Corporate Debt Review

All About That (Qatari) Gas

Another Wrinkle In the Qatar Crisis

Toward the end of last year, I found myself in discussions with Qatari energy and financial officials in Doha. Those meetings took place just before and after similar sessions in Abu Dhabi. In each case, the object was to determine where investment trends were moving in a broader global context.

Yet one takeaway from those meetings has a curious connection to more recent events. More on this in a moment.

Currently, Qatar has become the subject of sanctions from neighboring countries. The charge is that Doha has been financing terrorists and allying with Iran.

Now the substance of the accusations depends on who you talk to in the region. There are also reasons to suspect the division was accentuated by some “false news” allegedly issuing from Moscow.

On the other hand, that Saudi Arabia is leading the move is not debatable. Egypt and the United Arab Emirates are also supporting the Saudis.

The mess is getting serious.

Fire Turned up Under a Simmering Pot

This is hardly the first time Riyadh has suspended diplomatic relations with Doha. It last happened in 2014. However, this time there is a more concerted antagonism from the Saudis.

Qatar has for some time attempted to play “both ends” in the Gulf – pledging loyalty to Sunni neighbors while continuing to maintain ties with Shia Iran. In both Libya and Syria, the two nations have supported opposing factions.

Then there is the presence of the major Qatari-based Al-Jazeera news network. The Saudis have long criticized the “slant” of the news coming from Al-Jazeera and have demanded that Doha close the outlet. Then there are the Hamas and Muslim Brotherhood figures living in Qatar.

While the Strait of Hormuz remains open to Qatar’s liquefied natural gas (LNG) exports, Saudi Arabia has cut the primary land route for supplies to Qatar. By some estimates, this accounts for upwards to 40% of all daily imports into the country.

Yesterday (June 18) was the deadline for Qataris to leave Saudi Arabia, Bahrain, and the UAE. Egypt is expected to follow suit. For its part, Doha has placed the same deadline on citizens of the three nations living in Qatar. There is no word this morning as to whether each has complied.

Prospects for the rancor tearing apart the Gulf Coordination Council (GCC) remain in a war of decrees that is largely helping Iran now. It for this reason that several knowledgeable commentators believe some interim accord will be reached in a disagreement that has lasted decades.

The Saudi-led move against Qatar was supposed to have created a major rift within OPEC. It didn’t. Qatar is one the smallest contributors to OPEC monthly production, less than 600,000 barrels a day. Its future for a while now has been tied up in exports of LNG, for which its fleet is the largest in the world.

The move was also expected to put geopolitical pressure on the US, given the large and strategically important American military base located there. It hasn’t…and least not yet. Sources have told me that US officials do not as yet see problems for the continuing presence of military personnel there.

Other matters are shaping up differently. And that brings me back to the conversations I had several months back.

Qatar to the Chase

During my discussions late last year, certain Gulf-based finance channels were deemed to be off limits. In both Doha and Abu Dhabi I had broached the subject of financing for Iranian LNG exports. With Qatar having already made a massive investment in LNG and my scheduled meetings with the Iranians to take place in Frankfurt in March, it seemed a major issue.

To say the least, it was unusual to see a Qatari lack of concern over a new export flow likely to further depress their revenues. When I pursued the matter of how those attending expected Iranian LNG exports to develop, I was greeted with something else.

A stone wall.

Doha has been competing with Dubai over the UAE’s dominance in regional finance. Qatar is already the leading global nation for wealth per capita and it has been flexing that leverage. For at least the last two years, it has been enticing fiduciary services from Dubai to Doha.

Subsequent information leads me to conclude the following.

Qatar intends to initiate financing avenues for Teheran with Iranian LNG exports a principal component. It is likely that arrangements between the two countries will involve a broader joint LNG policy, leasing of Qatari tankers and shore facilities, and probably a new bilateral accord on further development of the offshore North Pars fields.

One other possibility involves Qatar entering into consignment swaps with Iran, allowing export of LNG from Iranian ports south of the Strait of Hormuz in the event of increased Saudi and Emirati pressure on the choke point.

Ongoing Doha-Teheran “arrangements” are at the nub of the heated regional controversy. But indications are this time it will be over much heightened finance and export matters.

About the Author


Dr. Kent Moors is an internationally recognized expert in oil and natural gas policy, risk management, emerging market economic development, and market risk assessment.

He serves as an advisor to the highest levels of 27 countries, including the U.S., Russian, Kazakh, Chinese, Iraqi, and Kurdish governments, to the governors of several U.S. states, and to the premiers of two Canadian provinces. He’s served as a consultant to private companies, financial institutions and law firms in 29 countries, and has appeared more than 2,300 times as a featured radio-and-television commentator. He appears regularly on ABC, BBC, Bloomberg TV, CBS, CNBC, CNN, NBC, Russian RTV, and the Fox Business Network.

A prolific writer and lecturer, his six books, more than 2,700 professional and market publications, and over 650 private/public sector presentations and workshops have appeared in 47 countries.