Qatar has officially left the Organization of the Petroleum Exporting Countries (OPEC) on Tuesday, ending its 58 years of membership.
The decision to withdraw was announced on December 3 by Qatar's energy minister Saad al-Kaabi, under the circumstances of Qatar being boycotted by former neighboring allies including Saudi Arabia for 18 months. Kaabi said the decision to withdraw was not "political".
With an oil production of approximately 600,000 barrels per day (bpd), Qatar accounts for only two percent of global oil reserves.
Kaabi said the country will “focus efforts” on gas production. With 858 trillion cubic feet of proved natural gas reserve, Qatar ranks the third in the world. But the country is the world's largest exporter of liquefied natural gas (LNG).
Global demand for natural gas is forecast to increase at an average 1.6 percent over the next five years with emerging Asian markets as the main engine for demand.
Driven by continuous economic growth and strong policy support to switch from coal to natural gas, China alone accounts for a third of global demand growth till 2022.
Qatar announced plans to raise its liquefied natural gas output capacity of 77 million tons a year to 110 million tons, around 43 percent rise. The timeframe for completion to reach the new capacity is expected within the next few years.
Qatar announced in December that it plans to invest more than 20 billion U.S. dollars in the oil and gas sectors as well as unconventional resources over the next five years.
Qatar was the first Arab state to join OPEC after its founding in 1960. Now it will be the first Arab state to leave. There have been instances of countries withdrawing from OPEC before: Gabon withdrew in 1992 and rejoined two decades later. Indonesia suspended its membership in 2016.
Data from OPEC Annual Statistics Bulletin 2018 shows that over 80 percent of the world's proven oil reserves are located in OPEC member countries. International Energy Agency (IEA) data indicates that OPEC member countries produce about 40 percent of the world's crude oil. Equally important to global prices, OPEC's oil exports represent about 60 percent of the total petroleum traded internationally.
Moving forward, OPEC is facing many challenges such as continued improvements in the productivity of U.S. shale, oil transportation bottlenecks in the Permian Basin and western Canada, and expected projects coming on-stream in other non-OPEC countries.