Saudi Dispute With Qatar Has 22-Year History Rooted in Gas

Saudi Dispute With Qatar Has 22-Year History Rooted in Gas
Saudi Arabia's isolation of Qatar has been brewing since 1995, and the dispute's long past and likely lingering future are best explained by natural gas.

Gas isn’t the immediate cause of the current showdown, but “you can question why Qatar has been unwilling to supply its neighboring countries, making them gas poor,” said Wright, the academic, speaking by telephone from the Qatari capital Doha. “There probably was an expectation that Qatar would sell gas to them at a discount price.”

What Next?

Adding to regional frustrations, in 2005, Qatar declared a moratorium on the further development of the North Field that could have provided more gas for local export.

Qatar said it needed to test how the field was responding to its exploitation, denying that it was bending to sensitivities in Iran, which had been much slower to draw gas from its side of the shared field. That two-year moratorium was lifted in April, a decade late, after Iran for the first time caught up with Qatar’s extraction rates.

“People here are scratching their heads as to exactly what the Saudis expect Qatar to do,” said Gerd Nonneman, professor of international relations and Gulf studies at Georgetown University’s Doha campus. “They seem to want Qatar to cave in completely, but it won’t call the Muslim Brotherhood a terrorist organization, because it isn’t. And it isn’t going to excommunicate Iran, because that would jeopardize a relationship that is just too fundamental to Qatar’s economic development.”

To contact the reporter on this story: Marc Champion in London at mchampion7@bloomberg.net. To contact the editors responsible for this story: John Fraher at jfraher@bloomberg.net Rodney Jefferson.


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WHAT DO YOU THINK?


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Bassam EL Wazni  |  June 14, 2017
two years ago Iexpected a war in the Gulf area..I wrote the following The LNG market has extra supply of about 60 MTPY and by end of 2017 there will be a wave of new 60 MTPY of LNG introduced to the already saturated international market. So what will the world do with the flood of LNG output? Sure the price of LNG will crash to about $1/MMBTU. As more LNG output will continue up to 2020, the price of LNG will not revive until after the year 2025. Unless, the world is going for war by mid of 2017 in a location where about 80 MTPY of LNG and 20 MBPD of crude oil will be cut off from the market!!!! It is important to point out that Australia cannot and will not compete with Qatar as the issue here is not between two countries. It is between the major players in the energy market; ExxonMobil , Chevron & Total companies which control Qatar LNG production and Australia LNG production. These companies are partners (33-49%) of the LNG in Qatar and owners (100%) of the LNG in Australia and they will decide what is best for them. To my knowledge, Qatar’s LNG projects have paid back its costs and the three players have made huge profits from Qatar’s LNG project. However, their interest now is to make Australia’s costly LNG projects work and pay back its cost. Marketing Australia LNG is more vital to Chevron, Exxon and Total than Qatar’s LNG, so I would imagine Qatar LNG is completely stopped in the best interest of the major energy players. Worse scenario is war that will completely stop LNG production from Qatar however huge reduction to about 50 % of Qatars LNG output may help the big energy players to quickly gain good cash from Australian LNG sales. This reduction might starts with operations shutdown due to shortages in spare parts or critical consumables like catalysts forcing LNG production to gradually reduced to the level that make Australian LNG enters the market with high price to increase the cash flow for the big players. It is highly recommended that Qatar form an emergency team to list all major spares and consumables to purchase and to stock them ASAP to resist any plan aiming to halt its LNG production. Hence, who do you think is behind the problem in that area?!!!
Nik Kalita  |  June 07, 2017
Interesting take that rings true but may not be the whole story. I wonder how the 1100 strong US military presence in Qatar features.
Interested observer  |  June 07, 2017
Not sure you can blame Qatar for not supplying its neighbours with gas. For example, Qatar and Exxon spent years negotiating with Kuwait for pipeline supplies from Qatar to Kuwait in the early 2000s. An HOA, including pricing, was agreed, but the project eventually cratered following pressure from, guess who, the Saudis.....


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