Abstract

Five member-states within the Gulf Cooperation Council (GCC) have developed shortages of natural gas, while the sixth, Qatar, controls an ideal source of supply. But proximity and friendly relations within the Arabian Peninsula bloc have failed to provide the basis for sufficient cross-border trade. Several factors continue to thwart regional gas distribution, starting with the GCC’s institutionalized undervaluation of natural gas. During the 1990s, amid faltering negotiations for a GCC-wide gas network, Qatar succeeded against the odds in attracting investment partners and building an export sector in liquefied natural gas (LNG). The unprecedented size and low cost base of Qatar’s LNG industry allowed Qatar to reap political and economic gains far beyond those regionally available. The diminutive peninsular monarchy has since used a network of long-term export contracts and protective security alliances to emerge from Saudi domination, while parlaying its comparative advantage in natural resources into a role of outsized global influence. Meanwhile, as the undersupply crisis has deepened within neighbouring monarchies, Qatar’s 2005 moratorium has closed off the possibility for increases in gas production. Forthcoming prospects for regional distribution of Qatari gas only appear plausible under future conditions of spare capacity, and when combined with a regional willingness to pay prices competitive with those in external markets.

Read the full paper at The London School of Economics and Political Science.