The transport and diplomatic embargo of
Qatar, announced early in June, has oilfield services companies
worried about their supplies of drilling fluid materials, but
others see an opportunity for Iran to jump start its
long-moribund mineral sector.
On June 5 Qatar’s nearest
neighbours cut off all transport to the country, as well as
severing diplomatic links, over the Gulf nation’s
alleged funding of terrorism, and its supposed closeness with
both the Muslim Brotherhood and the government of Iran.
Participants in the embargo include Saudi
Arabia, which shares Qatar’s only land border, as
well as Bahrain, which lies a short distance away in the Gulf,
and the United Arab Emirates, which contains the regional hub
port of Dubai.
Ties were also cut by Egypt, the Maldives,
Comoros, Mauritania, the self-declared republic of Somaliland,
the internationally-recognised government in Yemen, and the
Tobruk government in Libya.
Qatar’s port service has
scrambled to establish new routes, which avoid the Dubai hub.
Shipping giants Maersk of Denmark and MSC have already
announced that they will accept bookings for container
shipments from nearby Oman, which has remained neutral in the
But the move raised concerns among
drilling fluid providers, as to whether they would be able to
source oilfield minerals for use in Qatar’s oil
and gas industry.
Fears of a baryte
As of 2014, Qatar was the
world’s fourth-ranked natural gas producer, after
Russia, and the 17th ranked oil producer, according
to the CIA World Fact book.
Bakers Hughes reported that Qatar had 10
active drilling rigs as of May 2017, out of a total of 391 in
Middle East as a whole.
And earlier this year Qatar lifted a
12-year self-imposed moratorium on new activity in the North
Field region, potentially spurring new drilling activity.
The North Field is part of the South Pars
field, part of which lies in Iranian waters, and is the
world’s largest natural gas formation according to
the Energy Information Administration (EIA).
Energy exports have made Qatar the richest
country per capita in the world, as of 2016, according to IMF
One major oilfield services company told
IM that thanks to cargoes being booked before
the start of the crises, it has access to three
month’s worth of stock from Qatar.
Barytes is a crucial ingredient in
drilling muds, used as a weighting agent to maintain formation
He noted that India, the major supplier of
barytes to the Gulf region, does most of its business with
Saudi Arabia, which spearheaded the embargo, potentially
discouraging shipments to Qatar.
But another barytes consumer noted that
demand in Qatar had been supressed since the start of 2017, due
to low natural gas prices.
Iran stands to
One exporter which could benefit from a
squeeze in barytes supplies in Qatar is Iran.
Qatar’s close proximity to
Iran, and the fact that it shares access to the South Pars
field, makes it a tempting market for Iranian exporters.
The US Geological survey sees
Iran’s barytes reserves at 24m tonnes, the fifth
largest in the world, but production has long been squeezed by
US sanctions, which restricted access to funding, equipment,
With sanctions significantly relaxed in
the wake of the nuclear deal last year, several market
participants pointed to Iran as a possible source of
US-based companies operating in Qatar are
still prevented from buying Iranian exports, but other players
see a way out of their current quandary.
"The Qataris have been supplying from
Iranian companies before, but it was very low," an Iranian
exporter told IM.
But he said that in recent days, there had
been surge demand, nothing that "they are terrified about the
situation which they are in, and they are scared they can't
find good deals".
An Indian exporter pointed to Iran as a
potential competitor across the Gulf region.
"From a product perspective you
can’t write it off," he said, noting that Iran can
supply "quite a range of grades". "I see no reason it
can’t [be a major competitor] he said.
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