CNBC Transcript: Saad al-Kaabi, Qatar Energy Minister


HADLEY GAMBLE (HG): Thank you so much for joining CNBC. I want to kick off with Qatar’s decision to leave OPEC. Walk me through the reasons behind that decision.

Saad al-Kaabi (SAK): We’ve been really contemplating this decision for some time now for a few months. We’ve been looking at the activity we’re planning and expanding our gas business and really evaluating the value of us being an opaque as a small producer and how much we’re going in the gas business. And that really resulted in us deciding that gas business is our future and our strategy and that’s where we’re growing. And we didn’t see ourselves fitting anymore.

HG: And your Excellency, you’ve been a member of our pack for almost six decades. And today no one really believes it’s just about diversification and focusing on the gas. Most people would say this has to do with the rift with Saudi Arabia. What’s your response to that?

SAK: I’m a new minister that has just been appointed almost a month ago. I have been involved in the oil and gas business for more than 30 years. I have been known as somebody that has worked on the gas business and promoting gas business with my previous bosses if you will and Qatar Petroleum and ex ministers and gas business is really the thing that drives our strategy our growth and everything that we’re doing. And as a gas man if you will and I’m looking at the gas business as the most important thing for Qatar in the future of Qatar I thought that that was an important thing. Really focus and just keep driving on the gas business. And I suggested to our leadership that we should exit OPEC. I know people would love to politicize this and they have politicized it and I see media and a lot of people even my country when you look at some of the media have been politicizing this because they don’t know really the facts and the fact is the absolute truth is that this has been done on a methodical way of looking at strategy and looking at what’s our business going forward.

HG: And when you look at the politics of this there is a lot of conversation not just about Qatar but also obviously about Iran about the growing relationship between Saudi Arabia and Russia when it comes to energy markets. How worried are you about what you’ve seen over the last six to 12 months?

SAK: Energy is very important for everybody around the world. It’s the most important thing for humankind. I mean we need electricity we need cars. We need transportation of all forms to be a really functioning. So we need a very good energy mix between oil, gas, renewables, nuclear a lot of things that were the people working on of course gas is the oil. A lot of people call it the transition fuel. We believe it’s really the destination fuel as the cleanest fossil fuel available to everybody that wants to use fuels. And we see that as the most important element really going forward. Anything else really is something that will be important in the future. But as a percentage of the energy mix if you will gas is going to be dominating the future. I know that a lot of rifts and the political things that are happening around the world are affecting the energy industry and that’s quite disturbing in some sense. And I hate to see any restriction of oil and gas movements whether it’s political moves, tariffs, additional tariffs. I think we need supply and demand to dominate what will happen to the market, not political influence.

HG: So you would say then that the sanctions on Iran are not necessary.

SAK: No I don’t think the sanctions on Iran as a technocrat speaking now you know looking away from politics. And I think the implications of putting a sanction on Iran and stopping oil flowing from it is not good for the energy business. I think having a free flow of oil and liquids and gas from all countries to all countries and having supply demand dominate that is a much better outcome for humankind around the world. In addition to that I think putting tariffs on LNG whether it’s know LNG coming out of the US by China or anybody else is not also beneficial although I’m an LNG supplier and it’s good for me as a Qatari LNG competing with U.S. LNG if it is penalized with penalties but I don’t think that’s good long term because we are also contemplating producing gas from the US and exporting gas from the US in the form of LNG without partners to everyone around the world so I think free flow of all energy is good for the market. If we’re looking for better fuel prices for the future, I know that the US is looking for instance for better oil prices. President Trump keeps tweeting regarding oil prices being lower. I think if we make sure that everybody can get their volumes to the market including Iran and that will be serving that purpose.

HG: Given what we’ve seen over the last several months in particular there’s a conversation that happened again and again at meetings like this one – is OPEC still relevant. What’s your take?

SAK: I think OPEC is an organization that has reduced in strength if you will with time due to the growth of many producers like the US itself. Russia is a very large producer. So I don’t think OPEC looking at the percentage of the market share that it has is as strong as it used to be.

HG: Does that mean that we need to look for some other kind of organization a new one perhaps to find that market balance?

SAK: I’m not for organizations as again, as a technocrat, I think organizations that have restriction of flow to the market are not something that I endorse.

HG: Well not necessarily restricting the flow but certainly trying to balance the market.

SAK: I think if you let supply demand work it will balance the market and I think the more the cheapest projects will be able to function and economics will drive projects happening in the market and I think you leave it letting supply and demand work itself out with the energy mix that’s going to be available to that there’s going to be sufficient to take care of that.

HG: And looking specifically to your country what happens next what new markets are you looking toward as you refocus on gas?

SAK: For us, we’ve announced that we’re going to grow from 77 million tonnes per annum to 110 million tonnes per annum where we are well on our way and that development where we’re in the stage of building material you know tendering for rigs and we’re going full steam ahead there. We think that growth in LNG is very important for us in addition to our international growth where we have huge investments that we’re going to be making in many countries around the world. We’re in Brazil and big exploration blocks, we’re in Mexico and Cyprus, in Argentina we are in the US and we are going to grow in a big way in many of these markets and you will see announcements that will come very soon. Some major decisions that we’re going to be taking in investments outside the country outside Qatar including the U.S. We are supplying volume into China we’re looking at supplying more volume into China as the biggest LNG market obviously and we have very good relationships with buyers in China and selling substantial volume to China currently. We’ve just recently signed a 22 year deal with China and more to come.

HG: I know that you said you’re a technocrat but energy is always political. How do you plan to navigate that going forward because some would say that the moves that we’ve seen from Qatar in the last few days mean that they are withdrawing from that traditional GCC relationship.

SAK: You see I am a technocrat and you’re right that the energy and politics do work together but it works together geopolitically and making sure that you can get into different countries. You have relationships I have to meet some presidents. I have to go into countries because I’m an international player. I’m also the CEO of QP and QP is really international and we’re like any international company ExxonMobil, Shell and so on and so I have to have relationships that I have to deal with politicians and I have to navigate the geopolitics of the business. So there definitely is a part of our business and I think we do it very well. But what I refer to in that discussion is people politicizing the decision that we take in seeing what’s best for our country and for our strategy going forward in the energy industry and twisting that around due to the conflict of the blockade that we have against Qatar. We have a very unjust blockade that has been in place for more than a year and a half now from Saudi Arabia and the Emirates, Bahrain and Egypt. We still do not understand the blockade and I think many people around the world struggle with finding the logic of stopping food, medicine and people crossing borders for what so called a funding of terrorism. When we sign with the US that we’re you know an open book policy to review that that specific file together and where the others have not. And then you see the issues that other countries are doing around the world.

HG: And final question isn’t there some danger when you disengage politically within the energy sphere because we’ve agreed that all energy is political. Is there a danger when you disengage from organizations like OPEC or potentially the GCC itself. Are you worried about that?

SAK: No disengaging from OPEC doesn’t mean anything. OPEC is an organization that was put together for basically producers to discuss supply demand and see if they could restrict demand when there isn’t any then and add supply when there isn’t any then add more supply if they have that supply available.