Qatar shows mettle, offers compromise as Gulf states prepare meeting

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Qatar shows mettle, offers compromise as Gulf states prepare meeting

By Tom Finn and Rania El Gamal

 

FILE PHOTO: An aerial view of Doha's diplomatic area March 21, 2013. REUTERS/Fadi Al-Assaad/File Photo

 

DOHA (Reuters) - Qatar announced plans for a steep rise in Liquefied Natural Gas (LNG) production capacity on Tuesday that suggested it was ready for a protracted dispute with Gulf neighbours, but Doha said it was doing all it could to reach agreement.

 

Saudi Arabia, the United Arab Emirates, Egypt and Bahrain were due to meet on Wednesday to decide whether to continue sanctions they imposed on Qatar on accusations it was aiding terrorism and courting regional rival Iran. Doha denies the charges and has submitted to mediator Kuwait replies to 13 demands that the gathering will consider.

 

"What Qatar has given in goodwill and good initiative for a constructive solution, based on dialogue, we believe should be sufficient (to show) we have carried out our duties from our side," Qatari Foreign Minister Sheikh Mohammed bin Abdulrahman al-Thani told a news conference in Doha.

 

"There is a lot of progress that has been made on that front (countering terrorism financing)... but of course there is always room for improvement," he said, describing the sanctions as illegal steps under the pretext of fighting terrorism.

 

The three Gulf states and Egypt have severed diplomatic and transport ties with Doha in a dispute that has raised concern across the Middle East and beyond. Western states fear a lengthy dispute, besides threatening political instability, could upset supply chains in a region vital for energy supplies.

 

German Foreign Minister Sigmar Gabriel told the same Doha news conference he felt Qatar had shown restraint in the row which began on June 5 when the Gulf states severed diplomatic and transport ties.

 

"We hope others will respond in a similar spirit.

 

Qatar says it is ready to meet any "reasonable" demands.

 

But the Gulf state, with a population of just over two million to Saudi Arabia's 31 million, may be reluctant to carry out conditions such as the closure of the al-Jazeera television station and removal of a Turkish military base - matters it considers impinge on Qatari sovereignty.

 

Qatar mounted what appeared to be a show of strength on Tuesday, when the state-owned Qatar Petroleum announced plans to raise liquefied natural gas capacity by 30 percent. Its immediate effect will be to worsen a glut on the LNG market where Australia, the United States and Russia vie.

 

LNG is natural gas liquefied at low temperatures to reduce its volume, thus allowing it to be transported by tanker where pipelines are not feasible.

 

Qatar Petroleum chief executive Saad al-Kaabi said the firm would increase gas production from its giant North Field, which it shares with Iran, by 20 percent after new gas development.

 

In April, Qatar lifted a self-imposed ban on development of the North Field, the world's biggest natural gas field, and announced a new project to develop its southern section, increasing output in five to seven years.

 

That new project will raise Qatar's total LNG production capacity by 30 percent to 100 million tonnes from 77 million tonnes per year in five to seven years, Kaabi said.

 

The decision will have international ramifications.

 

With such low production costs and LNG facilities closer to buyers in Europe and Asia, the Qatari move means U.S. producers could struggle to sell their LNG competitively and projects still needing finance could struggle to find investors. So far only Cheniere exports U.S. LNG, but there are project proposals with a total capacity of some 150 million tonnes/year.

 

Energy sales have driven Qatar's rapid rise as a regional player, with vast infrastructure projects and widening diplomatic influence as well as a role in the Syrian conflict that is viewed with suspicion by Gulf neighbours.

 

The Saudi Ambassador to Sudan Ali Hassan Jaafar, speaking at a news conference, said he hoped the Gulf crisis would end "in the coming hours" with the Qatari response to demands.

 

"We wish well for the people of Qatar and we hope that the rulers of Qatar return to their senses," he said. "We want stability in the Gulf region and in the Arab region. … If these demands are not fulfilled we will defend our security and stability and there will be other measures."

 

IRANIAN QUESTION

 

The LNG glut has already driven down prices. Asian spot LNG prices LNG-AS have fallen more than 40 percent this year to $5.50 per mmBtu and by 70 percent from peaks in 2014.

 

So far, the majority of LNG is supplied via long-term contracts between producers and users which allow little flexibility and in many cases also prevent importers from reselling cargoes. With supplies far outpacing demand, analysts expect more and more LNG to be freely traded.

 

Many producers have already started to offer contracts without resale or destination restrictions.

 

Kaabi, alluding to suggestions that the Gulf states may ask trading partners to choose between them and Doha, said the company's operations would not be affected by the crisis.

 

"Qatar Petroleum will continue working...If some companies decide they don't want to work with QP that's their choice. We will find other foreign companies to work with," he said.

 

Analysts said the move to boost production was partly to do with added competition in the LNG market, mainly from Australia, the United States and Russia.

 

"It is also to do with Iran now set to increase production on the South Pars field, which means they can up production from their side of the field (North Field) without destabilising the geology of the field," said Oliver Sanderson, gas analyst at Thomson Reuters.

 

Some experts say that, while the Gulf States accuse Qatar of cooperating too closely with Iran, their sanctions could push it to closer cooperation with Tehran on gas production and exports from the shared field.

 

"Qatar needs the support of Iran now more than any time before. I don't believe it would be possible for Qatar to increase production without the cooperation with Iran, if in the long term the (political) situation stayed same as now," said Reza Mostafavi Tabatabaei, president of London-based ENEXD, a firm involved in oil and gas equipment in the Middle East.

 

"Also, major (oil) companies may be asked to choose between working in Qatar or Saudi/UAE and Egypt, otherwise there be sanctions against them. That’s why I don’t think that developing this project by Qatar now will be as easy as before, politically not financially," he added.

 

Qatar Petroleum's Kaabi said there is no cooperation with Iran on any project in the North Field, but the countries have a joint committee that meets yearly to discuss development of the field.

 

While QP owns a majority stake, energy firms including Total, Mitsui & Co and ConocoPhillips also possess small stakeholdings. RasGas is a 70/30 percent joint venture between QP and Exxon Mobil.

 

"Qatar has one of the lowest LNG production costs in the world. It has followed an astute policy of maximizing value from market prices around the world," said Ajay Singh, special advisor at Japan Petroleum Exploration Co and former gas executive at Shell.

 

"For Qatar, LNG is everything."

 

(Reporting by Tom Finn, Issam Abdallah and Rania El Gamal; additional reporting by Henning Gloystein in Singapore, Aaaron Sheldrick in Tokyo, Jane Chung in Seoul and Nina Chestney in London; Writing by Ralph Boulton; Editing by William Maclean)

 

-- © Copyright Reuters 2017-07-05

[observer90210]

Good, let Qatar flood the market with oil,  prices will drop and the other rogues of Saudia,  Abu Dhabi et al.,  will learn a lesson....and the rest of the world will benefit with even lower cost on the barrel!!

[ilostmypassword]

51 minutes ago, observer90210 said:

Good, let Qatar flood the market with oil,  prices will drop and the other rogues of Saudia,  Abu Dhabi et al.,  will learn a lesson....and the rest of the world will benefit with even lower cost on the barrel!!

Actually, it's methane, not petroleum.

[whatawonderfulday]

Excellent news and all it will do is ensure Qatar forges even closer links with Iran. 

[ilostmypassword]

4 minutes ago, whatawonderfulday said:

Excellent news and all it will do is ensure Qatar forges even closer links with Iran. 

Yes, the Iranians are enjoying this spectacle. With an enemy like the Crown Prince of Saudi Arabia, who needs friends?

[Dave67]

Nothing has changed I work in Doha the people are behind Emir. And spealing on Saudi pot kettle black

 

http://www.bbc.com/news/uk-politics-40496778

 

https://www.theguardian.com/uk-news/2017/jul/05/report-calls-for-public-inquiry-into-gulf-funding-of-british-extremism

Edited July 5, 2017 by Dave67

[whatawonderfulday]

1 hour ago, Dave67 said:

Nothing has changed I work in Doha the people are behind Emir. And spealing on Saudi pot kettle black

 

http://www.bbc.com/news/uk-politics-40496778

 

https://www.theguardian.com/uk-news/2017/jul/05/report-calls-for-public-inquiry-into-gulf-funding-of-british-extremism

and it is interesting that the BBC today are running a report stating what we already knew, the Saudis are the biggest backers of the extreme Jihadists. But shush don't tell the UK government who have their tongues firmly implanted up the Saudis backsides, and have done for decades. So how many atrocities will the world have to endure, financed by the Saudis until the penny drops that they should be wiped of the face of the planet, metaphorically speaking ?

[natway09]

Egypt & Saudi,,,,, the biggest financiers of terrorism in the world.

As to that idiot sitting in the White House sitting back fueling this fire I say, behead him

[coulson]

Excellent news and all it will do is ensure Qatar forges even closer links with Iran. 

Maybe you're right. But who created this mess?

Qatar is the only party that has acted with resolve, caution and dignity considering the local and International implications.

All Saudi really wants is a weaker neighbour with less firepower, a closed media outlet and ties cut with the Muslim brotherhood.

The other 10 grievances will be met but the above 3, never.

I said this before, too late to rein in the horns, all this has done is aggrevated the young bull and what you said is the likely outcome in the long run.

[coulson]

Nothing has changed I work in Doha the people are behind Emir. And spealing on Saudi pot kettle black
 
http://www.bbc.com/news/uk-politics-40496778
 
https://www.theguardian.com/uk-news/2017/jul/05/report-calls-for-public-inquiry-into-gulf-funding-of-british-extremism

And I believe QDC is open again. Mashalla!!!

[lvr181]

2 hours ago, whatawonderfulday said:

and it is interesting that the BBC today are running a report stating what we already knew, the Saudis are the biggest backers of the extreme Jihadists. But shush don't tell the UK government who have their tongues firmly implanted up the Saudis backsides, and have done for decades. So how many atrocities will the world have to endure, financed by the Saudis until the penny drops that they should be wiped of the face of the planet, metaphorically speaking ?

"... Saudis are the biggest backers of the extreme Jihadists."

Well, the Wahhabis are, as they are a group of Islamists (Sunnis?) that insist on a literal interpretation of the Koran. Strict Wahhabis believe that all those who don't practice their form of Islam are heathens and enemies. Pretty close close to the extremist Daech I think. 'Fund them and let them die to fight for our beliefs'.  No wonder they (Shia) are fighting them along with the western allies. Many western Governments have a foot in both camps because they want or need the continuing supply of oil.

[Morch]

1 hour ago, natway09 said:

Egypt & Saudi,,,,, the biggest financiers of terrorism in the world.

As to that idiot sitting in the White House sitting back fueling this fire I say, behead him

 

Egypt can barely finance itself. The current Egyptian government is anything but pro-Islamic. And like him or not, al Sisi is one of the few leaders in the region to actually acknowledge and address the need for change.

[observer90210]

8 hours ago, ilostmypassword said:

Actually, it's methane, not petroleum.

Actually, I was talking about petroleum as I think vaguely that Qatar does have a bit of oil here and there.

[terryofcrete]

Booked on Qatar to Da Kok witha tight connection in Doha . Emailed them about potential delays due to this mess.  Answered immediatel saying no change to the route , flight path,  from Dublin to Doha . Should I believe that ?  I know this is selfish, but, hey.. life's too short to be sitting in Middle Eastern Airports longer than necessary. 

[clockman]

The whole situation is because the Saudi, Sunnis. Hate the Shias. This has been going on for hundreds of years.

[coulson]

Booked on Qatar to Da Kok witha tight connection in Doha . Emailed them about potential delays due to this mess.  Answered immediatel saying no change to the route , flight path,  from Dublin to Doha . Should I believe that ?  I know this is selfish, but, hey.. life's too short to be sitting in Middle Eastern Airports longer than necessary. 

 

You'll be fine. Most of their EU flights don't even go over Saudi airspace. If you want peace of mind download the *flightstats* app and see for yourself.

 

Transferring in Doha is normally very easy (once I never even went through security literally disembarked and walked to the next gate for some weird reason), and they are more likely to improve the transit services at this time than to have people miss flights under the circumstances. They need the transit business badly.

 

 

[Dave67]

There was "Fake News" today from UAE Newspaper headlie QATAR BANS ITS CITIZENS AND RESIDENTS FROM LEAVING THE COUNTRY. I was a bit concerned not that I'm going anywhere in the near future. When I read the article it only applies to essential Govenment Staff and O+G workers, got to geep the gas flowing.

 

I actually admire Qatari regimes behaviour during this time. They are keeping calm knowing they can survive and the Saudis will lose face before they will as they are the one saying demands are not negotiable. Emirs Image is everywhere huge posters on the side of building and stickers on cars , good luck to them

Edited July 5, 2017 by Dave67

[Dave67]

5 hours ago, terryofcrete said:

Booked on Qatar to Da Kok witha tight connection in Doha . Emailed them about potential delays due to this mess.  Answered immediatel saying no change to the route , flight path,  from Dublin to Doha . Should I believe that ?  I know this is selfish, but, hey.. life's too short to be sitting in Middle Eastern Airports longer than necessary. 

They'll have to change the route to fly round Saudi. Might just add a bit of time to flight

Edited July 5, 2017 by Dave67