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Qatar’s OPEC decision will boost its energy independence

September 28, 2021 at 6:18 pm

Qatar’s Minister of State for energy affairs Saad Sherida Al-Kaabi attends the 175th OPEC Conference of Organization of the Petroleum Exporting Countries (OPEC) in Vienna, Austria on December 6, 2018 [JOE KLAMAR/AFP via Getty Images]

Speaking at a Future of the Oil and Gas Industry conference, Pulitzer prize-winning author and global energy expert Daniel Yergin said that the Covid-19 pandemic has revealed that the global gas market is more resilient than its oil counterpart. According to Mckinsey, the world is witnessing a new global energy transformation, in which liquefied natural gas (LNG) will not only show resilience but also be the fastest-growing fossil fuel between 2020and 2035.

When, one year before the pandemic in 2018, the world’s largest exporter of LNG, Qatar, announced its decision to pull out of OPEC, it ended nearly 60 years of membership of the international oil producers’ cartel. The withdrawal from OPEC membership did not mean that Qatar was getting out of the oil business altogether; it was simply withdrawing from an organisation that governs oil markets. The decision came against the background of an oil price war between major OPEC member countries Saudi Arabia and Russia. Rather than become entangled in the disagreement, Qatar apparently decided to focus on the development of its own national energy resources.

There are two reasons for Qatar’s focus on LNG. First, it faced highly destructive sanctions during the Gulf blockade of 2017/20. It has since realised that energy independence is a key prerequisite if it is to be a major player in global diplomacy. How much a country manages and develops its natural resources will determine the level of independence it will achieve, especially in an age of crises like the pandemic.

The end of the Gulf dispute - Cartoon [Sabaaneh/MiddleEastMonitor]

The end of the Gulf dispute with Qatar – Cartoon [Sabaaneh/MiddleEastMonitor]

The second point is related to the first: the geopolitics of energy security at a time of transformation. The International Energy Agency (IEA) defines energy security as the uninterrupted availability of energy sources at an affordable price. Countries need energy security in the short as well as long term.

In the short term, energy security focuses on the ability of the sector to react promptly to sudden changes in supply and demand. In the long term, energy security deals mainly with timely investments to supply energy in line with global economic developments and environmental needs. Hence, Qatar has decided to focus on LNG, its main natural resource, to develop its technology and develop some strong protection for the sector.

However, Qatar also wants to adopt the technology for energy alternatives due to climate change concerns. The IEA says that the country’s geographic location carries lots of risk in terms of climate change, which will have a significant impact on the energy required by producer economies in the region to sustain normal life. Qatar, therefore, has no time to lose if it is to transform its energy sector.

According to a report by S&P Global Platts, Qatar Petroleum will spend $200 million on emissions reduction technology for its North Field LNG expansion project. It suggests that Qatar does not want to be a regional country which relies on fossil fuels. Experience has shown that this has posed major domestic challenges for the Gulf countries, such as environmental degradation, including urban air pollution and the increasing salinisation of groundwater.

READ: Qatar will not join OPEC, will invest more on LNG, minister says

In the long run, the region’s high temperatures will lead to more severe environmental and social consequences if governments don’t adopt measures such as the development of renewable energy sources. Qatar has started the process by focusing on LNG. There is no doubt that, like Japan, Qatar will also focus on this as it commits to an increase in its renewable generation to 20 per cent by 2030, according to the International Renewable Energy Agency (IRENA).

Qatar’s decision to withdraw from OPEC in 2018 and its recent 2021 announcement not to rejoin the cartel shows that it is moving towards the strategic evolution of its energy sector. The country, it seems, is eager to become a gas superpower in the world by transforming its technologies. By so doing, it will free itself of OPEC’s hegemony and gain more energy independence while allowing itself to develop its renewable energy goals until 2030.

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.