Qatar, in a move that could impact Australia, has announced plans for a steep rise in Liquified Natural Gas (LNG) production, suggesting it is ready for a protracted dispute with Gulf neighbours.

But Doha says it’s doing all it can to reach agreement.

The immediate effect of the planned LNG production rise will be to worsen a glut on the LNG market where Australia, the United States and Russia vie.

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.

Qatar says it is ready to meet any “reasonable” demands.

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.

The Saudi Ambassador to Sudan Ali Hassan Jaafar, speaking at a news conference, said he hoped the Gulf crisis would end “in the coming hours” with the Qatari response to demands.

“We wish well for the people of Qatar and we hope that the rulers of Qatar return to their senses,” he said. “We want stability in the Gulf region and in the Arab region. … If these demands are not fulfilled we will defend our security and stability and there will be other measures.”

Qatar mounted what appeared to be a show of strength on Tuesday, when the state-owned Qatar Petroleum announced plans to raise liquefied natural gas capacity by 30 per cent.

Some experts say that, while the Gulf States accuse Qatar of cooperating too closely with Iran, their sanctions could push it to closer cooperation with Tehran on gas production and exports from a shared gas field.