Opec PDF

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Organization of the Petroleum Exporting Countries
Our Mission
In accordance with its Statute, 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.
What is OPEC?
The Organization of the Petroleum Exporting Countries (OPEC) is a permanent
intergovernmental organization, currently consisting of 12 oil producing and
exporting countries, spread across three continents America, Asia and Africa. The
members are Algeria, Angola, Ecuador, the Islamic Republic of Iran, Iraq, Kuwait,
Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates & Venezuela.
These countries have a population of more than 408 million and for nearly all of
them, oil is the main marketable commodity and foreign exchange earner. Thus, for
these countries, oil is the vital key to development economic, social and political.
Their oil revenues are used not only to expand their economic and industrial base, but
also to provide their people with jobs, education, health care and a decent standard of
living.
The organizations principal objectives are:
1. To co-ordinate and unify the petroleum policies of the Member Countries and to
determine
the best means for safeguarding their individual and collective interests;
2. To seek ways and means of ensuring the stabilization of prices in international oil
markets,
with a view to eliminating harmful and unnecessary fluctuations; and
3. To provide an efficient economic and regular supply of petroleum to consuming
nations
and a fair return on capital to those investing in the petroleum industry.
When was OPEC formed?

OPEC was formed at a meeting held on September 14, 1960 in Baghdad, Iraq, by five
Founder Members: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. OPEC was
registered with the United Nations Secretariat on November 6, 1962
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OPEC HISTORY
1960 - founded by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela
1965 - Moves from Switzerland to new headquarters in Vienna, Austria
1973 - Opec embargo causes oil price shock
1990 - Iraq's anger at Kuwaiti over-production sparks Gulf War
The 1960s
These were OPECs formative years, with the Organization, which had started life as
a group of five oil-producing, developing countries, seeking to assert its Member
Countries legitimate rights in an international oil market dominated by the Seven
Sisters multinational companies. Activities were generally of a low-profile nature, as
OPEC set out its objectives, established its Secretariat, which moved from Geneva to
Vienna in 1965, adopted resolutions and engaged in negotiations with the companies.
Membership grew to ten during the decade.
The 1970s
OPEC rose to international prominence during this decade, as its Member Countries
took control of their domestic petroleum industries and acquired a major say in the
pricing of crude oil on world markets. There were two oil pricing crises, triggered by
the Arab oil embargo in 1973 and the outbreak of the Iranian Revolution in 1979, but
fed by fundamental imbalances in the market; both resulted in oil prices rising
steeply. The first Summit of OPEC Sovereigns and Heads of State was held in Algiers
in March 1975. OPEC acquired its 11th Member, Nigeria, in 1971.
The 1980s
Prices peaked at the beginning of the decade, before beginning a dramatic decline,
which culminated in a collapse in 1986 the third oil pricing crisis. Prices rallied in
the final years of the decade, without approaching the high levels of the early-1980s,
as awareness grew of the need for joint action among oil producers if market stability
with reasonable prices was to be achieved in the future. Environmental issues began
to appear on the international agenda.
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The 1990s
A fourth pricing crisis was averted at the beginning of the decade, on the outbreak of
hostilities in the Middle East, when a sudden steep rise in prices on panic-stricken
markets was moderated by output increases from OPEC Members. Prices then
remained relatively stable until 1998, when there was a collapse, in the wake of the
economic downturn in South-East Asia. Collective action by OPEC and some leading
non-OPEC producers brought about a recovery. As the decade ended, there was a
spate of mega-mergers among the major international oil companies in an industry
that was experiencing major technological advances. For most of the 1990s, the
ongoing international climate change negotiations threatened heavy decreases in
future oil demand.
Who are OPEC Member Countries?

The Organization of the Petroleum Exporting Countries (OPEC) was founded in
Baghdad, Iraq, with the signing of an agreement in September 1960 by five countries
namely Islamic Republic of Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. They
were to become the Founder Members of the Organization.
These countries were later joined by Qatar (1961), Indonesia (1962),Libya (1962),
the United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973),
Gabon (1975) and Angola (2007).
From December 1992 until October 2007, Ecuador suspended its membership. Gabon
terminated its membership in 1995. Indonesia suspended its membership effective
January 2009.
Currently, the Organization has a total of 12 Member Countries.
The OPEC Statute stipulates that: "any country with a substantial net export of crude
petroleum, which has fundamentally similar interests to those of Member Countries,
may become a Full Member of the Organization, if accepted by a majority of threefourths of Full Members, including the concurring votes of all Founder Members".
The Statute further distinguishes between three categories of membership:
Founder Member, Full Member and Associate Member.
Founder Members of the Organization are those countries which were represented at
OPEC's first Conference, held in Baghdad, Iraq, in September 1960, and which
signed the original agreement establishing OPEC.
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Full Members are the Founder Members, plus those countries whose applications for
Membership have been accepted by the Conference.
Associate Members are the countries which do not qualify for full membership, but
which are nevertheless admitted under such special conditions as may be prescribed
by the Conference.
OPEC Member Countries:

Country
Algeria
Angola
Ecuador
IR Iran
Iraq
Kuwait
Libya
Nigeria
Qatar
Saudi Arabia
United Arab Emirates
Venezuela
Joined OPEC
Location
1969
Africa
2007
Africa
rejoined 2007 South America
1960
Middle East
1960
Middle East
1960
Middle East
1962
Africa
1971
Africa
1961
Middle East
1960
Middle East
1967
Middle East
1960
South America
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Algeria facts and figures

Covering an area of around 2.4 million square kilometres, the Republic of Algeria is,
territorially, OPECs largest Member Country and the largest country in Africa. It is situated in
the north of the continent, and shares borders with Morocco, the Western Sahara, Mauritania,
Mali, Niger, Libya and Tunisia. To the north is the Mediterranean Sea.
The country achieved political independence in 1962 after more than a century of colonial rule
by France. Algerias struggle for independence was one of the most bitter in Africas colonial
history.
It has a population of more than 36 million, with over 3.5 million living in the capital, Algiers.
Arabic is the official language, while French and Berber Tamazight are also spoken. The
currency is the dinar.
The hydrocarbons sector is the backbone of the economy, accounting for roughly 60 per cent of
budget revenues, 30 per cent of the gross domestic product, and more than 95 per cent of export
earnings. The countrys other natural resources include iron ore, phosphates, uranium and lead.
Algerias President is HE Abdelaziz Bouteflika. It joined OPEC in 1969.
Did you know?
Algeria was first known as the Kingdom of Numidia, whose most famous kings were
Syphax, Massinissa and Jugurta. They ruled during the second and third century BC.
Algerias first commercial oil discovery was Edjelleh in 1956, followed immediately by
the Hassi Messaoud oil field the same year. Production began in 1958. With an estimated
6.4 billion barrels of proven oil reserves, Hassi Messaoud is Algerias largest oilfield,
producing more than 400,000 b/d
b/d (barrels per day)
cu. m. (cubic metres)
Population (million inhabitants)

Land area (1,000 sq km)
Population density (inhabitants per sq km)
GDP per capita ($)
GDP at market prices (billion $)
Value of exports (billion $)
Value of petroleum exports (billion $)
Current account balance (billion $)
Proven crude oil reserves (billion barrels)
Proven natural gas reserves (billion cu. m.)
Crude oil production (1,000 b/d)
Marketed production of natural gas (billion cu. m.)
Refinery capacity (1,000 b/d)
Output of petroleum products (1,000 5b/d)
Oil Consumption (1,000 b/d)
Crude oil exports (1,000 b/d)
Exports of petroleum products (1,000 b/d)
Natural gas exports (billion cu. m.)
36.70
2,382
15
5,196
190.71
73.39
51.40
21.08
12.20
4,504
1,162
82.77
652
501.3
329
698
492.2
52.02
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Angola facts and figures

Located on the Atlantic coast in the southern part of Africa, the Republic of Angola is
the second largest oil producer in Africa.
It has a population of 18 million and is bordered by Zambia to the east, Namibia to
the south and the Democratic Republic of Congo to the north. Its capital city is
Luanda and the national currency is the kwanza. Portuguese is its official language,
but Bantu and other African languages are also spoken. Angola gained independence
from Portugal in 1975.
Angolas impressive economic growth rate is being driven by its oil sector. Oil
production and its supporting activities contribute about half of the nations gross
domestic product and 90 per cent of exports.
Angolas President is HE Dr Jos Eduardo dos Santos. It joined OPEC in 2007.
Did you know?
Angolas most important river is the Cuanza, from which the countrys
currency derives its name.
Angola first produced oil from the Benfica oilfield in the Cuanza Basin in
1955.

GDP per capita ($)
Output of petroleum products (1,000 b/d)
17.99
1,247
14
5,611
100.95
65.69
64.43
8.18
10.47
366
1,618
0.75
38
39.4
90
1,543
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26.4
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Ecuador facts and figures

Ecuador comprises an area of more than 280,000 square kilometres and has a
population of around 14 million. The country straddles the equator, from which it
derives its name. Located in Latin America, it is bordered in the north by Colombia,
in the east and south by Peru and in the west by the Pacific Ocean. Its capital city is
Quito and Spanish is the official language.
Apart from oil, Ecuador also exports bananas, shrimp, coffee, cocoa, cut flowers and
fish. The country is a haven for many exotic animals and birds like the blue footed
booby, and the orange iguana, both of which can be found in the Galapagos Islands.
Ecuadors President is Rafael Correa Delgado. The country joined OPEC in 1973.
Nineteen years later, in 1992, it voluntarily suspended its membership. It resumed
membership of the Organization in 2007.
Did you know?
Ecuadors capital city Quito was declared a World Heritage Site by UNESCO
in the 1970s for having the best preserved and least altered historic centre in
Latin America.
Located in the Santa Elena Peninsula, Ancon 1 is Ecuadors first productive
oil well. It began producing oil in 1921.

GDP per capita ($)
7
14.48
281
52
4,553
65.95
22.29
14.02
- 0.70
8.24
7.00
500
0.24
188
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217.3
256
334
28.8
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Iran facts and figures

Stretching from Turkey and Iraq to Turkmenistan and Pakistan, the Islamic Republic
of Iran is the worlds 17th largest country in terms of territory, comprising more than
1.6 million square kilometres. It is one of the worlds oldest continuous major
civilizations.
It has a population of more than 75 million. The capital, Tehran, is located at the foot
of the Alborz Mountains, and is home to around seven million people. Most Iranians
speak Farsi, while other languages include Azeri, Kurdish and Luri.
Apart from petroleum, the countrys other natural resources include natural gas, coal,
chromium, copper, iron ore, lead, manganese, zinc and sulphur. The national currency
is the rial.
The Islamic Republic of Irans President is Mahmoud Ahmadinejad. It is a Founder
Member of OPEC.
Did you know?
The Dizin ski resort near Tehran sits at 3,800 metres and has several downhill
runs.
The Masjid-i-Solaiman, located in the Khozestan province in the southwest of
the Islamic Republic of Iran, was the countrys first oil well. It was drilled in
1908. It is also, the first oil well in the Middle East.

GDP per capita ($)
8
75.86
1,648
46
6,360
482.45
130.54
114.75
51.43
154.58
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33,620
3,576
188.75
1,772
1,770.2
1,777
2,537
441.3
9.11
Iraq facts and figures

Sharing borders with three other OPEC Member Countries the Islamic Republic of
Iran, Kuwait and Saudi Arabia Iraq covers an area of 438,000 square kilometres. It
has a population of more than 33 million, one fifth of which lives in the capital,
Baghdad. Most Iraqis speak Arabic, although Kurdish is also used especially in the
northern part of the country.
Iraq attained its independence as a Kingdom in 1932. In 1958, a military coup dtat
ended the monarchy, making Iraq a republic.
Apart from petroleum, Iraqs other natural resources include natural gas, phosphates
and sulphur. Its national currency is the dinar. The country has a varied landscape,
which includes areas of desert, mountains and fertile regions.
Iraqs President is Jalal Talabani. The country is a Founder Member of OPEC.
Did you know?
Baghdad was the largest multicultural city of the Middle Ages and was the
centre of learning during the Islamic Golden Age.
Iraqs Kirkuk oilfield consists of three domes Baba, Avanah and Khurmala.
It was at the Baba dome that the countrys first productive oil well was drilled
in 1927.

GDP per capita ($)
33.33
438
76
5,675
189.15
85.64
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83.01
21.76
141.35
3,158
2,653
0.88
800
613.2
752
2,166
163.8
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Kuwait facts and figures

Located on the Arabian Peninsula bordering Saudi Arabia and Iraq, Kuwait is one of
the most densely populated OPEC Member Countries. The Middle Eastern nation
comprises an area of 18,000 square kilometres and has a population of over three
million. Its official language is Arabic.
Kuwait has a prosperous economy. Petroleum accounts for nearly half of its gross
domestic product, 93 per cent of export revenues, and 80 per cent of government
income. Apart from petroleum, its other natural resources include natural gas and
foodstuffs.
The Emir of Kuwait is Sheikh Sabah Al-Ahmad Al-Sabah. It is a Founder Member of
OPEC.
Did you know?
Failaka Island is considered the most beautiful of Kuwaits islands. Its history
dates back to the early Stone Age.
In 1938, the Kuwait Oil Company drilled the countrys first commercial oil
well in the Al Burqan oilfield. The commercial export of crude oil began in
1946.

GDP per capita ($)
10
3.70
18
205
47,787
176.67
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Crude oil production * (1,000 b/d)
103.49
96.72
73.87
101.50
1,784
2,659
13.53
936
881.9
361
1,816
629.2
-
Libya facts and figures

Situated in the north of Africa, and sharing a border to the west with fellow OPEC
Member Country Algeria, Libya is the 16th largest country in the world in terms of
land mass, comprising more than 1.7 million square kilometres. More than a quarter
of the countrys six million plus inhabitants live in its capital city, Tripoli. Arabic is
the main language.
Apart from petroleum, Libya's other natural resources are natural gas and gypsum. Its
economy depends primarily on revenues from the oil sector, which contribute about
95 per cent of export earnings, about one-quarter of gross domestic product, and 60
per cent of public sector wages. Substantial revenues from the energy sector, coupled
with a small population, give Libya one of the highest per capita GDPs in Africa. The
national currency is the dinar.
HE Mustafa Abdul Jalil is Libya's Chairman of the National Transitional Council.
The country joined OPEC in 1962.
Did you know?
Libya's huge man-made river is the largest water transportation project ever
undertaken and carries more than five million cubic metres of water per day
across the desert to coastal areas.
Libya's first productive oil well was struck in 1959 at Amal and Zelten, now
known as Nasser. The country began exporting oil in 1961.
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GDP per capita ($)
6.48
1,760
4
5,691
36.87
16.46
11.82
5.06
48.01
1,547
489
7.86
380
473.2
231
300
20.6
3.67
Nigeria facts and figures

The most populous country within OPEC, Nigeria has over 163 million inhabitants.
Located on the Gulf of Guinea on Africas western coast, Nigeria covers an area of
924,000 square kilometres. Abuja, the capital since 1991, has a population of more
than one million. English is Nigerias official language, although many local
languages such as Hausa, Yoruba, Igbo and Ijaw are also spoken.
Apart from petroleum, Nigerias other natural resources include natural gas, tin, iron
ore, coal, limestone, niobium, lead, zinc and arable land. The capital-intensive oil
sector provides 20 per cent of gross domestic product, 95 per cent of foreign
exchange earnings, and about 65 per cent of budgetary revenues. Its currency is the
naira.
Nigerias President is Dr. Goodluck Ebele Jonathan. The country joined OPEC in
1971.
Did you know?
Conservationists say that Nigerias unique rainforest region is amongst the
richest in Africa. The country is also home to numerous important game
reserves, such as the Yankari and Kainji national parks.
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Oil was first discovered in Oloibiri, in Nigerias Bayelsa State, in 1956.


GDP per capita ($)
163.32
924
177
1,443
235.69
108.30
86.20
17.85
37.20
5,154
1,975
41.32
445
100.3
267
2,377
23.6
25.94
Qatar facts and figures

Covering an area of 11,000 square kilometres and with a population of 1.8 million,
Qatar is the smallest OPEC Member Country in terms of both area and population.
This Middle Eastern nation is located on a peninsular attached to the larger Arabian
Peninsula. The capital, Doha, has a population of 400,000. Arabic is the countrys
official language.
Apart from petroleum, Qatars other natural resources include natural gas and
foodstuffs. Oil and natural gas account for more than 60 per cent of the countrys
gross domestic product, around 85 per cent of export earnings and 70 per cent of
government revenues. Petroleum has made Qatar one of the worlds fastest-growing
and highest per-capita income countries. Its currency is the rial.
Qatars Emir is Sheikh Hamad Bin Khalifa Al Thani. The nation joined OPEC in
1961.
Did you know?
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An expatriate workforce makes up nearly 75 per cent of the country's

inhabitants, most of whom live and work Doha.
Qatars oil exploration began in 1935 at the Dukhan field. Commercial
exportation from the field started between 1939 and 1940.

GDP per capita ($)
1.77
11
161
98,144
173.52
107.10
44.75
53.57
25.38
25,110
734
116.70
80
127.0
125
588
508.8
113.7
Saudi Arabia facts and figures

The Middle Eastern Kingdom of Saudi Arabia straddles the Arabian Peninsula,
bordered by Jordan, Kuwait and Iraq in the north and Oman and Yemen in the south.
It is the 14th largest country in the world covering around two million square
kilometres, making it the second largest OPEC Member Country. Saudi Arabia has a
population of more than 28 million, more than three and a half million of whom live
in the capital, Riyadh. Arabic is the official language.
Saudi Arabia possesses 18 per cent of the worlds proven petroleum reserves and
ranks as the largest exporter of petroleum. The petroleum sector accounts for roughly
75 per cent of budget revenues, 45 per cent of gross domestic product, and 90 per
cent of export earnings. Apart from petroleum, the Kingdoms other natural resources
include natural gas, iron ore, gold, and copper.
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The national currency is the riyal.

The Sovereign is the Custodian of the Two Holy Mosques King Abdullah Bin
Abdulaziz Al-Saud. Saudi Arabia is a Founder Member of OPEC.
Did you know?
Saudi Arabias is home to the worlds largest continuous sand desert the Rub
Al-Khali, or Empty Quarter.
Oil was first struck in Saudi Arabia in March 1938, at a depth of 1,440 metres
in the Dammam oilfield.

GDP per capita ($)
Crude oil production *(1,000 b/d)
28.17
2,150
13
20,505
577.60
360.09
318.48
141.09
265.41
8,151
9,311
92.26
2,107
1,856.7
2,714
7,218
902.2
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UAE facts and figures

The United Arab Emirates comprises seven emirates - Abu Dhabi, Ajman, Dubai,
Fujairah, Ras Al-Khaimah, Sharjah and Umm Al-Quwain - located along the
southeast coast of the Arabian Peninsula. The country covers 84,000 square
kilometres and has a population of around five million. More than one million people
live in the capital, Abu Dhabi. Arabic is the countrys official language.
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About 30 per cent of the countrys gross domestic product is directly based on oil and
gas output. Since the discovery of oil in the UAE, the country has become a modern
state with a high standard of living. The currency is the dirham.
The United Arab Emirates President is Sheikh Khalifa Bin Zayed Al-Nahyan. It
joined OPEC in 1967.
Did you know?
Desert Park in the Sharjah Emirate is a centre for the breeding of the
endangered Arabian leopard. It is thought that very few of these cats exist in
the wild.
The first commercial oil was discovered in 1958 onshore in the Bab-2 well
and offshore at Umm Shaif.

GDP per capita ($)
4.85
84
58
74,235
360.14
252.56
104.54
33.31
97.80
6,091
2,565
52.31
466
446.2
618
2,330
226.9
5.18
Venezuela facts and figures

The Bolivarian Republic of Venezuela lies along South Americas Caribbean Coast. It
is bordered by Brazil, Colombia and Guyana. The country covers an area of 916,000
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square kilometres, excluding the Esequibo area, and has a population of more than 29
million. Around four million people live in the capital, Caracas, and Spanish is the
countrys official language.
Venezuelas oil revenues account for roughly 94 per cent of export earnings, more
than 50 per cent of federal budget revenues, and around 30 per cent of gross domestic
product. Apart from petroleum, the countrys natural resources include natural gas,
iron ore, gold, bauxite, diamonds and other minerals. The national currency is the
bolivar.
Venezuelas President is Hugo Chavez Frias and the country is a Founder Member of
OPEC.
Did you know?
There are 43 national parks in Venezuela, making up 15 per cent of the
countrys land mass.
Venezuela has been an oil producer since 1914 when the first commercial oil
well, Zumaque I, was drilled in the Mene Grande field on the eastern shores of
Lake Maracaibo.

GDP per capita ($)
17
29.07
916
32
10,864
315.84
92.60
88.13
27.21
297.57
5,528
2,881
20.77
1,016
1,131.7
742
1,553
786.3
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How does OPEC function?

Representatives of OPEC Member Countries (Heads of Delegation) meet at the
OPEC Conference to coordinate and unify their petroleum policies in order to
promote stability and harmony in the oil market. They are supported in this by the
OPEC Secretariat, directed by the Board of Governors and run by the Secretary
General, and by various bodies including the Economic Commission and the
Ministerial Monitoring Committee.
The Member Countries consider the current situation and forecasts of market
fundamentals, such as economic growth rates and petroleum demand and supply
scenarios. They then consider what, if any, changes they might make in their
petroleum policies.
For example, in previous Conferences the Member Countries have decided variously
to raise or lower their collective oil production in order to maintain stable prices and
steady supplies to consumers in the short, medium and longer term.
Why does OPEC set oil production quotas?

The OPEC Statute requires OPEC to pursue stability and harmony in the petroleum
market for the benefit of both oil producers and consumers. To this end, OPEC
Member Countries respond to market fundamentals and forecast developments by coordinating their petroleum policies. Production regulations are simply one possible
response. If demand grows, or some oil producers are producing less oil, OPEC can
increase its oil production in order to prevent a sudden rise in prices. OPEC might
also reduce its oil production in response to market conditions.
How does OPEC oil production affect oil prices?

The Oil and Energy Ministers of the OPEC Member Countries meet at least twice a
year to co-ordinate their oil production policies in light of the market fundamentals,
ie, the likely future balance between supply and demand.
The Member Countries, represented by their respective Heads of Delegation, may or
may not alter production levels during the Meetings of the OPEC Conference.
Given that OPEC Countries produce about 43 per cent of the world's crude oil and
about 60 per cent of the crude oil traded internationally, any decisions to increase or
reduce production may lower or raise the price of crude oil.
The impact of OPEC output decisions on crude oil prices should be considered
separately from the issue of changes in the final prices of oil products, such as
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gasoline or heating oil. There are many factors that influence the prices paid by end
consumers for oil products. In some countries taxes comprise over 60 per cent of the
final gasoline price paid by consumers, so even a major change in the price of crude
oil might have only a minor impact on consumer prices.
Does OPEC control the oil market?

No, OPEC does not control the oil market. OPEC Member Countries produce about
42 per cent of the world's crude oil and 18 per cent of its natural gas. However,
OPEC's crude oil exports represent about 60 per cent of the crude oil traded
internationally. Therefore, OPEC can have a strong influence on the oil market,
especially if it decides to reduce or increase its level of production.
OPEC seeks stability in the oil market and endeavours to deliver steady supplies of
oil to consumers at fair and reasonable prices. The Organization has achieved this in a
number of ways: sometimes by voluntarily producing less oil, sometimes by
producing more when there is a shortfall in supplies (such as during the Gulf Crisis in
1990, when several million barrels of oil per day were suddenly removed from the
market).
How does OPEC oil production affect oil prices?

The Oil and Energy Ministers of the OPEC Member Countries meet at least twice a
year to co-ordinate their oil production policies in light of the market fundamentals,
ie, the likely future balance between supply and demand.
The Member Countries, represented by their respective Heads of Delegation, may or
may not alter production levels during the Meetings of the OPEC Conference.
Given that OPEC Countries produce about 42 per cent of the world's crude oil and
about 61 per cent of the crude oil traded internationally, any decisions to increase or
reduce production may lower or raise the price of crude oil.
The impact of OPEC output decisions on crude oil prices should be considered
separately from the issue of changes in the final prices of oil products, such as
gasoline or heating oil.
There are many factors that influence the prices paid by end consumers for oil
products. In some countries taxes comprise over 60 per cent of the final gasoline
price paid by consumers, so even a major change in the price of crude oil might have
only a minor impact on consumer prices.
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Does OPEC Set Crude Oil Prices?

One of the most common misconceptions about OPEC is that the Organization is
responsible for setting crude oil prices. Although OPEC did in fact set crude oil prices
from the early 1970s to the mid-1980s, this is no longer the case. It is true that
OPEC's Member Countries do voluntary restrain their crude oil production in order to
stabilize the oil market and avoid harmful and unnecessary price fluctuations, but this
is not the same thing as setting prices.
DOES OPEC SUPPORT ENVIRONMENT POLICY:OPEC supports sound environmental policies that are fair and equitable, based on
proven needs and designed to address those needs.
OPEC is concerned about the environment and we want to ensure that it is clean and
healthy for future generations.
OPEC also supports sustainable economic development, which requires steady
supplies of energy at reasonable prices. Many countries have already introduced
heavy taxes on oil products. In some countries, the price that motorists pay for
gasoline is three or four times higher than the price of the original crude oil. Taxes
account for up to 70 per cent of the final price of oil products in some countries.
As a result of these taxes, some of the oil-consuming countries (especially those in
Europe where taxation levels are highest) receive much more income from oil than
OPEC does. OPEC is concerned that many of the so-called 'green' taxes that are
currently levied on oil do not specifically help the environment. Instead, they simply
go into government budgets to be spent on other things. Taxes might lead to
instability in the oil industry, creating problems
for many countries and industries.
Industrialised countries are developing policies to limit the use of fossil fuels in order
to reduce their emissions of carbon dioxide. Many are already levying heavy taxes,
particularly on oil products. Yet studies have shown that OECD members could cut
their carbon dioxide emissions by 12 per cent by 2010 and still maintain their tax
revenues, if they adopted a pro rata tax system that levies tax on all forms of energy
according to their carbon content.
OPEC is concerned that some countries may impose environmental and taxation
policies that are harmful to those who rely on fossil fuels for a substantial part of their
income.
Some countries with high oil taxes actually subsidise domestic coal production, yet
coal produces more carbon dioxide than oil. Carbon dioxide is one of the greenhouse
gases which are believed to contribute to global warming.
OPEC is worried about discriminatory oil taxes because we are committed to
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providing a stable petroleum market.

We need to invest in oil exploration and development in order to have production
capacity available as demand rises in the years ahead, but we also need to be sure that
there will be enough demand for that oil and that we will get a reasonable price.
If we do not invest in expanding oil production capacity before it is needed, the world
could face sudden price shocks, leading to serious global economic problems.
OPEC is also concerned that many of the environmental policies now being proposed
and adopted do not have the full support of the scientific community. There is still
considerable debate about the impact of global warming, and how it can best be
addressed. OPEC supports further research into these important issues.
OPEC is also spending heavily to improve its environmental impact, by locating
sources of higher quality oil and gas, by developing cleaner fuels for consumers, and
by reducing the impact of its activities through safer, cleaner drilling, transportation
and refining processes.
OPEC also participates in many international meetings in order to remind
governments and others who are debating environmental policies that they must
consider the needs of developing countries, especially those that rely on their income
from oil.
What is the OPEC Conference?

The Conference is the supreme authority of the Organization, and consists of
delegations normally headed by the Ministers of Oil, Mines and Energy of Member
Countries.
The Conference generally meets twice a year, in March and September, and in
extraordinary sessions whenever required. It operates on the principle of unanimity
and one Member, one vote. It is responsible for the formulation of the general policy
of the Organization and the determination of the appropriate ways and means of its
implementation.
The Conference also decides upon applications for membership of the Organization,
and on reports and recommendations submitted by the Board of Governors on the
affairs of the Organization. It approves the appointment of Governors from each
Member Country and elects the Chairman of the Board.
Moreover, the Conference directs the Board to submit reports or make
recommendations on any matter of interest to the Organization, and considers and
decides upon the Organizations budget, as submitted to it by the Board.
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Who are the heads of Delegation?

The Heads of Delegation to OPEC are the official representatives of each Member
Country to the OPEC Conference. They are normally the Ministers of Oil, Mines and
Energy of Member Countries.
What is the Board of Governors?

The Board of Governors, or BoG, can be compared to the board of directors of a
commercial organization. The BoG is composed of Governors nominated by Member
Countries and confirmed by the Conference for two years. The Board directs the
management of the Organization; implements Resolutions of the Conference; draws
up the Organizations annual budget and submits it to the Conference for approval. It
also decides upon any reports submitted by the Secretary General and submits reports
and recommendations to the Conference on the affairs of the Organization.
The role of the Board of Governors is described in Article 20 of the OPEC Statute.
The Board of Governors shall:
1. Direct the management of the affairs of the Organization and the implementation
of the decisions of the Conference;
2. Consider and decide upon any reports submitted by the Secretary General;
3. Submit reports and make recommendations to the Conference on the affairs of the
Organization;
4. Draw up the Budget of the Organization for each calendar year and submit it to the
Conference for approval;
5. Nominate the Auditor of the Organization for a duration of one year;
6. Consider the Statement of Accounts and the Auditor's Report and submit them to
the Conference for approval;
7. Approve the appointment of Directors of Divisions and Heads of Departments,
upon nomination by Member Countries, due consideration being given to the
recommendations of the Secretary General;
8. Convene an Extraordinary Meeting of the Conference; and
9.
Prepare the Agenda for the Conference.
What is the Economic Commission?

The Economic Commission is a specialized body operating within the framework of
the Secretariat, with a view to assisting the Organization in promoting stability in the
international oil market. The Commission is composed of a Commission Board,
National Representatives, and a Commission staff. The Commission Board consists
of the Secretary General, the National Representatives appointed by the Member
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Countries, and a Commission Co-ordinator (who is ex-officio the Director of the

Research Division).
What is the OPEC Secretariat?

The OPEC Secretariat functions as the Headquarters of OPEC. It is responsible for
carrying out the executive functions of the Organization, in accordance with the
provisions of the Statute and under the direction of the Board of Governors.
The Secretariat consists of the Secretary General, who is the Chief Executive and
includes the Research and Support Services Divisions, the Legal office and the Office
of the Secretary General.
The Research Division, headed by a Director, comprises the departments of Data
Services, Petroleum Studies and Energy Studies. The Support Services Division, also
headed by a Director, includes the departments of PR & Information, Finance &
Human Resources and Administration & IT Services.
The Secretariat was originally established in Geneva, Switzerland, in 1961. It moved
to Vienna, Austria, in 1965. The 8th (Extraordinary) OPEC Conference approved the
Host Agreement with the Austrian Government in April 1965, prior to the opening of
the Secretariat in Vienna on September 1, 1965.
What are OPEC's proven oil reserves?

At the end of 2011, OPEC had proven oil reserves of 1,199,707 million barrels of
crude oil, representing 81 per cent of the world total of 1,481,526 million barrels.
What is OPEC's attitude towards fuel-efficient cars?

OPEC is happy to see improvements in transportation technology to make it cleaner,
safer and more efficient.
The organization would prefer that more people enjoy the benefits of personal
mobility in an environmentally sustainable manner.
Oil is a precious, limited resource and we want people to value it accordingly.
Can OPEC guarantee the security of oil supplies?

Yes, at the right conditions, OPEC can provide an increasing amount of oil to meet
the expected growth of global oil demand. OPEC currently produces about 43 per
cent of the world's crude oil.
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OPEC has a policy of maintaining stability in the oil market, and its Member
Countries have often done this by increasing or decreasing the amount of oil they
produce. Only OPEC nations have a significant spare oil production capacity, and this
enables them to increase production at relatively short notice. However, because
OPEC is not the only source of oil in the market, it cannot guarantee the movement of
oil prices, or the availability of supplies to all consumers at all times.
OPEC has around 81 per cent of the world's oil reserves, and this will enable us to
expand oil production to meet the growth in demand. But in order to expand our
output, we need to be sure that the oil industry will continue to be profitable. Oil
producers invest billions of dollars in exploration and infrastructure (drilling and
pumping, pipelines, docks, storage, refining, staff housing, etc) and a new oil field
can take 3-10 years to locate and develop.
If oil producers do not invest enough money and do it far enough in advance, then the
world could face a shortage of oil supplies in future.
Therefore, OPEC is concerned about issues that undermine the prosperity of the oil
industry and thus threaten the security of world oil supplies. One such issue is oil
taxation in the consuming countries.
Oil taxes reduce the incomes of oil producers, and limit the funds they have available
for maintenance, exploration and production activities.
Oil taxes also limit the growth in oil demand and raise costs for other industries. As a
result, oil producers and other investors are unsure of the future development of oil
prices and profits, and they might hesitate from making the necessary investments.
Although OPEC does try to maintain stability and invest in a timely manner, our
efforts to guarantee the security of oil supplies can be undermined - or supported - by
the actions of oil consumers.
Is there any need for security of oil demand?

Yes, oil consumers need steady supplies of oil, and oil producers rely on steady
demand. If demand changed suddenly it would have a major impact on the
profitability of oil producers and the economies of many countries around the world.
Oil production is a long-term affair: the oil industry works 24 hours a day, 365 days a
year, excluding maintenance or bad weather and other disruptions. Oil facilities
require many millions of dollars of investment, and the investors try to earn a
reasonable return on their capital.
A downturn in oil demand could force oil production to slow down or stop. This
could physically damage the oil fields, reducing the amount of oil that can be
recovered in future. The oil installations could also be damaged. Some facilities, such
as those operating in the oceans, are very difficult and expensive to shut down.
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When production slows down, oil producers might be forced to lay off staff.
Downstream operators, such as gasoline retailers, refiners and transport companies,
could also be forced to shed staff.
If oil producers receive lower incomes they must spend less money and import fewer
goods from oil consumers. If investors are unsure about the risks and the likely
returns from petroleum investments they may not make those investments. If we do
not invest enough money, or do it far enough in advance, then the world could face a
shortage of oil supplies and a downward spiral in the global economy. However, if oil
producers continue to receive reasonable prices and stable demand, they will
maintain their production and invest far enough in advance to meet the growth of
demand.
Thus the security of oil supplies relies upon the security of oil demand. Oil producers
- and oil consumers - need to work together to ensure that the security of oil supply
and demand is preserved.
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INDIAN STRATEGY TO DEAL WITH OPEC

Asking OPEC to act against speculators India has asked oil-producing countries to
move against what it called speculation pushing up prices of crude. Indian finance
minister has asked recently the energy ministers of the Opec countries in Jeddah in
Saudi Arabia that there is need for the oil industry toaffirm its leadership in price
formation and not remain a passive spectator of speculation and paper
trading in oil.
India has proposed that adopting a price band mechanism would stabilize prices in
the global market. Under the mechanism, consuming countries will guarantee that oil
prices will not fall below an agreed level while producing countries will ensure that
oil prices do not rise above a guaranteed level.
This can be one of the solutions to save the world from volatility and unpredictability
in oil prices. In case the global economy slowed or slipped into recession due to high
oil prices the oil producer countries would also suffer.
The current level of prices was in the interest of neither the producer nor the
consuming countries.
International oil prices in the last 10 months have doubled from $70 a barrel in
August 2007.
There are evidences that large financial institutions, pension funds, hedge funds, etc
have channelised trillion of dollars into commodity investments and commodity
derivatives. These financial transactions are unregulated and highly opaque and the
demand for oil generated by these funds is purely speculative.
Asking OPEC for uniform pricing policy

India has asked OPEC to adopt a uniform pricing policy for all buyers and not charge
a premium from developing countries in Asia while offering a discount to the
developed West.
Petroleum Minister Mani Shankar Aiyar told the 132nd OPEC ministerial conference
in Vienna.
India is the only importer among Asian countries to have been invited for the meet to
present views on petroleum and sustainable development.
All Asian countries, barring Japan, were developing nations and accounted for twothirds of the crude imports from West Asia.
During 2003, Asian consumers paid about half a dollar per barrel more than US
buyers and nearly two dollars per barrel more than European consumers.
In the April-July quarter this year, Asian countries paid 36 cents per barrel more than
the US and close to three dollars per barrel more than European customers.
The Asian premium costs between $5-10 billion a year to Asian countries, according
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to the Japan's Institute of Energy Economics.

Import dependent India estimates the premium accounts for $750 million to $1 billion
of its over $18 billion oil import bill, as per petroleum ministry official reports.
In the absence of energy efficient technology it takes India nearly three times as much
oil to produce one unit of economic output as in the OECD (Organisation for
Economic Co-operation and Development) countries.
India, Iran should sign gas pipeline deal

India has said in last week of June, 2008 that it will sign very soon an agreement with
Iran and Pakistan in connection with the transnational pipeline project involving the
three countries.
the Iran-Pakistan-India (IPI) pipeline project is of $7.5 billion There are some issues
with Pakistan that has been taken care of since the Pakistan oil minister has changed
and so India will have to deal with the new minister who will be dealing with it. Very
soon India hopes to sign the agreement with Iran and Pakistan.
The project was first mooted in 1994 but has been stalled by a series of disputes over
prices and transit fees.
India's domestic gas supply meets barely half its fast growing demand, and with
projected 7-8 percent annual growth, the country has to ensure reliable supply of
affordable energy. As long as natural gas is used to move India's power turbines, Iran,
geographically closest to India, will be the lowest cost supplier.
While for India the pipeline is almost a must, Pakistan can afford to kill the project
and reap many diplomatic and economic benefits without compromising its energy
security. Should it decide to do so it could opt for an alternative energy route such as
the proposed US$2 billion Turkmenistan-Afghanistan-Pakistan (TAP) gas pipeline
which would carry gas from Daulatabad in Turkmenistan via Herat Afghanistan to
Multan. For an additional US$500
million TAP can be extended to Fazilka on the Pakistan-India border and hence
provide gas to India as well. At a later stage TAP could be expanded further to
connect other fields in Central Asia to Gwadar, turning the new port into one of the
world's most important energy hubs.
From an energy security standpoint TAP could provide Pakistan with 3,350 million
meters cubic feet per day (mm cfpd) of gas, more than the 2,230 mm cfpd the IPI is
planned to carry. Economically, shifting from IPI to TAP should be of no
consequence. The potential revenue of the IPI, US$700 million in transit fees alone,
would be collected too were TAP extended to India. TAP will also save Pakistan the
need to depend on Iran which has never been a good neighbour due to its role in
spreading Shia militancy in the predominantly Sunni Pakistan. Furthermore, Iran is
not a reliable supplier. Last winter it failed to meet its contractual agreements to
Turkey resulting in the disruption of gas supplies to Turkey during the winter.
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Running through the restive province of Balochistan, the IPI will face constant
threats its reliability due to sabotage by Baloch insurgents.
Asking OPEC to raise oil production

India has joined the global chorus asking members of oil exporting cartel OPEC to
increase
volumes to calm global crude prices. Indian oil minister has complimented his Saudi
counterpart for unilateral decision to increase production by 300,000 bpd (barrels per
day).
This action would help supply side management and would thus stabilise the current
oil market Major oil producing countries should raise their output to calm the market
further and revitalize the global economic growth.
Saudi Arabia is the world's largest oil exporter and has unilaterally decided to raise
production by 300,000 bpd, mainly for exporting to Asian markets which are
witnessing record growth in demand and are pushing up global prices.
This is an effort at weakining the adverse impact of high oil prices on developing
economies.
The Indian government has already raised prices of motor fuels and cooking gas this
year to save state-owned oil marketing companies from bankruptcy.
The current high oil prices coupled with the turmoil in the financial markets would
seriously impact the economic growth of most countries and in the longer term affect
both producers and consumers," Deora wrote.
However, experts feel that India does not have much influence in the global oil
market and Saudi Arabia had been resisting much stronger US demands for pumping
more oil for almost a year before deciding to raise its output.
India in 2007-08 spent $68 billion for its crude imports, up from $48.38 billion in
2006-07.
Even after the June 4, 2008 decision raising prices of diesel by Rs 5 a litre, petrol by
Rs 3 and cooking gas cylinders by Rs 50, besides reducing customs and excise duties,
the state-run firms continue to incur losses of Rs 13.79 a litre on petrol, Rs 23.22 on
diesel, Rs 35.98 on kerosene and Rs 302.99 on each cooking gas cylinder refill.
Building relationship with OPEC: Indian finance minister and

petroleum minister will also attend OPEC meet
The decision to send Indian finance minister to the meeting, called by King Abdullah
of Saudi Arabia to discuss measures to stabilize the international oil market, have
been taken at the highest level in view of the rising inflationary trends and the
volatility in oil market threatening to derail economic growth. All eyes are on this
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high-level meeting between producers and consumer-nations.

Saudi Arabia has already announced that it will step up its daily oil output by
2,00,000
barrels to help cool record-high crude futures. Saudi Arabia, the worlds biggest oil
exporter, is believed to be the only producer with spare output capacity. However,
there are chances that production increases may still not keep up with future demand.
Indian finance minister would interact with leading OPEC (Organisation of the
Petroleum Exporting Countries) members and seek their intervention in cooling crude
prices.
The idea is to get a proper feedback from the oil producers in order to chart a strategy
for dealing with a situation that could emerge in future. India is a petroleum importdependent nation and any volatility in the crude oil market would only make things
difficult for the Indian government in an election year
India should prosecute OPEC in WTO

We live in the WTO era of rule-based trade aimed at increasing competition and
removing distortions. Yet there is an absolutely huge exception to this rule called
OPEC (Organization of Oil Exporting Countries). This cartel shamelessly aims to
manipulate production to deceive consumers.
Why does the world community not impose sanctions on the cartel and ensure its
break-up?
Clearly the very existence of OPEC is anti-competitive. India is now a huge importer
of energy, and its dependence on imported energy will rise further in coming years.
But India by itself cannot take on OPEC. Rather, it must raise the issue within WTO,
and seek multilateral action to stop the fleecing of oil consumers.
US should also help India in the process considering the improving relations between
the two countries. US anti-trust legislation makes it illegal for producers to collude to
raise prices.
This is why the US government fined multinational vitamin producers and even
Microsoft.
Logically, it should prosecute government-owned oil companies in OPEC countries,
sequester OPEC assets in the US, and arrest any OPEC oil minister who steps into the
USA.
But it will not do that because it is reluctant to move against cartelizes who happen to
be governments rather than corporations. The State Department and Pentagon view
many OPEC countries as valuable allies.
The second reason for US reluctance to act is its own oil producers, notably those
based in Texas, who are major beneficiaries of cartelization. Many of them are
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engaged in oil exploration in OPEC countries, and fear that anti-trust action against
OPEC could jeopardize their foreign operations. So this combination of big oil, the
Pentagon and State Department has put paid to any US anti-trust initiative against
OPEC. Instead the US has used diplomatic pressure on OPEC, viewing cartelization
as a diplomatic rather than anti-trust issue.
But even governments are answerable in forums like WTO, which seeks to lower
global trade barriers. Cartelization is a far more objectionable barrier to trade than
quotas or tariffs.
India needs to raise the cartelization of oil as a WTO issue, and canvass support from
other oil-importing countries. If India moves positively, the US and other western
nations will find it difficult to adopt the position that protecting Indian small scale
industries is bad but looting consumers of oil is acceptable.
Trading With Non-OPEC Countries
Non-OPEC countries contain less than one-fourth of the world's proven oil reserves
but produce nearly 60 percent of the world's oil. They also possess most of the
world's capacity for refining crude oil into petroleum products such as gasoline and
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heating oil. Because non-OPEC countries have smaller reserves which are being
depleted more rapidly than in OPEC, their overall reserves-to-production ratio, which
is an indicator of how long proven reserves would last at current production rates, is
much lower (about 14 years for non-OPEC and 73 years for OPEC).
The oil industries in non-OPEC countries differ from those of OPEC countries in
several fundamental ways:
Markets. Whereas most OPEC oil is produced for export, many non-OPEC countries,
such as the United States, produce oil primarily to meet their domestic demand for
petroleum.
Nevertheless, non-OPEC countries as a group account for about 45 percent of crude
oil trade worldwide.
Industry Ownership. OPEC countries generally have state-owned and state-operated
oil industries. Although some non-OPEC countries (e.g., China, Mexico) also have
state industries, most either already have a private sector oil industry or are
promoting increased private investment in their oil industries
Finding Costs. Non-OPEC oil reserves generally cost more to develop and produce
than OPEC reserves. Finding costs in the Middle East (where OPEC countries control
most of the region's oil reserves) averages just over $2/barrel compared with about
$4.50/barrel in the United States and western Europe, and $5.75/barrel in Canada
Excess Capacity. Non-OPEC producers typically operate close to capacity, thus they
have a relatively limited ability to boost production without significant additional
investments.
Nearly all of the world's excess production capacity is in OPEC countries.
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REFERENCES
www.doe.gov
www.eia.doe.gov/cabs/india.htm
www.wikipedia.org
www.opec.org
Reliance Review of Energy Markets Energy Research Group, RIL
news.bbc.co.uk
32

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Organization of the Petroleum Exporting Countries

When was OPEC formed?

Organization of the Petroleum Exporting Countries

Organization of the Petroleum Exporting Countries

Who are OPEC Member Countries?

Organization of the Petroleum Exporting Countries

OPEC Member Countries:

Organization of the Petroleum Exporting Countries

Algeria facts and figures

Population (million inhabitants)

Organization of the Petroleum Exporting Countries

Angola facts and figures

Population (million inhabitants)

Organization of the Petroleum Exporting Countries

Exports of petroleum products (1,000 b/d)

Ecuador facts and figures

Population (million inhabitants)

Organization of the Petroleum Exporting Countries

Output of petroleum products (1,000 b/d)

Natural gas exports (billion cu. m.)

Iran facts and figures

Population (million inhabitants)

Organization of the Petroleum Exporting Countries

Proven natural gas reserves (billion cu. m.)

Iraq facts and figures

Population (million inhabitants)

Organization of the Petroleum Exporting Countries

Value of petroleum exports (billion $)

Kuwait facts and figures

Population (million inhabitants)

Organization of the Petroleum Exporting Countries

Value of exports (billion $)

Libya facts and figures

Organization of the Petroleum Exporting Countries

Population (million inhabitants)

Nigeria facts and figures

Organization of the Petroleum Exporting Countries

Oil was first discovered in Oloibiri, in Nigerias Bayelsa State, in 1956.

Population (million inhabitants)

Qatar facts and figures

Organization of the Petroleum Exporting Countries

An expatriate workforce makes up nearly 75 per cent of the country's

Population (million inhabitants)

Saudi Arabia facts and figures

Organization of the Petroleum Exporting Countries

The national currency is the riyal.

Population (million inhabitants)

UAE facts and figures

Organization of the Petroleum Exporting Countries

Population (million inhabitants)

Venezuela facts and figures

Organization of the Petroleum Exporting Countries

Population (million inhabitants)

Organization of the Petroleum Exporting Countries

How does OPEC function?

Why does OPEC set oil production quotas?

How does OPEC oil production affect oil prices?

Organization of the Petroleum Exporting Countries

Does OPEC control the oil market?

How does OPEC oil production affect oil prices?

Organization of the Petroleum Exporting Countries

Does OPEC Set Crude Oil Prices?