Rajita Sanji & Devi ModhaAP Comparative & Politics | 3B

Purpose & AimsCoordinate and unify petroleum policiesSustain stability

Eliminate fluctuationsSecure a steady income for membersPromote prosperityProtect the environment

Important DocumentsThe Statute

Basically outlines the goals, the structure, and the way in which OPEC functions.

Organization and ObjectivesMembershipThe ConferenceThe Board of GovernorsThe SecretariatConsultative Meetings and Specialized OrgansFinancial ProvisionsAdditional ProvisionsAmendments

History: 1960sCreated: Baghdad Conference

5 countries came together, a time of decolonization

Oil market controlled by multinational companies

‘Declaratory Statement of Petroleum Policy in Member Countries”Inalienable rights of each country involved,

control of own natural resources. Now Headquartered in Vienna, Austria

History: 1970sGrew internationally, gained importanceTwo occasions in which oil prices rose

significantlyArab oil embargo in 1973 Iranian Revolution in 1979

1975 Head of State and Government in AlgiersAddressed poorer nations’ issues, called for

international help and cooperationEstablishment of OPEC Fund for International

Development in 1976Added more members (Total = 13 by 1975)

History: 1980sPrices crashed in 1986, caused severe

hardship for many countries (Iran-Iraq War)Prices increased in the end of the decade Production ceiling introduced and divided by

Members Reference Basket for pricing introduced

More cooperation from all members in OPEC as well as all non-OPEC members

Environmental issues = new problemTotal = 13 members

History: 1990sPrices relatively stableMore integrated oil market

Post-Soviet world = greater regionalism, globalization, communications, technology

Iraq and Kuwait both involved in Persian Gulf War Prices would fluctuate but OPEC controlled situation –

remained stablePrices moved less dramatically than in the 1970s and 1980s

Timely action reduced the market impact of regional hostilities in 1990–91.

Environmentally-friendly movement Sought fairness, balance and realism in the treatment of

supplyOne country left OPEC, while another suspended its

Membership. Total= 11 members

History: 2000sPrices dropped in 2008 and then crashedIndonesia suspended membership

January 2009Total= 12 members in 2012

Membership

Leadership Secretariat

Chief Executive arm of OPEC President – Rostam Ghasemi Consists of leaders who specialize in data services, research,

petroleum studies, and public relations OPEC Conference

Has supreme authority Ministerial-level delegation from each Member Country Meets twice a year – March, September Principle of unanimity Board of Governors reports to the Conference – budget,

recommendations Board of Governors

Nominated by Member Countries and confirmed by the Conference Directs management of Secretariat, implements Conference

resolutions, draws up budget (that the Conference approves), submits reports and recommendations to Conference.

Leadership cont’dMinisterial Monitoring Sub-CommitteesHeads of Delegation

Representatives of each Member Country to the Conference - normally the Minister of Oil or Energy

Economic Commission BoardResearch-oriented department.

Secretary General – Abdallah el-BadriAppointed by the Conference, three year term

which can be renewed once

Leadership: Secretary GeneralInternal AuditorOffice of the SG

Abdullah al-ShameriHelps the SG execute, manage, plan and guide policyMaintains close relations with Austrian government

Legal OfficeAsma Muttawa – headed by General Legal CounselAdvises SG, supervises Secretariat’s legal affairs

Research DivisionDr. Hasan M. QabazardPlans and coordinates all research efforts within Division

Support Services DivisionProvides infrastructure needed to implement services

Leadership: Research DivisionEnvironmental Matters UnitData Services DepartmentPetroleum Studies Department

Energy Studies Department

Support Services DivisionPR & Information Department

Finance & Human Resources Department

Administration & IT Services Department

MembershipAdvantages Disadvantages 1973 Energy Crisis

Yom Kippur War, fourfold increase in the price of oil, five months

Raised crude oil prices by 10%, nationalized oil industries Power to control oil prices Use this control for own

political interests Secure a steady income for

nations Collective security But each country has

independence, to make its own decisions

Power to suspend own membership

Limit competition among themselves

Criticized for having short term policy plans and changes that cause fluctuations or worsen them

International ImpactOFID

OPEC Fund for International Development - promotes cooperation between OPEC Members and other developing nations, helps the poorer non-OPEC countries

Active in Africa, Asia, Latin AmericaProvides clean water, builds schools, hospitals

and roads, farming and trade opportunities

OPEC: Iran & RussiaIran

Is a (Founding) member: Baghdad Conference

Gained dominance from Saudi Arabia, 2011 New powerhouse USA has no influence

on OPEC

Russia Not a member Chechnya – primarily

Muslim dominated, fought for freedom

Yukos Oil – Khodorkovsky arrested in 2003, company trying to protect itself from being dismantled

Rosneft – Sechin, oil fields and other assets from Yukos Nomenklatura

Economy is fueled by its huge oil and gas reserves Mostly state owned Attempts to keep economy

from declining Putin has prioritized

diversifying the economy but oil and energy continue to be vital resources

OPEC: Mexico & NigeriaMexico

Not a member“Mexican Miracle” –

rapid growth based on oil Mexico’s production

increased as OPEC’s decreased

PEMEX – a para-statal, government owned but privately managed After 1980s oil bust,

para-statals have dwindled

Fox and Calderon tried privatizing it but did not succeed

Nigeria Is a member Both a major consumer and

producer of oil No successful policy of adding

value to the crude oil Spends more money on oil than

necessary America’s fifth largest oil

supplier, world’s eighth largest oil exporter

Economic dependence on oil - the country’s good fortune has been a liability in its quest for political and economic stability. Corruption: enriched the elite. Other sectors in economy are

ignored Movement for the Emancipation

of the Niger Delta protested the environmental devastation caused by the oil industry – 2002, 2006 Oppressed by the government

Works Cited"Home." OPEC: Organization of the Petroleum Exporting Countries. Web. 21 Mar. 2012. <http://www.opec.org/opec_web/en/>.

"OPEC: FAQs." OPEC: Organization of the Petroleum Exporting Countries. Web. 21 Mar. 2012. <http://www.opec.org/opec_web/static_files_project/media/downloads/publications/FAQ.pdf>.

"OPECORGANIGRAM." OPEC: Organization of the Petroleum Exporting Countries. Web. 21 Mar. 2012. <http://www.opec.org/opec_web/static_files_project/media/downloads/about_us/OPECORGANIGRAM.pdf>.

"Saudi Arabia Lost Its Dominance in OPEC, Iran Is New Powerhouse: Analysts." Payvand.com. 10 June 2011. Web. 22 Mar. 2012. <http://www.payvand.com/news/11/jun/1094.html>.