In December 2018, Qatar caused a stir in the oil market when it announced that it was leaving OPEC in January, an organisation it had been a member since 1961.
Saad Sherida al-Kaabi, Qatar’s minister of state for energy affairs and president and CEO of Qatar Petroleum said the withdrawal decision reflect the country’s desire to focus its efforts on plans to develop and increase its natural gas production from 77 million tonnes per year to 110 million tonnes in the coming years.
Clearly, the decision is more strategic than political, a business decision to take advantage of the next big thing. This is what differentiates successful nations from well, countries like Nigeria. Decisions are viewed from the prism of long-term, strategic benefits rather than emotional and primordial sentiments.
Qatar’s oil production has been on the decline since 2013, from about 728,000 barrels per day in 2013 to about 607,000 barrels per day in 2017, or just under two percent of OPEC’s total output.
Conversely, the country’s Liquefied Natural Gas (LNG) production has been growing exponentially. Steven Wright, Associate Professor at Hamad bin Khalifa University in Qatar, in an article for Aljazeera said Qatar began to strategically cultivate its natural gas sector in 1987 at a time when many in the industry hardly saw any potential in gas.
“This decision paid dividends many times over: Qatar today has emerged as the world largest exporter of LNG, GTL (Gas-to-Liquids) and helium. The revenue from the natural gas sector has propelled its economy and has given it special importance globally,” said Wright.
However, Qatar is not resting on its oars with the threat to market share coming from countries like Russia, Australia and the United States. In September this year, it set a target to lift its LNG output from the current 77 million tonnes per year to 110 million by 2024.
The move to reduce focus on oil and concentrate on LNG is even pragmatic. As the world begins to take the threat of climate change seriously, fossil fuels which are a big contributor to greenhouse emissions will be increasingly maligned even if the world grudgingly continues to depend on crude oil.
Qatar recognises that it is cleaner fuels like LNG that have a brighter future than oil, given the global trend to moving towards cleaner fuels. There is much more uncertainty about the growth in demand for oil than there is for natural gas says Wright.
Africa’s biggest oil producer has the potential to leverage gas to power its economy but a blind obsession with crude oil has turned the focus from gas. 40 years after an oil industry has been developed, Nigeria does not even have terms for its gas rather charges mere pittance as fines from companies who flare more gas than is used for power production.
Maikanti Baru, NNPC GMD in a recent announcement said Nigeria achieved an average national daily gas production of 7.90bscf, translating to 3 per cent above the 2017 average daily gas production of 7.67bscf.
He said out of the 7.90bscf produced in 2018, an average of 3.32bscfd (42 percent) was supplied to the Export market, 2.5bscfd (32 percent) for Reinjection/Fuel Gas, 1.3bscfd (16 percent) was supplied to the domestic market and about 783mmscfd (10 percent) was flared.
For a country that sits upon proven natural gas reserves of 5,627 billion cubic meters, the celebration of three percent increase in production, demonstrates a painful lack of ambition.
Several LNG projects including Brass LNG and OK LNG has been stalled and even the NLNG Train 7 is proceeding at the speed of loose conveyor belt with occasional jerks in the form of announcement of new partnerships but the critical FDI remains elusive.
ISAAC ANYAOGU
