Opec: goals, objectives, headquarters, history of creation, secretary general. Trustee countries: goals, influence, opportunities Not included in the group of oil exporting countries
OPEC (from the English OPEC, The Organization of the Petroleum Exporting Countries) is an organization of oil exporting countries.
What does the organization do?
OPEC coordinates the policy of oil production and global pricing of raw materials.
Members of the organization control approximately two-thirds of the explored oil reserves on the planet, carry out 40% of world production.
The main goals of OPEC:
- protection of the interests of the member countries of the organization;
- ensuring the stability of prices for oil and oil products;
- guarantee of regular oil supplies to other countries;
- providing member countries of the organization with a stable income from the sale of oil;
- determination of the strategy for the extraction and sale of oil.
Who is in OPEC?
OPEC includes 12 countries: Iran, Iraq, Kuwait, Saudi Arabia, Venezuela, Qatar, Libya, United Arab Emirates, Algeria, Nigeria, Ecuador and Angola. Russia, Mexico, Egypt and Oman are observer countries in the organization.
History of creation
OPEC was created at a conference in Baghdad on September 10-14, 1960. The initiator of the creation was Venezuela. Initially, OPEC included Iran, Iraq, Saudi Arabia, Venezuela and Kuwait.
Later, in different years, nine more countries joined this organization.
Qatar (1961)
Indonesia (1962)
Libya (1962)
United Arab Emirates (1967)
Algiers (1969)
Nigeria (1971)
Ecuador (1973)
Gabon (1975)
Angola (2007).
Gabon left the organization in 1994, and Indonesia left the cartel in 2008.
The cartel is headquartered in Vienna, the capital of Austria.
Oil production by OPEC member countries in 2013, thousand barrels per day (according to OPEC):
Saudi Arabia - 9,637;
Iran - 3,576;
Iraq - 2,980;
Kuwait - 2,922;
United Arab Emirates - 2,797;
Venezuela - 2,786;
Nigeria - 1,754;
Angola - 1,701;
Algeria - 1.203;
Libya - 993;
Qatar - 724;
International commodity organizations (ITO) are engaged in the implementation of international commodity agreements that regulate activities in certain market segments in the form of:
- International organizations;
- International councils;
- International Advisory Committees;
- International Research Groups (MIGs).
All of these institutions are engaged in studying the state of world commodity markets, namely: the prevailing relationship between supply and demand for specific commodities, the dynamics of prices and conditions.
Currently, the International Councils for Olive Oil, Tin, Grain are functioning.
There are MIGs for rubber, lead and zinc, and copper.
There is an International Advisory Committee on Cotton and a Tungsten Committee.
Iran It has the second largest oil reserve after Saudi Arabia (18 billion tons) and occupies 5.5% of the world oil products trade market. Particular attention is paid to the diversification of the economy through the development of precision engineering, automotive engineering, rocket and space industry, as well as information technology.
A major oil exporter is Kuwait. Oil production provides 50% of Kuwait's GDP, its share in the country's exports is 90%. The country also has developed oil refining and petrochemistry, the production of building materials, fertilizers, the food industry, and pearl mining. Sea water is being desalinated. Fertilizers form an important part of the country's exports.
Iraq has the second largest oil reserves in the world. The Iraqi state-owned companies North Oil Company and South Oil Company have a monopoly on the development of local oil fields. The southern fields of Iraq, which are managed by SOC, produce about 1.8 million barrels of oil per day, which is almost 90% of all oil produced in Iraq.
In this way, most OPEC countries are deeply dependent on the revenues of their oil industry. Perhaps the only one of the member countries of the organization that represents an exception is Indonesia, which receives substantial income from tourism, forestry, gas sales and other raw materials. For the rest of the OPEC countries, the level of dependence on oil exports ranges from the lowest - 48% in the case of the United Arab Emirates to 97% in Nigeria.
During the crisis, the strategic path for countries dependent on oil exports is economic diversification, moreover, through the development of the latest resource-saving technologies.
OPEC (Organization of Petroleum Exporting Countries) was formed in 1961 at a conference in Baghdad.
What is OPEC is an interstate organization that was created by oil-producing countries in order to establish control over oil production in their region, unite the efforts of countries and control oil prices.
Five countries proposed to create such an organization: Venezuela, Saudi Arabia, Kuwait, Iran and Iraq.
This was due to the fact that in the 60s of the 20th century the process of decolonization began, new independent states began to appear on the world map, and the main world share of oil production was owned by 7 transnational corporations that set their own rules and at one point significantly reduced purchase prices for oil.
The emerging independent states wanted to independently manage their natural resources and do this only for the benefit of their state and society. Since the supply of oil at that time was excessive, measures were needed to prevent a subsequent fall in prices. In this connection, OPEC approved its oil production program and created its own body - the Secretariat, which in our time is located in Vienna.
Opinion: OPEC is a consequence of the globalization of the world economy. The desire to concentrate the management of the oil industry in a single unit, unify processes, ensure uninterrupted supply of raw materials to developed countries and world factories. It is also a powerful tool for influencing the world economy, Russia, through the manipulation of oil production and prices.
Initially, OPEC included 5 founding countries. Subsequently, 5 more joined them: the UAE, Qatar, Libya, Indonesia and Algeria. At the moment, 12 states are represented in OPEC: Venezuela, Saudi Arabia, Kuwait, Iran, Iraq, United Arab Emirates, Libya, Algeria, Ecuador, Equatorial Guinea, Gabon and Angola.
Indonesia became an oil importer and left OPEC. In 2018, Qatar announced its withdrawal from OPEC. In 2015, Russia was invited to join OPEC, but the Russian Federation refused.
Recently, the price of oil has become an important instrument of political influence. The economies of some countries are very dependent on current oil prices and suffer huge losses when they decrease.
Some OPEC countries (Nigeria, Angola, Iraq, Kuwait), with large volumes of oil production, have weak economic systems, large external debts and often enter into unjustified military conflicts (for example, Kuwait's invasion of Iraq in 1990). In Venezuela, for a long time there was the dictatorship of Hugo Chavez, who was replaced by his follower Muduro. Therefore, OPEC countries are facing great difficulties, and even control of 2/3 of the world's oil reserves does not allow stabilizing the situation in the economy and the political sphere.
The opinion is often replicated that OPEC is no cartel, and this organization has long lost real levers of influence on the price of oil. Meanwhile, market observations in the context of meetings and decisions of OPEC show the fallacy of this opinion.
Opinion: OPEC's collusion to increase oil prices - cause a negative in developed countries (shale oil companies do not count), the backlash is the growth of alternative energy: wind, sun. The transition to electric vehicles is accelerating. The world is tired of being dependent on a handful of countries.
The content of the article
ORGANIZATION OF OIL EXPORTING COUNTRIES (OPEC)(Organization of Petroleum Exporting Countries, OPEC) is an international economic organization that unites most of the leading oil exporting countries. Regulates the volume of production and the price of oil on the world market. OPEC members control 2/3 of the world's oil reserves.
The headquarters of OPEC was originally located in Geneva, later moved to Vienna. Twice a year (not counting extraordinary events) OPEC conferences are held, at which each country is represented by the minister responsible for oil production. In addition to official conferences, ministers also hold informal meetings. The main object of negotiations is the regulation of oil production volumes. The main decisions are made by the rule of unanimity (the right of veto is valid, there is no right of abstention). The role of the OPEC president, who leads the organizational work on holding conferences and representing OPEC at various international forums, is performed by one of the ministers of the participating countries. At the 132nd Extraordinary Conference of OPEC in July 2004, Sheikh Ahmad al-Fahd al-Sabah, Kuwait's oil minister, was elected.
In the 2000s, the share of 11 OPEC countries in world oil production was approximately 35-40%, in exports - 55%. This dominant position allows them to exert a strong influence on the development of not only the world oil market, but also the world economy as a whole.
OPEC in the 1960s–1970s: the road to success.
The organization was created in 1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela to coordinate their relations with Western oil companies. As an international economic organization, OPEC was registered with the UN on September 6, 1962. Qatar (1961), Indonesia (1962), Libya (1962), the United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador ( 1973, withdrew from OPEC in 1992) and Gabon (1975, withdrew in 1996). As a result, the OPEC organization united 13 countries (Table 1) and became one of the main participants in the world oil market.
| Table 1. OPEC COUNTRIES AT THE HIGHEST RISE OF THEIR INFLUENCE (1980) | ||||
| Countries | GNP per capita, USD | Share of oil in export value, % | Oil production, million tons | Proved oil reserves, million tons |
| United Arab Emirates (UAE) | 25,966 | 93,6 | 83 | 4,054 |
| Qatar | 25,495 | 95,2 | 23 | 472 |
| Kuwait | 19,489 | 91,9 | 81 | 9,319 |
| Saudi Arabia | 14,049 | 99,9 | 496 | 22,946 |
| Libya | 11,327 | 99,9 | 86 | 3,037 |
| Gabon | 6,138 | 95,3 | 9 | 62 |
| Venezuela | 4,204 | 94,7 | 113 | 2,604 |
| Iraq | 3,037 | 99,2 | 130 | 4,025 |
| Algeria | 2,055 | 91,7 | 51 | 1,040 |
| Iran | 1.957 | 94,5 | 77 | 7,931 |
| Ecuador | 1.203 | 54,1 | 11 | 153 |
| Nigeria | 844 | 95,3 | 102 | 2,258 |
| Indonesia | 444 | 72,1 | 79 | 1,276 |
The creation of OPEC was caused by the desire of oil exporting countries to coordinate efforts to prevent a decline in world oil prices. The reason for the formation of OPEC was the actions of the Seven Sisters, a global cartel that united the companies British Petroleum, Chevron, Exxon, Gulf, Mobil, Royal Dutch Shell and Texaco. These firms, which controlled the processing of crude oil and the sale of petroleum products around the world, unilaterally reduced the purchase price of oil, on the basis of which they paid income taxes and royalties (rent) for the right to exploit natural resources to oil-producing countries. In the 1960s, there was an oversupply of oil in the world markets, and the original purpose of the creation of OPEC was the agreed restriction of oil production for the sake of stabilizing prices.
In the 1970s, under the influence of the rapid development of transport and the construction of thermal power plants, world demand for oil increased dramatically. Now the oil-producing countries could consistently increase the rent payments of oil producers, significantly increasing their revenues from oil exports. At the same time, the artificial containment of oil production led to an increase in world prices (Table 2).
| Table 2. DYNAMICS OF CURRENT PRICES AND RENTAL PAYMENTS FOR REFERENCE OIL* | ||
| years | Current selling prices, dollars per barrel | Rent payments (royalty plus income tax) |
| 1960 | 1,50 | 0,69 |
| 1965 | 1,17 | 0,78 |
| February 1971 | 1,65 | 1,19 |
| January 1973 | 2,20 | 1,52 |
| November 1973 | 3,65 | 3,05 |
| May 1974 | 9,55 | 9,31 |
| October 1975 | 11,51 | 11,17 |
| * Reference oil is oil from Saudi Arabia. Oil from other countries is recalculated to the reference oil depending on the fuel value. | ||
In 1973-1974, OPEC managed to achieve a sharp increase in world oil prices by 4 times, in 1979 - by another 2 times. The formal reason for price gouging was the Arab-Israeli war of 1973: demonstrating solidarity in the fight against Israel and its allies, the OPEC countries for some time stopped shipping oil to them altogether. Due to the "oil shock", the crisis of 1973–1975 turned out to be the worst global economic crisis in the entire period after World War II. Formed and strengthened in the fight against the Seven Sisters oil cartel, OPEC itself became the strongest cartel in the world oil market. By the early 1970s, its members accounted for approximately 80% of proven reserves, 60% of production, and 90% of oil exports in non-socialist countries.
The second half of the 1970s was the peak of OPEC's economic prosperity: demand for oil remained high, soaring prices brought huge profits to oil-exporting countries. It seemed as if this prosperity would last for many decades.
The economic success of the OPEC countries had a strong ideological significance: it seemed that the developing countries of the "poor South" managed to achieve a turning point in the struggle with the developed countries of the "rich North". The success of OPEC was superimposed on the rise of Islamic fundamentalism in many Arab countries, which further enhanced the status of these countries as a new force in world geo-economics and geopolitics. Realizing itself as a representative of the "third world", in 1976 OPEC organized the OPEC International Development Fund - a financial institution that provides assistance to developing countries that are not members of OPEC.
The success of this association prompted other third world countries exporting raw materials (copper, bauxite, etc.) to try to use their experience, also coordinating their actions to increase incomes. However, these attempts were generally unsuccessful, because other commodities were not in such high demand as oil.
OPEC in the 1980s–1990s: a weakening trend.
The economic success of OPEC was, however, not very sustainable. In the mid-1980s, world oil prices almost halved (Figure 1), drastically reducing the income of the OPEC countries from "petrodollars" (Figure 2) and burying hopes for long-term prosperity.
The weakening of OPEC was caused by two groups of reasons - a relative decline in demand for oil and an increase in its supply.
On the one hand, the "oil shock" stimulated the search for new energy sources not related to oil production (in particular, the construction of nuclear power plants). The widespread introduction of energy-saving technologies in general has led to a much slower growth in demand for energy resources than expected. On the other hand, the system of oil production quotas by OPEC members turned out to be unstable - it was undermined both from outside and from within.
Some countries that were also major oil exporters were not included in OPEC - these are Brunei, Great Britain, Mexico, Norway, Oman and, most importantly, the USSR, which, according to some estimates, has the second largest potential oil reserves in the world. These countries benefited from the increase in world prices initiated by OPEC, but they did not obey its decisions to limit oil production.
Within OPEC itself, unity of action was often broken. The organic weakness of OPEC is that it unites countries whose interests are often opposed. Saudi Arabia and other countries in the Arabian Peninsula are sparsely populated, but have huge oil reserves, receive large investments from abroad, and maintain close relations with the Seven Sisters. Some other OPEC countries, such as Nigeria and Iraq, are characterized by high population and poverty, they pursue costly economic development programs and have high external debt. These countries are forced to extract and sell as much oil as possible in order to receive foreign exchange earnings, especially if oil prices are falling. The political orientation of the OPEC countries also differs: if Saudi Arabia and Kuwait relied on the support of the United States, then many other Arab countries (Iraq, Iran, Libya) pursued an anti-American policy.
The discord between the OPEC countries is aggravated by political instability in the Persian Gulf. In the 1980s, Iraq and Iran maximized their oil production to pay for the costs of war with each other. In 1990, Iraq invaded Kuwait in an attempt to annex it, but the Gulf War (1990–1991) ended in Iraq's defeat. International trade sanctions were applied to the aggressor, which severely limited Iraq's ability to export oil. When American troops occupied Iraq in 2003, it generally took this country out of the ranks of independent participants in the world oil market.
As a result of the influence of these factors, OPEC lost its role as the main regulator of world oil prices and became only one (albeit very influential) of the participants in exchange trading on the world oil market (Table 3).
| Table 3 THE EVOLUTION OF THE PRICING MECHANISM IN THE WORLD OIL MARKET IN THE SECOND HALF OF THE 20TH CENTURY | |||
| Market Characteristics | Stages of development of the world oil market | ||
| Before 1971 | 1971–1986 | After 1986 | |
| Pricing principle | cartel | Competitive | |
| Who sets the price | Cartel of Oil Refining Corporations “Seven Sisters” | 13 OPEC countries | Exchange |
| Dynamics of oil demand | sustainable growth | Alternating rise and fall | slow growth |
Prospects for the development of OPEC in the 21st century.
Despite the difficulties of control, oil prices remained relatively stable throughout the 1990s compared to the fluctuations they experienced in the 1980s. Moreover, since 1999, oil prices have gone up again. The main reason for the trend change was OPEC's initiatives to limit oil production, supported by other major oil-producing countries that have observer status in OPEC (Russia, Mexico, Norway, Oman). Current world oil prices in 2005 reached a historical maximum, exceeding $60 per barrel. However, adjusted for inflation, they still remain below the 1979-1980 level, when the price in modern terms exceeded $80, although they exceed the level of 1974, when the price was $53 in modern terms.
The development outlook for OPEC remains uncertain. Some believe that the organization managed to overcome the crisis of the second half of the 1980s - early 1990s. Of course, the former economic strength, as in the 1970s, cannot be returned to it, but in general, OPEC still has favorable opportunities for development. Other analysts believe that the OPEC countries are unlikely to be able to comply with the established oil production quotas and a clear common policy for a long time.
An important factor in the uncertainty of OPEC's prospects is associated with the vagueness of the ways of development of world energy as such. If serious progress is made in the use of new energy sources (solar energy, nuclear energy, etc.), then the role of oil in the world economy will decrease, which will lead to a weakening of OPEC. Official forecasts, however, most often predict the preservation of oil as the planet's main energy resource for the coming decades. According to the report International Energy Forecast - 2004, prepared by the US Department of Energy Information Administration, the demand for oil will increase, so that with existing oil reserves, oil fields will be depleted by about 2050.
Another factor of uncertainty is the geopolitical situation on the planet. OPEC took shape in a situation of a relative balance of power between the capitalist powers and the countries of the socialist camp. However, today the world has become more unipolar, but less stable. On the one hand, many analysts fear that the United States, as the world's policeman, may begin to use force against those who pursue economic policies that do not coincide with America's interests. The events of the 2000s in Iraq show that these predictions are justified. On the other hand, the rise of Islamic fundamentalism could increase political instability in the Middle East, which would also weaken OPEC.
Since Russia is the largest oil-exporting country that is not a member of OPEC, the issue of our country's entry into this organization is periodically discussed. However, experts point to the discrepancy between the strategic interests of OPEC and Russia, which is more profitable to remain an independent force in the oil market.
Consequences of OPEC activity.
The high revenues received by the OPEC countries from oil exports have a dual effect on them. On the one hand, many of them manage to improve the standard of living of their citizens. On the other hand, petrodollars can become a factor slowing down economic development.
Among the OPEC countries, even the richest in oil (Table 4), there is not a single one that could become sufficiently developed and modern. Three Arab countries - Saudi Arabia, the United Arab Emirates and Kuwait - can be called rich, but not developed. An indicator of their relative backwardness is at least the fact that all three still retain feudal-type monarchical regimes. Libya, Venezuela and Iran are at about the same low level of prosperity as Russia. Two more countries, Iraq and Nigeria, should be considered by world standards not just poor, but very poor.
| Table 4 COUNTRIES WITH THE LARGEST OIL RESERVES IN THE EARLY 2000S | |||
| Countries | Share in world oil reserves, % | Share in world oil production by exporting countries, % | GDP per capita, thousand dollars |
| Saudi Arabia | 27 | 16 | 13,3 |
| Russia (not part of OPEC) | 13 | 15 | 7,1 |
| Iraq | 10 | 5 | 0,8 |
| United Arab Emirates | 10 | 4 | 20,5 |
| Kuwait | 10 | 4 | 18,7 |
| Iran | 9 | 7 | 6,0 |
| Venezuela | 7 | 6 | 5,7 |
| Libya | 3 | 3 | 7,6 |
| Nigeria | 2 | 4 | 0,9 |
| United States (not part of OPEC) | 2 | 0 | 34,3 |
The contrast between natural wealth and the lack of noticeable progress in development is explained by the fact that abundant oil reserves (as well as other "free" natural resources) create a strong temptation to fight not for the development of production, but for political control over the exploitation of resources. When there is no readily available natural wealth in a country, income must be generated by productive activities, the benefits from which accrue to the majority of citizens. If a country is generously endowed with natural resources, then its elite tends to be more rent-seeking than manufacturing. Natural wealth can thus turn into a social disaster - the elite get richer, and ordinary citizens vegetate in poverty.
Among the OPEC countries there are, of course, examples where natural resources are exploited relatively efficiently. Prominent examples are Kuwait and the United Arab Emirates. In these countries, current oil revenues are not only “eaten up”, but also put aside in a special reserve fund for future expenses, and are also spent on the development of other sectors of the economy (for example, the tourism business).
Yuri Latov,Dmitry Preobrazhensky
In September last year, the OPEC organization celebrated its anniversary. It was established in 1960. Today, the OPEC countries occupy a leading position in the field of economic development.
OPEC in translation from English "OPEC" - "Organization of Petroleum Exporting Countries". This is an international organization created to control the volume of sales of crude oil and the setting of its price.
By the time OPEC was created, there were significant surpluses of black gold in the oil market. The appearance of an excess amount of oil is explained by the rapid development of its vast deposits. The main supplier of oil was the Middle East. In the mid-1950s, the USSR entered the oil market. The production of black gold in our country has doubled.
This has resulted in the emergence of serious competition in the market. Against this backdrop, oil prices fell significantly. This contributed to the creation of the OPEC organization. 55 years ago, this organization pursued the goal of maintaining an adequate level of oil prices.
What are the countries
The states that are part of this organization in 2020 produce only 44% of the world's oil production. But these countries have a huge impact on the black gold market. This is explained by the fact that the states that are part of this organization own 77% of all proven oil reserves in the world.
Saudi Arabia's economy is based on oil exports. Today, this black gold exporting state has 25% of oil reserves. Thanks to the export of black gold, the country receives 90% of its income. The GDP of this largest exporting state is 45 percent.
The second place in gold mining is given. Today, this state, which is a major oil exporter, occupies 5.5% of the world market. No less large exporter should be considered. The extraction of black gold brings the country 90% of the profit.
Until 2011, Libya occupied an enviable place in oil production. Today, the situation in this once richest state can be called not just difficult, but critical.
The history of the creation of OPEC:
The third largest oil reserves are. The southern deposits of this country can produce up to 1.8 million black gold in one day alone.
It can be concluded that most of the OPEC member states are dependent on the profits that their oil industry brings. The only exception to these 12 states is Indonesia. This country also receives income from such industries as:
For other powers that are part of OPEC, the percentage of dependence on the sale of black gold can range from 48 to 97 indicators.
When difficult times come, the states with rich oil reserves have only one way out - to diversify the economy as soon as possible. This happens due to the development of new technologies that contribute to the conservation of resources.
Organization policy
In addition to the goal of unifying and coordinating oil policy, the organization has a no less priority task - to consider the stimulation of economical and regular deliveries of goods by members of those states that are consumers. Another important goal is to obtain a fair return on capital. This is true for those who actively invest in the industry.
The main governing bodies of OPEC include:
- Conference.
- Advice.
- Secretariat.
The conference is the highest body of this organization. The highest position should be considered the position of General Secretary.
Meetings of energy ministers and black gold specialists take place twice a year. The main purpose of the meeting is to assess the state of the international oil market. Another priority task is to develop a clear plan to stabilize the situation. The third purpose of the meeting is to predict the situation.
The forecast of the organization can be judged by the situation on the black gold market last year. Representatives of the member countries of this organization argued that prices would be kept at the rate of 40-50 US dollars per 1 barrel. At the same time, representatives of these states did not rule out that prices could rise up to $60. This could happen only in the event of an intensive growth of the Chinese economy.
Judging by the latest information, there is no desire in the plans of the leadership of this organization to reduce the amount of oil produced. Also, the OPEC organization has no plans to interfere in the activities of international markets. According to the management of the organization, it is necessary to give the international market a chance for independent regulation.
Today, oil prices are close to the critical point. But the situation on the market is such that prices can both rapidly fall and rise.
Attempts to resolve the situation
After the start of another economic crisis that swept the whole world, the OPEC countries decided to meet again. Prior to this, 12 states were meeting when there was a record drop in black gold futures. Then the size of the fall was catastrophic - up to 25 percent.
Judging by the forecast given by the experts of the organization, the crisis will not affect only Qatar. In 2018, the price of Brent crude was about $60 per barrel.
Price policy
Today, the situation for the OPEC members themselves is as follows:
- Iran is the price by which a deficit-free budget of the state is provided - 87 US dollars (the share in the organization is 8.4%).
- Iraq - $81 (share in the organization - 13%).
- Kuwait - $67 (share in the organization - 8.7%).
- Saudi Arabia - $106 (share in the organization - 32%).
- UAE - $73 (share in the organization - 9.2%).
- Venezuela - $125 (share in the organization - 7.8%).
According to some reports, at an informal meeting, Venezuela made a proposal to reduce the current volume of oil production to 5 percent. This information has not yet been confirmed.
The situation within the organization itself can be called critical. The year of black gold that has fallen in price has hit hard on the pockets of the OPEC states. According to some reports, the total income of the participating states may drop to 550 billion US dollars a year. The previous five-year plan showed much higher rates. Then the annual income of these countries is 1 trillion. USD.