In December 2018, Qatar announced its imminent departure from The Organization of the Petroleum Exporting Countries (OPEC), which it had been a member of for 57 years. The first Arab state to join, it also became the first to leave following its withdrawal on 1 January 2019.
The move appeared high risk and left many wondering how Qatar would cope without the ongoing support of the multinational oil cartel, whose 15 members account for around 44% of global oil production and 81.5% of the world’s oil reserves.
Now, 10 months down the line, we take a look at how the country – which has the third-largest natural gas and oil stocks in the world – has weathered the storm and delivered strong economic growth for its 2.6 mn citizens.
The decision to leave OPEC
Despite being a small country with a relatively small population – the majority of which is made up of expats – Qatar has long been the world’s largest exporter of liquefied natural gas, with its oil reserves being a much more minor concern in comparison.
Pumping out just 600,000 barrels per day, Qatar ranked 11th out of the 15 member states and contributed just 2% of the cartel’s overall production, meaning that its reliance on OPEC was always far less than that of other countries.
Although some at the time suggested that Qatar was leaving the bloc for diplomatic reasons, following its two-year-long dispute with Saudi Arabia (alongside the United Arab Emirates, Bahrain and Egypt and other countries), the country’s energy minister HE Saad Sherida Al Kaabi explained that this was not the case.
Rather, Al Kaabi revealed in December 2018 that the country had chosen to withdraw from OPEC as part of an ongoing decision to move their focus away from oil production so that they could re-intensify their efforts to increase natural gas production from 77 mn tonnes per annum to 110 mn.
Moving forward minus the cartel
One point that’s interesting to note, and which almost certainly had an impact on Qatar’s decision to leave OPEC, is that the country’s output at their maturing oilfields had already levelled off when they left.
As specialists in the field, Top Rated Forex Brokers explain the purpose of the cartel is to secure fair pricing on behalf of petroleum producers. In the case of Qatar, however, they earned far more from natural gas and related products than they did from crude oil, meaning their OPEC membership actually contributed comparatively little to the economy – a reality that has been proven by its continuing resilience post-withdrawal.
Continuing to show strong signs of economic recovery two years after being faced with diplomatic isolation, growth is expected to hit 2.6% by the close of 2019, rising above 3% by 2020. With Qatar having successfully navigated the dual shocks of lower oil prices and the blockade, the country is seemingly on track to become ever more self-sufficient.
Indeed, the government has specifically called on the nation to make efforts towards self-sustainability in all sectors, with the country’s non-hydrocarbon industry, in particular, going from strength to strength. Underpinned by infrastructure investments, it saw an incredible 5.3% growth in 2018 alone – a trend that is expected to continue moving forward.
Resilient, robust, and committed to achieving ever greater fiscal optimisation and economic diversification, Qatar is a country on the up, and its departure from OPEC shows no sign of having slowed its meteoric rise to renewed financial stability.