OPEC exit frees Qatar from U.S. legal concerns

[December 13, 2018]   By Rania El Gamal and Eric Knecht

DUBAI/DOHA (Reuters) - Even before taking over Qatar's energy policy in a government reshuffle last month, Qatar Petroleum (QP) CEO Saad al-Kaabi had long wanted the Gulf state to leave OPEC.

Kaabi was concerned OPEC membership could be a stumbling block for QP's ambitions in the United States, where it has one of the world's biggest LNG terminals, and a distraction as Doha doubles down on gas production, three industry sources said.

Proposed U.S. legislation known as NOPEC (No Oil Producing and Exporting Cartels Act) could expose members of the oil exporters club to antitrust lawsuits, a risk for QP at a time it is planning to invest billions more in the United States.

The sources said Qatar's exit had been in the works for months, driven by Kaabi's desire to focus on Qatar's strength in liquefied national gas (LNG) rather than OPEC, where Doha has little say anyway because it doesn't produce much oil.

"It takes Qatar out of the whole debate within the U.S. Congress on whether or not OPEC is a cartel," said James Dorsey, a senior fellow at the S. Rajaratnam School of International Studies. "If anything it puts Qatar in America's good books."

The decision to leave after 57 years just two days ahead of a crucial OPEC output policy meeting in Vienna last week also struck many as a shot at Saudi Arabia, which along with the Bahrain, Egypt and the United Arab Emirates has imposed a boycott on Qatar since June 2017.

The absence of Qatar's emir from an annual Gulf Arab summit in Saudi Arabia on Sunday was then seen as a sign there is no end in sight to the dispute and that Qatar is set to go it alone - outside a six-nation Gulf Arab bloc fractured by the rift.

Qatar would nevertheless still welcome the lifting of the trade and transport boycott which has hit national carrier Qatar Airways, companies with interests in boycotting states and demand from regional investors and banks.

The countries boycotting Qatar accuse it of supporting terrorism. Doha denies the charge.

NOPEC RISK

U.S. President Donald Trump has been a vocal critic of the Organization of the Petroleum Exporting Countries, blaming it for high oil prices. OPEC members have also been unnerved by the souring of U.S.-Saudi relations over the murder of journalist Jamal Khashoggi at the kingdom's Istanbul consulate.

The logo of Qatar Petroleum is seen at its headquarters in Doha, Qatar, July 8, 2017. REUTERS/Stringer

The U.S. Senate is considering this week a joint resolution condemning Saudi Arabia's Crown Prince Mohammed bin Salman for Khashoggi's murder. Trump told Reuters he stands by the crown prince as de facto ruler of a strategic ally, saying he has repeatedly denied involvement in the killing.

But the risk of possible legal action under NOPEC has become a concern for Doha as it aims to cement its rank as the world's biggest LNG producer, the industry sources told Reuters.

State-owned QP is the majority owner of the huge Golden Pass LNG terminal in Texas, with U.S. oil companies Exxon Mobil Corp and ConocoPhillips holding smaller stakes.

QP is also considering buying U.S. gas assets and is due to decide soon on more investment in the Golden Pass LNG project.

While Qatar is one of smallest OPEC producers with output of some 600,000 barrels per day, or 0.6 percent of global demand, it is one of the most influential players in the global gas market thanks to annual production of 77 million tonnes of liquefied natural gas.

Qatar's gas production has been a crucial factor in helping it weather the Gulf Arab boycott and it plans to boost capacity 43 percent by 2023-2024.

Kaabi said in Vienna last week that being primarily a gas producer, Doha saw no added value in belonging to OPEC and that its departure was "100 percent not a political decision".

"We don't have enough weight in OPEC to have an effect," he told reporters on the eve of his first and last meeting as the head of Qatar's OPEC delegation.

Kaabi promised QP would make "a big splash" soon.

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