INTERVIEW: Qatar thrives outside OPEC as minister warns over market flood legacy

London — Qatar quit OPEC at the end of 2018 and has not regretted it since, energy minister Saad al-Kaabi told S&P Global Platts Monday, having watched from the sidelines as the producer group has struggled to maintain harmony with its ranks in the face of deteriorating market fundamentals.

In an interview, Kaabi said that, as long as he is minister, he would not advise the government to rejoin OPEC.

"Joining or leaving OPEC is a government decision, so saying never is not my place, [but] I would not recommend going back into OPEC because we are a gas country and we want to focus on that," he said.

Qatar, which had been a member of OPEC since 1961, shocked its counterparts by abruptly announcing its withdrawal just before its December 2018 meeting, citing its minnow status in the organization and its desire to focus on its gas expansion ambitions.

The economic blockade of Qatar -- still in place today -- led by OPEC kingpin Saudi Arabia and close ally the UAE likely contributed to the decision, though Kaabi, just weeks into his tenure as energy minister at the time, downplayed any geopolitical impetus.

Qatar's crude production is around 600,000 b/d, roughly 2% of OPEC's total output. The sheikhdom is, however, a major player in the global gas market, as the second-largest LNG exporter, with aims of reclaiming the crown from Australia.

Qatar currently produces about 77 million mt/year of LNG and is expanding its giant North Field to boost capacity to 126 million mt/year in the coming years.

"The big players make the decisions in OPEC," Kaabi said. "We didn't see a place for us there because we are a gas producer, and we are really growing in gas."

OPEC 'spoiled the market'

OPEC, Russia and nine other countries, in an alliance known as OPEC+, signed earlier this month a landmark 9.7 million b/d crude oil production cut deal to help combat the demand destruction wrought by the coronavirus pandemic.

But it took four days of hard negotiations and came only after a meeting in March broke up in acrimony launching a Saudi-Russian price war.

OPEC+ members have touted it as the largest coordinated cut agreement in the market's history and say it is aimed at putting a floor under the market, though prices have continued to tumble since the decision was unveiled.

"The collective efforts have given a lifeline to many producers," Saudi energy minister Prince Abdulaziz bin Salman said in a media briefing last week.

The way Kaabi sees it, though, OPEC+ was already powerless against market forces before the coronavirus arrived on the scene in January and then exacerbated the oil glut by ramping up production in March.

"I think OPEC by flooding the market, in an oversupplied market, that was what spoiled the market, and then you had the pandemic on top of that," Kaabi said. "It was like the Americans say, a double whammy, and will take the market a long time to recover."

He added that Qatar has no intentions of cutting its crude production to help with the OPEC+ efforts. And asked if he was bothered by low oil prices also cutting into Qatar's gas margins, he took a longer-term view.

Gas demand is rising over the coming decades, and Qatar stands ready to serve the market, he said.

"As an oil and gas company, the only risk we are willing to take and that we understand how to take is the oil price," said Kaabi, who also serves as president and CEO of Qatar Petroleum. "We have lived through these ups and downs, and we can withstand these hits."