Qatar and Russian Rosneft investment
Is it in the right direction?
Qatar’s purchase of about 19 percent share in Rosneft, the largest publicly listed oil company in the world, at $9 billion warrants some questions as to the purpose and objective behind such a deal.
It seems to be in the right direction from the aspect that Qatar might be trying to divert away from oil, as it is poor in oil production with the maximum being close to one million barrels per day, while it is the third largest gas-producing country after Russia and Iran. It is also in the right direction as the country has been buying the assets of Russia, which is the second most powerful force in the world.
In addition, Qatar bought the share of a Chinese company, which was in financial trouble and could not meet its commitment due to which Qatar took over. This way, it is developing and solidifying its relationship with the China, which is the second economic force in the world and will eventually becoming the top. So through this single $9 billion deal, Qatar has caught two powerful forces in one deal.
This deal can also make Qatar a strong commercial partner with China, which is the biggest oil consumer, for the latter to import gas from it, if not already in existence.
The timing of this oil deal couldn’t be more apt with the oil prices going up and appearing to remain strong, and with the USA re-imposing its oil sanctions on Iran again, which will create instability in the oil market for months to come.
It seems Qatar is doing the right thing by investing in oil, in order to be rich in gas and oil, unlike Norway, which is opting to exit out of investing, focusing on its domestic oil, and diverting away from international oil to venture into other industries far away from oil.
This is exactly what we should do in Kuwait. We must divest of overseas oil investments, oil stock shares, and our overseas oil exploration in KUFPEC, as the timing is good with oil prices firming up which could make it attractive to sell. This should be a long-term strategy of Kuwait — to move away from oil and stay away from further overseas investments.
We have to make our decision in this regard. We shouldn’t be happy with the current surge in oil prices and we should not get carried away.
Qatar took the decision to invest in the biggest oil company in Russia, with the hope of gaining experience in the harsh environment of Siberia, along with some gas experience. In this way, it has gained two strongest political allies - Russia and China - by investing and assisting them both. It is indeed a wellworth investment.