas producer, shares the field with Iran. Currently, Qatar provides about 30 percent of all the liquefied natural gas on the market.

Natural gas is the future

A focus on this market presumably played the biggest role in the decision, said Thomas Richter, an expert on the Arabian Gulf states at the Hamburg-based GIGA think tank. "Qatar is already the world's largest producer of liquefied petroleum gas," Richter told DW. "It makes sense to continue investing in this direction."

Read more: Germany warms to plan for liquefied natural gas terminal

Oil production is no longer as important for Qatar, Richter argued. Compared to other OPEC states, including Saudi Arabia, Qatar produces comparatively small quantities of crude oil — about 600,000 barrels per day, while Saudi Arabia produces 11 million barrels a day.

So the move came as a "natural process" said Richter, adding that the gas market partially disconnected from the oil market last year. "That is another reason why Qatar has little interest in OPEC's politics."

Qatar Energy Minister Saad al-Kaabi
During the early days of the blockade, Energy Minister al-Kaabi said the move would only make Qatar strongerImage: Getty Images/AFP/A. Levasseur

Political background

Economic reasons may have played a decisive role in the decision, but the resolve to quit OPEC comes against the background of the country's strained ties with some of its neighbors, in particular Saudi Arabia.

In June 2017, Saudi Arabia, Bahrain, the United Arab Emirates and Egypt imposed an economic blockade on Qatar. Saudi Arabia accused Qatar of having too close of a relationship with Saudi archrival Iran, as well as with the Muslim Brotherhood, which Saudi Arabia considers a terrorist organization. Saudi Arabia also wants to see Qatar shut down its prominent international news channel Al Jazeera, a broadcaster whose political orientation the House of Saud disapproves of. Qatar has always rejected the demands.

Read more: Germany and Qatar eye deeper economic ties

In an interview last year with Al Jazeera that the news channel republished on Monday, Energy Minister al-Kaabi said that the blockade would only serve to strengthen Qatar.

"I would like to thank the four countries for their blockade because it has made Qatar, its citizens and their businesses stronger," al-Kaabi said.

He added that for years, Qatar had worked at building a relationship based on trust that has now been shattered overnight with the four states. He said these countries could not prevent Qatar from doing international business, and added that in the long run, they would do more harm to themselves than to Qatar.

LNG refinery in Qatar
Qatar is the world's largest producer of liquefied natural gasImage: picture-alliance/Construction Photography/T. Motion

Message to the US?

Politics may have played a role in Qatar's latest decision, said GIGA's Richter, but the move is not likely to change the basics of the political makeup in the Gulf region. Qatar has good relations with Iran — after all, the countries jointly manage a gas field — as well as with Turkey, which in turn has had a difficult relationship with Saudi Arabia even before the murder of journalist Jamal Khashoggi in Istanbul. "But I wouldn't call that an alliance of these three countries, that would be going too far," said Richter. Qatar, he added, can't afford too close a political relationship with Iran without jeopardizing its good relations with the United States.

Read more: The Khashoggi case: Arab media omit uncomfortable facts

That's exactly how the withdrawal from OPEC could also be interpreted, according to Richter. "In recent weeks, [Donald] Trump has repeatedly criticized OPEC for its pricing policies," he said, adding that the US president wants oil prices to fall to prevent gasoline prices in the US from going up any further.

The OPEC withdrawal could thus be seen as a signal to the US that Qatar, already a close Washington ally, is no longer bound to the current price strategy. This latest move could tighten Qatari-US relations even more, a development Saudi Arabia is likely to monitor with serious concern.

Kersten Knipp
Kersten Knipp Political editor with a focus on the Middle East