OPECXIT And Hydrocarbon Resources
Qatar’s production of hydrocarbon remains the most significant definer of the country’s economy. Although there was a slight contraction in the hydrocarbon sector of 0.7% in 2017 as a result of output cuts by the Organization of the Petroleum Exporting Countries (OPEC) and maintenance on LNG trains, this has been offset by growth in the non-hydrocarbon sectors, which grew by 3.8%. This is primarily because of Qatar’s continued expansion of its construction, transport, communication and finance industries. While reduction in hydrocarbon growth is mostly attributable to OPEC’s output cuts, after the discovery of a new field of 2.5 trillion cubic feet of natural gas in 2013, there was a general moratorium on further exploration and development in the much larger North Field (which holds approximately 900 trillion cubic feet of natural gas), further deterring hydrocarbon exploitation there. However, this moratorium was lifted in April 2017 and hydrocarbon production is predicted to increase dramatically in the coming years, with Qatar Petroleum announcing an increase of LNG production of 30% by 2024.
Qatar announces it was withdrawing from the Organization of Petroleum Exporting Countries “OPEC” effective 1 January 2019.
— Qatar Petroleum (@qatarpetroleum) December 3, 2018
Qatar has withdrawn from OPEC with effect from 1 January 2019 and is the first Gulf country to leave the bloc of 15 oil-producing countries. In December 2018, Qatar’s energy minister, Saad Sherida al-Kaabi, said ‘The withdrawal 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 100 million tonnes in the coming years.’ Since 2013, the amount of oil Qatar produces has declined steadily from about 728,000 barrels per day in 2013 to about 607,000 barrels per day in 2017, or just under 2% of OPEC’s total output.
Previously Qatar successfully accumulated a substantial buffer to prevent its economy from suffering and it has expressed a desire to develop its economy sustainably by increasing its production in sectors other than hydrocarbons. However, in addition to this, it is aiming to increase production of oil to maximise profit, with forecasts estimating that Qatar will achieve production of around 608,000 barrels per day this year and trending to around 600,000 barrels per day by 2020. The slowdown of hydrocarbon growth is attributable to the large expansion of extraction and the processing of these resources coming to an end. This is part of the evolution of Qatar’s hydrocarbon sector, as it moves from a phase of expansion into one of mature stability and lower growth. This is something that has been articulated in the Second National Development Strategy as Qatar aims to move to a less volatile and more sustainable economy. Although this is the long-term ambition and Qatar has reduced the rate of growth of its LNG exports in previous years, it also wants to ensure that revenue from these industries remains as high as possible so as to continue developing infrastructure for the World Cup in 2022 and to meet Qatar’s National Vision by 2030.
