Petroleum Sector Current Affairs - 2019
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Qatar has announced its withdrawal from Organization of Petroleum Exporting Countries (OPEC) from January 2019 and focus more on the production of natural gas. It makes Qatar first Gulf country to leave OPEC bloc of oil-producing countries led by Saudi Arabia.
Qatar has been member of OPEC since 1961 and its decision to pull out after more than five decades comes at turbulent time in Gulf politics. It is under boycott from its neighbouring gulf allies including Saudi Arabia for 18 months (since August 2017).
Qatar is the world’s largest exporter of liquified natural gas (LPG) and 17th largest producer of crude oil (around 600,000 barrels per day). It also only holds around 2% of the world’s global oil reserves. The withdrawal decision reflects Qatar’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. Being part of OPEC its oil production was steady with limited prospects for increases. Since 2013, amount of oil Qatar produced has steadily declined from about 728,000 barrels per day (2013) to about 607,000 barrels per day (2017), or just under 2% of OPEC’s total output.
Organization of Petroleum Exporting Countries (OPEC)
OPEC is an intergovernmental organization (or cartel) of 15 oil-exporting developing nations that coordinates and unifies the petroleum policies of its member countries. It was established in 1960 in Baghdad, Iraq by the first five members. Its headquarters are in Vienna, Austria.
Its mission is to coordinate and unify petroleum policies of its member countries and ensure stabilization of oil markets, in order to secure an efficient, economic and regular supply of petroleum to consumers, steady income to producers and fair return on capital for those investing in petroleum industry.
OPEC member countries accounted for an estimated 43% of global oil production and 73% of the “proven” world’s oil reserves. Two-thirds of OPEC’s oil production and reserves are in its six Middle Eastern (west Asian) countries that surround the oil-rich Persian Gulf.
- Asia and Middle East: Iran, Iraq, Saudi Arabia (de facto leader of OPEC), Kuwait, United Arab Emirates and Qatar (to withdraw from January 2019)
- Africa: Algeria, Angola, Libya, Congo Nigeria, Equatorial Guinea and Gabon
- South/Latin America: Ecuador and Venezuela
Union Government has constituted six-member committee to look at selling as many as 149 small and marginal oil and gas fields of state-owned Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL) to private and foreign companies to boost domestic output.
The committee will be headed by NITI Aayog Vice Chairman Rajiv Kumar and includes Cabinet Secretary P K Sinha, Oil Secretary M M Kutty, Economic Affairs Secretary Subhash Chandra Garg, NITI Aayog CEO Amitabh Kant and ONGC Chairman and Managing Director Shashi Shanker as members.
Constitution of this committee is follow up of October 2018meeting called by Prime Minister Narendra Modi to review domestic production profile of oil and gas and the roadmap for cutting import dependence by 10% by 2022. In this meeting, Union Oil Ministry had made presentation showing that 149 smaller fields of ONGC, OIL and other explorers accounted for just 5% of domestic crude oil production. It was suggested at the meeting that these smaller fields could be given out to private and foreign firms, so that ONGC could concentrate on big ones where it could rope in technology partners through production enhancement contracts (PEC) or technical service arrangements. This was mainly large ONGC fields as contribute to 95% of its production and leave out the rest for private firms.