OPEC is holding its 175th meeting in the Austrian capital of Vienna on December 6, the last for Qatar. EPA
OPEC is holding its 175th meeting in the Austrian capital of Vienna on December 6, the last for Qatar. EPA
OPEC is holding its 175th meeting in the Austrian capital of Vienna on December 6, the last for Qatar. EPA
OPEC is holding its 175th meeting in the Austrian capital of Vienna on December 6, the last for Qatar. EPA

Why would Doha choose to leave Opec now?


Robin Mills
  • English
  • Arabic

As delegates descend on Vienna, the city of diplomatic intrigue, for Thursday’s Opec meeting, one member is making its last trip. Saad Al Kaabi, Qatar’s minister for energy affairs, announced on Monday that the country would leave the oil exporters’ organisation in January.

Qexit is a surprise, but not a severe blow, after tumultuous change at Opec over the past three years. The big questions are why would Doha choose to leave now? And what does it mean for the group’s future?

Qatar is not a founder member, but it was the first to join the original five of September 1960, entering in 1961. It is the first Middle Eastern member to depart. There are, though, precedents for countries leaving the organisation.

Gabon left in 1995 and rejoined in 2016. Indonesia suspended its membership in 2009, and came back at the start of 2016 but then suspended itself again at the end of that year when it refused to accept production cuts, as it has become a net oil importer. Ecuador left in 1992, unwilling to pay the $2 million membership fee, but rejoined in 2007. And the organisation also picked up new members: Angola in 2007, Equatorial Guinea in 2017 and the Republic of Congo this June.

The countries that have left Opec are all small producers with limited impact on decisions and little ability to increase production significantly. Qatar produces about 610,000 barrels per day of crude oil, just 2 per cent of the Opec total. Its 1.3 million barrels per day of condensate and natural gas liquids, and more than 120 billion cubic metres of gas exports, not covered by Opec, are far more significant.

Mr Al Kaabi, who only moved up to energy minister from chief executive of Qatar Petroleum (QP) in early November, stated that Qatar would continue complying with deals among global producers, a likely sop to Russia.

As well as leading the non-Opec cooperation, Moscow has been keen to strike deals with several Middle East states, and Qatar owns almost 19 per cent in its national oil champion Rosneft. At last week’s G20 meeting, Russian president Vladimir Putin met Saudi crown prince Mohammed bin Salman, and said they had “agreed to extend our agreement”.

But Mr Al Kaabi said that Qatar would not be bound by Opec agreements after exiting. It committed a cut of 30,000 bpd as part of the 2016 agreement. This allowed it 618,000 bpd, and it has been a little below that all year. Its mature oil-fields do not have much scope to increase output without heavy investment in enhanced oil recovery, and long-time partner Occidental will give up the Idd El Shargi North Dome field to QP when its contract expires next October.

So Qatar’s exit will not lead to a surge in its production, nor undermine the Opec cuts. It has not been a decisive voice in the organisation’s affairs. Nevertheless, a small membership fee bought it a seat at the table. Given the blockade imposed on it by Opec members Saudi Arabia and the UAE, Opec is almost the last remaining forum where the countries formally interact. Conflict between members is nothing new: during the Iran-Iraq war, the Iranian oil minister was at one point a prisoner of war and, twisting alphabetical order, the Iranian and Iraqi delegates were diplomatically seated with Indonesia between them. It is therefore somewhat puzzling why Doha would exit now.

The country stated that its exit was in order to enable it to concentrate on its natural gas business. But membership of Opec never seems to have impeded it. Saudi Aramco and, most recently, Adnoc have announced major expansions of domestic gas and plans for more international expansion, while remaining in the organisation. Qatar continues to be a member of the Gas Exporting Countries Forum, which is headquartered in Doha and includes the UAE, along with Russia and nine other members.

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Doha may also feel that, within Opec, it is taken for granted, but outside it, it would have to be courted like Oman to join in production cuts. During the era of Russia-Opec cooperation, it has seemed increasingly that the key decisions are taken outside the Vienna meetings. The UAE and Kuwait generally support Riyadh, and most of the other members are too small, have declining production, or are beset by security and political problems. Only Iraq really has the size and realistic production growth to pursue an independent line.

A Saudi government research institute, the King Abdullah Petroleum Studies and Research Centre (Kapsarc), is conducting a study on the future stability of the oil market which includes a scenario in which Opec ceases to exist. This is far from government policy, or even an option, at the moment. But Qatar’s move may look ahead to a more fluid and amorphous shape for the oil market, where producers drop in and out of cooperation.

The most immediate political driver, though, may also be the most recent. Donald Trump has repeatedly tweeted against Opec in recent months, complaining prices were too high and expecting Gulf members to support his campaign against Iran by replacing its exports lost to sanctions. A “Nopec” bill aimed to permit legal action against the organisation is currently wending its way through US Congress. Doha’s aim may be to win favour with the volatile president, gaining political credit to be spent later.

Robin M. Mills is CEO of Qamar Energy, and author of The Myth of the Oil Crisis

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