Muscat: Oil prices are expected to surge in the near future after Qatar announced it would leave the Organisation of Petroleum Exporting Countries (Opec).
The move comes as the Gulf country looks to focus on developing its natural gas reserves. At the same time, a deal to cut production was also signed between Russia and Saudi Arabia to cap oil outputs.
Qatar announced its withdrawal from the Opec effective January 1, 2019. Saad Sherida Al Kaabi, the Minister of State for Energy Affairs, announced Qatar’s withdrawal from Opec at a press conference in Doha, and said the organisation had been informed accordingly.
“The decision reflects Qatar’s desire to focus its efforts on plans to develop and increase its natural gas production from 77 million tonnes per year to 110 million tonnes in the coming years,” said Al Kaabi.
“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. Achieving our ambitious growth strategy will undoubtedly require focused efforts, commitment and dedication to maintain and strengthen Qatar’s position as the leading natural gas producer,” he added.
“Qatar is proud in its international standing at the forefront of natural gas producers, and as the biggest exporter of LNG - the cleanest fossil fuel, which has given Qatar a strong and resilient economy.”
Al Kaabi added, “Qatar Petroleum has developed and increased Qatar's LNG production, announcing its strategy to raise its production capacity from 4.8 million barrels per day (bpd) to 6.5 million bpd in the next decade.”
Parallel to Qatar’s announcement ran a renewed agreement between the Saudis and the Russians, which centred on agreeing to cap output, even as the United States agreed to cease further tariffs on Chinese imports, thereby putting paid to a long-running concern about how a lack of affordable imports could impact the demand and supply for oil.
Russian President Vladimir Putin said on Saturday that the Saudi Crown Prince Mohammed bin Salman and him “have agreed to extend our agreement" to limit production as prices slump in global markets.
An existing deal which binds both Opec and non-Opec members ends this year. The immediate impact of the announcements saw a significant rise in oil prices, as the cost of Brent crude rose by US$2.60 to $62.06 and West Texas Intermediate increased by $2.42 to $53.35 per barrel on Monday.
Prices in Omani crude also reflected a change, with the Dubai Mercantile Exchange reporting that Omani crude oil had increased by $2.05 to reach $61.42.
“Qatar Petroleum is considering entering into partnerships to produce natural gas in the United States as it may become one of the exporters of liquefied natural gas from the United States through its project Golden Pass,” announced the Qatar News Agency. “On the other hand, one of the options currently available is the entry of Qatar Petroleum in gas investments."
“The CEO of Qatar Petroleum revealed the intention to create a petrochemical complex for ethylene cracking in the Ras Laffan area, expecting the details of the project and Qatar Petroleum partners to be disclosed during the first quarter of next year,” added the Qatar News Agency.
“Qatar Petroleum will undertake projects to increase production without the need to borrow, due to the availability of liquidity necessary for the establishment of expansion projects. By the middle of next year, Qatar Petroleum will announce the names of its foreign partners in this expansion.”