Qatar shows mettle, offers compromise as Gulf states prepare meeting

(REUTERS)  Qatar announced plans for a steep rise in Liquified Natural Gas (LNG) production capacity on Tuesday that suggested it was ready for a protracted dispute with Gulf neighbors, but Doha said it was doing all it could to reach agreement.

Saudi Arabia, the United Arab Emirates, Egypt and Bahrain were due to meet on Wednesday to decide whether to continue sanctions they imposed on Qatar on accusations it was aiding terrorism and courting regional rival Iran. Doha denies the charges and has submitted to mediator Kuwait replies to 13 demands that the gathering will consider.

"What Qatar has given in goodwill and good initiative for a constructive solution, based on dialogue, we believe should be sufficient (to show) we have carried out our duties from our side," Qatari Foreign Minister Sheikh Mohammed bin Abdulrahman al-Thani told a news conference in Doha.

"There is a lot of progress that has been made on that front (countering terrorism financing)... but of course there is always room for improvement," he said, describing the sanctions as illegal steps under the pretext of fighting terrorism.

The three Gulf states and Egypt have severed diplomatic and transport ties with Doha in a dispute that has raised concern across the Middle East and beyond. Western states fear a lengthy dispute, besides threatening political instability, could upset supply chains in a region vital for energy supplies.

German Foreign Minister Sigmar Gabriel told the same Doha news conference he felt Qatar had shown restraint in the row which began on June 5 when the Gulf states severed diplomatic and transport ties.

"We hope others will respond in a similar spirit.

Qatar says it is ready to meet any "reasonable" demands.

FILE PHOTO: An aerial view of Doha's diplomatic area March 21, 2013. REUTERS/Fadi Al-Assaad/File Photo

But the Gulf state, with a population of just over two million to Saudi Arabia's 31 million, may be reluctant to carry out conditions such as the closure of the al-Jazeera television station and removal of a Turkish military base - matters it considers impinge on Qatari sovereignty.

Qatar mounted what appeared to be a show of strength on Tuesday, when the state-owned Qatar Petroleum [QATPE.UL] announced plans to raise liquefied natural gas capacity by 30 percent. Its immediate effect will be to worsen a glut on the LNG market where Australia, the United States and Russia vie.

LNG is natural gas liquified at low temperatures to reduce its volume, thus allowing it to be transported by tanker where pipelines are not feasible.

Qatar Petroleum chief executive Saad al-Kaabi said the firm would increase gas production from its giant North Field, which it shares with Iran, by 20 percent after new gas development.