Qatar’s OPEC withdrawal may fit its current LNG strategy, says Dr. Theodore


Behind the borders of QATAR’s decision for OPEC withdrawal. Could the decision for OPEC withdraw accelerate LNG industry development in Qatar?

Qatar’s recent decision to withdraw its membership from the Organization of the Petroleum Exporting Countries (OPEC) is a business decision that supports the country’s development strategy for its liquefied natural gas (LNG) sector, Dr. Theodore Theodoropoulos, Managing of POWERGLOBE, agreed in the Energy Conference held in Doha.

Qatar has retained the crown of  world’s largest exporter of Liquefied Natural Gas (LNG) in 2017 and 2018. The country exported 81 million tonnes (MT) last year, enabling it to remain market leader with a share of 27.6 percent in the global LNG trade, said the ‘2018 World LNG Report’ released by International Gas Union. “With exports of 81 MT, Qatar continued to be the largest LNG exporter, a position it has held for over a decade,” said the report. Qatar was much ahead of its competitors with a wide margin. Australia was the second-largest exporter with export of 56.2 MT and market share of 19.2 percent while Malaysia exported 26.4 MT with a share of nine percent. Nigeria was on the fourth place followed by Indonesia and the United States.  

“Qatar continued to be the world’s leading exporter of LNG, with 2017 liquefaction reaching 81 million tonnes per annum (MTPA), followed by Australia, Malaysia, Nigeria, Indonesia, and the United States. Australia and the United States led in growth of exports by increases over 2016 of 11.9 MTPA and 10.2 MTPA, respectively,” noted David Carroll, President of the International Gas Union in the report. In 2017, the number of LNG-exporting countries remained at 18 as all additional liquefaction capacity was added in countries that already contained export capabilities, said Dr. Theodore.

Qatar’s position in the global LNG market is expected to get stronger in the coming years. Qatar Petroleum, in 2017, had announced plans to increase Qatar’s LNG output by 30 percent — from 77 to 100 MTPA. Natural gas accounts for just under a quarter of global energy demand, of which 9.8 percent was supplied as LNG, in 2016. Last year was a good time for LNG exporters as, after steady growth in recent years, the global LNG trade increased sharply in 2017, rising by 35.2 MT to reach a new annual record of 293.1 MT. This marked the fourth consecutive year of incremental growth, and the second-largest annual increase ever, behind only 2010. The increase was driven by higher production at liquefaction plants in Australia, as well as full-year production and new trains at Sabine Pass LNG in the United States. China was a major driver of LNG import growth during 2017, accounting for over one-third of net growth, rising by 12.7 MT.

The country’s Minister of State for Energy Affairs, H.E. Saad Sherida Al-Kaabi, said that the country would withdraw from OPEC effective January 1, 2019. He explained that the withdrawal decision “reflects Qatar’s desire to focus its efforts on plans to develop and increase its natural gas production from 77 million tons per year to 110 million tons in the coming years. ”Qatar’s move to leave the organization of 15 oil-producing countries was announced at a press conference in Doha on December 3, ahead of the December 6 OPEC meeting. “Qatar has worked diligently during the past few years to develop a future strategy based on growth and expansion, both in its activities at home and abroad.”

Qatar is OPEC’s 11th-biggest oil producer, Mr. Lesley Chavkin, the US Department of the Treasury financial attache to Qatar and Kuwait, pointed out that Qatar’s total output accounts for “only 2%.” “Qatar is not a behemoth in Opec, and I think it (withdrawal from Opec) fits with the strategy to focus the resources on LNG. That seems to be the future of Qatar’s energy industry,” Chavkin said during the panel discussion titled‘Qatar’s Economy — New Directions, New Opportunities’.

On the global market, Chavkin also said that Qatar is expanding its reach, veering towards the Asia Pacific region. She noted that Qatar may have to look into short-term contracts with its Asian buyers. “Obviously, it’s no surprise that the demand is coming from the Asia Pacific region. We have China aggressively moving from coal to gas…moving forward, it’s going to be Asian-focused. “What I think is a kind of interesting space to watch is LNG contracts. So, Asian buyers tend to prefer buying LNG on spot or short-term basis. LNG contracts here tend to be longer term, and Qatar has flexibility in adjusting some of its longer term contracts to maintain market share but that’s something interesting that we would be watching, going forward,” Chavkin explained.

Mohamed Barakat, the managing director of US-Qatar Business Council, said he agrees with Qatar’s decision to withdraw its membership from OPEC, “because this is a business-focused decision.” “Qatar is in the gas business and its oil production doesn’t affect the market that much as countries like Saudi Arabia,” Barakat said. He added: “Qatar’s decision to increase its gas production will definitely increase the support and supplies that Qatar can provide globally, knowing that from a US perspective, Qatar has provided a lot of LNG to US allies, supporting them, and helping them to be more independent with a reliable partner in Qatar —that would help advance more the business interests globally in Qatar, as well.”


The director of International Economics at Georgetown University — Qatar, emphasized that the decision to withdraw Qatar’s OPEC membership is a business decision and was not politically motivated. “I don’t see any political decision behind it… this is a business decision. We have no role in OPEC… we are in the LNG industry and not the oil sector. It makes sense for us to withdraw there, and it makes sense for us to figure out what is it that we are going to do well, and focus our time and resources on that,” said.

Sources: QNB, QEN, QGN, Reuters, QT, QN, Global Energy News, Bloomberg, QP, BBC Energy News.