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Qatar to quit Opec next month to focus on natural gas production
QATAR said it will leave the Organization of the Petroleum Exporting Countries (Opec) next month in a move that threatens to fracture the group's unity, just as it tries to maintain a global coalition to control the oil market.
Qatar, a member since 1961, is leaving to focus on its natural gas production and has informed Opec of its decision, Energy Minister Saad Sherida Al-Kaabi told a news conference in Doha on Monday. A spokesman for the group declined to comment.
Qatar is Opec's 11th-biggest oil producer and the first Middle Eastern nation to leave Opec; its departure is significant for its potential impact on the group's cohesion. The surprise announcement comes just days ahead of a pivotal meeting, as Opec members and allies weigh joint production cuts to stabilise a market that suffered its worst month in more than a decade.
Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd in London, said: "Quitting Opec is largely symbolic for Qatar. Its oil production has been steady with limited prospects for increases."
Relations within the organisation are often frayed, including between Qatar and the group's de facto leader, Saudi Arabia. A Saudi-led coalition implemented a blockade on Qatar in June last year, severing diplomatic, trade and transport links based on accusations that stemmed from its funding of extremist groups and relations with Iran.
Qatar was the first country to join Opec after the five founding nations - Iran, Iraq, Kuwait, Saudi Arabia and Venezuela - formed the group in 1960. The organization first gained global recognition in 1973, when it cut production and instituted an embargo against companies allied with Israel in its war with Egypt, worsening a global recession.
More recently, the group and several allies, including Russia, agreed in late 2016 to cut production by about 1.8 million barrels a day to reduce a global glut of crude that had depressed prices from more than US$100 a barrel to less than US$30. After steadily rising through 2017 and this year, prices have plunged again recently, with Brent dropping by 22 per cent last month, the worst month since October 2018. Futures traded at US$62.04 a barrel in London on Monday morning.
In the history of the cartel, three nations have left the organisation, although two later re-joined. Ecuador left in 1992 after an economic and political crisis, suspending its membership until 2007. Gabon left in 1995 but returned in 2016. Indonesia suspended its Opec membership in 2016 after it having been a net importer of oil for a few years.
Energy Minister Al-Kaabi said in a statement: "In our pursuit to strengthen Qatar's position as a reliable and trustworthy energy supplier across the globe, we've had to take steps to review Qatar's role and contributions on the international energy scene. It has become clear to us that achieving our ambitious strategy will undoubtedly require focused efforts, commitment and dedication to strengthening Qatar's position as the leading LNG producer." BLOOMBERG