OPEC

Organization of the Petroleum Exporting Countries

What is OPEC? OPEC stands for the Organization of Petroleum Exporting

Countries Members include: Saudi Arabia, Iran, Iraq, Kuwait, United

Arab Emirates, Libya, Algeria, Qatar, Indonesia, Nigeria, and Venezuela

Founded in 1960 Their Mission: Control the PRICE of World Oil by limiting

the SUPPLY

OPEC Founded in 1960

Organization of the Petroleum Exporting Countries (OPEC) is a permanent, intergovernmental Organization, created at the Baghdad Conference on September 10–14, 1960, by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.

Member Countries• 1960: Founding

Members: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.

• Qatar (1961); • Indonesia (1962) –

suspended its membership from January 2009

• Socialist Peoples Libyan Arab Jamahiriya (1962)

• United Arab Emirates (1967)

• Algeria (1969) • Nigeria (1971)• Ecuador (1973) –

suspended its membership from December 1992-October 2007

• Angola (2007) • Gabon (1975–1994).

OPEC Headquarters

OPEC had its headquarters in Geneva, Switzerland, in the first five years of its existence. This was moved to Vienna, Austria, on September 1, 1965.

OPEC Headquarters in Vienna, Austria

MISSION

The mission of the Organization of the Petroleum Exporting Countries (OPEC) is to coordinate and unify the petroleum policies of its Member Countries and ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry

Key Functions of OPEC

Coordination of oil production policies Price and market stabilisation Maintaining stability in oil production Apart from this, OPEC members hold

quarterly meetings to discuss global demand outlook and supply strategies.

Goal # 1: OPEC seeks to ensure the stabilization of oil prices in international oil markets, with a view to

eliminating harmful and unnecessary fluctuations

Goal #2: To keep the interests and secure a steady income for the oil-producing Member Nations.

• Last year, OPEC earned $573 billion in net oil export revenues, a 41 percent decrease from 2008.

• Saudi Arabia earned the largest share of these earnings, $154 billion, representing 27 percent of total OPEC revenues.

• Based on projections from the EIA January 2010 Short-Term Energy Outlook (STEO), members of the Organization of the Petroleum Exporting Countries (OPEC) could earn $767 billion of net oil export revenues in 2010 and $833 billion in 2011.

Goal # 3: OPEC’s role in overseeing an efficient, economic and regular supply of petroleum to consuming

nations.

Goal # 4: Ensure a fair return on capital to those investing in the petroleum industry.

New York Stock Exchange

Other things that OPEC does…• OPEC established the OPEC Fund for International

Development (OFID) in January 1976 (originally called the ‘OPEC Special Fund’) to promote cooperation between OPEC Member Countries and other developing states.

• In particular, OFID aims to help poorer, low-income non-OPEC countries in their pursuit of social and economic advancement.

• OFID is active in many regions, including Africa, Asia, Europe and Latin America.

• It has supported a wide range of projects, from providing clean water and energy to remote communities, to building schools, hospitals and roads and developing industry, farming and trade opportunities.

• Since its establishment, it has made commitments totaling nearly US $10.1 billion, two-thirds of which have already been disbursed.

Does OPEC support environmental policies?

• OPEC is concerned about the environment and wants to ensure that it is clean and healthy for future generations.

• In fact, all OPEC Member Countries have ratified the Kyoto Protocol to the United Nations Framework Convention on Climate Change.

• OPEC considers that the development of technology is important for limiting or reducing greenhouse gas emissions.

• OPEC is looking to participate in international collaborative efforts in research and development programs geared at improving carbon capture and storage technology.

• OPEC Member Countries are also investing heavily to improve the environmental credentials of oil by tackling gas-flaring and promoting safer and cleaner drilling, transportation and refining processes.

• In addition, OPEC participates in many international meetings to remind governments and others debating environmental policies that they must consider the needs of developing countries, especially those that rely on oil for their income.

Summary• While OPEC still has considerable influence in determining

the price per barrel of petroleum by restricting output, their success has greatly diminished since the 1970’s

• Despite the overall increase in worldwide demand for petroleum, OPEC nations have not received the brunt of this increased demand. Rather, it has gone to Non-OPEC nations

• As a result, over the past few years both production and revenues in the OPEC nations have declined significantly

• Successful oil production in the OPEC nations is tied to the political and economic status of the volatile Middle East, which serves as a deterrent to potential importers