Rajita Sanji & Devi Modha AP Comparative & Politics | 3B

1. Rajita Sanji & Devi Modha AP Comparative & Politics | 3B

3. Purpose & Aims • Coordinate and unify petroleum policies • Sustain stability • Eliminate fluctuations • Secure a steady income for members • Promote prosperity • Protect the environment

4. Important Documents • The Statute • Basically outlines the goals, the structure, and the way in which OPEC functions. • Organization and Objectives • Membership • The Conference • The Board of Governors • The Secretariat • Consultative Meetings and Specialized Organs • Financial Provisions • Additional Provisions • Amendments

5. History: 1960s • Created: 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

6. History: 1970s • Grew internationally, gained importance • Two occasions in which oil prices rose significantly • Arab oil embargo in 1973 • Iranian Revolution in 1979 • 1975 Head of State and Government in Algiers • Addressed poorer nations’ issues, called for international help and cooperation • Establishment of OPEC Fund for International Development in 1976 • Added more members (Total = 13 by 1975)

7. History: 1980s • Prices 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 problem • Total = 13 members

8. History: 1990s • Prices relatively stable • More 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 stable • Prices 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 supply • One country left OPEC, while another suspended its Membership. • Total= 11 members

9. History: 2000s • Prices dropped in 2008 and then crashed • Indonesia suspended membership • January 2009 • Total= 12 members in 2012

10. Membership • Original 5 nations • Iran • Iraq • Kuwait • Saudi Arabia • Venezuela • Other members • Qatar (1961) • Indonesia (1962) – suspended its membership in January 2009 • Libya (1962) • United Arab Emirates (1967) • Algeria (1969) • Nigeria (1971) • Ecuador (1973) • Angola (2007) • Gabon (1975–1994) • Current total = 12 members • Terms of entry: any country with a substantial net export of crude petroleum, must be accepted by a majority of ¾ of Full Members and Founding Members.

11. 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.

12. Leadership cont’d • Ministerial Monitoring Sub-Committees • Heads of Delegation • Representatives of each Member Country to the Conference - normally the Minister of Oil or Energy • Economic Commission Board • Research-oriented department. • Secretary General – Abdallah el-Badri • Appointed by the Conference, three year term which can be renewed once

13. Leadership: Secretary General • Internal Auditor • Office of the SG • Abdullah al-Shameri • Helps the SG execute, manage, plan and guide policy • Maintains close relations with Austrian government • Legal Office • Asma Muttawa – headed by General Legal Counsel • Advises SG, supervises Secretariat’s legal affairs • Research Division • Dr. Hasan M. Qabazard • Plans and coordinates all research efforts within Division • Support Services Division • Provides infrastructure needed to implement services

14. Leadership: Research Division • Environmental Matters Unit • Data Services Department • Petroleum Studies Department • Energy Studies Department

15. Support Services Division • PR & Information Department • Finance & Human Resources Department • Administration & IT Services Department

17. Membership Advantages 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

18. International Impact • OFID • 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 America • Provides clean water, builds schools, hospitals and roads, farming and trade opportunities

20. OPEC: Iran & Russia • 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 • Iran • Is a (Founding) member: Baghdad Conference • Gained dominance from Saudi Arabia, 2011 • New powerhouse • USA has no influence on OPEC

21. OPEC: Mexico & Nigeria • 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 • Mexico • 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

22. 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>.