Apek oil. Opek - transcript
(The Organization of the Petroleum Exporting Countries, OPEC) is an international organization created to coordinate sales volumes and set prices for crude oil.
By the time OPEC was founded, there was a significant surplus of oil on the market, the emergence of which was caused by the beginning of the development of giant oil fields - primarily in the Middle East. In addition, the Soviet Union entered the market, where oil production doubled from 1955 to 1960. This abundance has caused severe competition in the market, leading to a constant decline in prices. The current situation was the reason for the unification of several oil exporting countries into OPEC in order to jointly resist transnational oil corporations and maintain the required price level.
OPEC as a permanent organization was created at a conference in Baghdad on September 10-14, 1960. Initially, the organization included Iran, Iraq, Kuwait, Saudi Arabia and Venezuela - the initiator of the creation. The countries that founded the organization were later joined by nine more: Qatar (1961), Indonesia (1962-2009, 2016), Libya (1962), United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973) -1992, 2007), Gabon (1975-1995), Angola (2007).
Currently, OPEC has 13 members, taking into account the emergence of a new member of the organization - Angola and the return of Ecuador in 2007 and the return of Indonesia from January 1, 2016.
The goal of OPEC is to coordinate and unify the oil policies of member countries to ensure fair and stable oil prices for producers, efficient, economical and regular supplies of oil to consumer countries, as well as a fair return on capital for investors.
The organs of OPEC are the Conference, the Board of Governors and the Secretariat.
The highest body of OPEC is the Conference of Member States, convened twice a year. It determines the main directions of OPEC's activities, decides on the admission of new members, approves the composition of the Board of Governors, considers reports and recommendations of the Board of Governors, approves the budget and financial report, and adopts amendments to the OPEC Charter.
The executive body of OPEC is the Governing Council, formed from governors who are appointed by states and approved by the Conference. This body is responsible for managing the activities of OPEC and for implementing the decisions of the Conference. Meetings of the Board of Governors are held at least twice a year.
The Secretariat is headed by the Secretary General, appointed by the Conference for three years. This body carries out its functions under the guidance of the Board of Governors. It facilitates the work of the Conference and the Governing Council, prepares communications and strategic data, and disseminates information about OPEC.
The highest administrative official of OPEC is the Secretary General.
The acting Secretary General of OPEC is Abdullah Salem al-Badri.
OPEC headquarters is located in Vienna (Austria).
According to current estimates, more than 80% of the world's proven oil reserves are found in OPEC member countries, with 66% of OPEC countries' total reserves concentrated in the Middle East.
Proven oil reserves of OPEC countries are estimated at 1.206 trillion barrels.
As of March 2016, OPEC oil production reached 32.251 million barrels per day. Thus, OPEC exceeds its own production quota, which is 30 million barrels per day.
The implementation of international commodity agreements regulating activities in certain market segments is carried out by International Commodity Organizations (ICOs) in the form of:
- International organizations;
- International Councils;
- International Advisory Committees;
- International Research Groups (IRGs).
All of these institutes are engaged in studying the state of world commodity markets, namely: the current relationship between supply and demand for specific raw materials, the dynamics of prices and conditions.
Currently, there are International Councils for Olive Oil, Tin, and Grains.
MIGs apply to rubber, lead and zinc, and copper.
There is an International Cotton Advisory Committee and a Tungsten Committee.
Iran has the second largest oil reserves after Saudi Arabia (18 billion tons) and occupies 5.5% of the global oil products trading market. Particular attention is paid to economic diversification through the development of precision engineering, automotive engineering, the rocket and space industry, and 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 petrochemicals, the production of building materials, fertilizers, the food industry, and pearl mining. Sea water is desalinated. Fertilizers constitute an important part of the country's exports.
Iraq has the second largest oil reserves in the world. Iraqi state-owned companies North Oil Company and South Oil Company have a monopoly on the development of local oil fields. Iraq's southern fields, managed by SOC, produce about 1.8 million barrels of oil per day, accounting for almost 90% of all oil produced in Iraq.
Thus, Most OPEC countries are deeply dependent on the income of their oil industry. Perhaps the only exception among the member countries of the organization is Indonesia, which receives significant income from tourism, timber, gas and other raw materials. For the remaining OPEC countries, the level of dependence on oil exports ranges from a low of 48% in the case of the United Arab Emirates to 97% in Nigeria.
During a crisis, the strategic path for countries dependent on oil exports is to diversify their economies through the development of the latest resource-saving technologies.
O PEC translated from English is the organization of oil exporting countries. The purpose of creating OPEC was and is to control oil production quotas and prices. OPEC was created in September 1960 in Baghdad. The list of members changes periodically during the existence of the organization and as of 2018 (July) it includes 14 countries.
The initiators of the creation were 5 countries: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. These countries were later joined by Qatar (1961), Indonesia (1962), Libya (1962), United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973), Gabon (1975) year), Angola (2007) and Equatorial Guinea (2017).
As of today (February 2018), OPEC includes 14 countries:
- Algeria
- Angola
- Venezuela
- Gabon
- Kuwait
- Qatar
- Libya
- United Arab Emirates
- Nigeria
- Saudi Arabia
- Equatorial Guinea
- Ecuador
Russia is not a member of OPEC.
Countries included in the organization control 40% of all oil production on earth, that’s 2/3. The leader in oil production in the world is Russia, but it is not part of OPEC and cannot control the price of oil. Russia is an energy-dependent country.
The level of economic development and well-being of Russians depends on its sale. Therefore, in order not to depend on oil prices on the world market, Russia should develop other sectors of the economy.
So, several times a year the ministers of OPEC countries gather for meetings. They assess the state of the world oil market and predict the price. Depending on this, decisions are made to reduce or increase oil production.
We constantly see the abbreviation “OPEC” in the news, and it is not surprising - after all, this organization today has a significant influence on the formation of world prices for “black gold”. OPEC is the Organization of the Petroleum Exporting Countries (OPEC, The Organization of the Petroleum Exporting Countries), created in 1960. Its headquarters were originally located in Geneva, but were moved to Vienna in 1965.
By the time OPEC was founded, there was a significant surplus of oil on the market, the emergence of which was caused by the beginning of the development of giant oil fields - primarily in the Middle East. In addition, the Soviet Union entered the market, where oil production doubled from 1955 to 1960. This abundance has caused severe competition in the market, leading to a constant decline in prices. The current situation was the reason for the unification of several oil exporting countries into OPEC in order to jointly resist transnational oil corporations and maintain the required price level.
Initially, the organization included Iran, Iraq, Saudi Arabia and Venezuela. They were then joined by Qatar, Indonesia, Libya, the United Arab Emirates, Algeria, Nigeria, Ecuador, Gabon and Angola. Ecuador left OPEC in 1992 but returned in 2007. Gabon left the organization in 1994. As a result, today there are 13 countries in OPEC.
The organization officially sets itself the following main goals:
protect the interests of the organization’s member countries; guarantee stability of prices for oil and petroleum products; ensure regular supplies of oil to other countries; guarantee member countries of the organization a stable income from oil sales; determine strategies for oil production and sales.
In the first years of its existence, OPEC was unable to achieve its goals. But this changed in 1973, when Egyptian and Syrian troops attacked Israeli positions. In this war, called Yom Kippur, the Western world supported the Israeli side. In response, OPEC announced the first embargo limiting oil exports to Western Europe and the United States, which caused the first oil crisis in world history. In just six months, by the beginning of 1974, oil prices jumped by 130% and reached $7 per barrel, and by the end of 1979 they were already $18 per barrel. The crisis strengthened the organization’s position so much that the mid-70s became the “golden age” of OPEC. However, the West began to establish closer ties with the USSR, which was actively increasing oil supplies. In addition, international oil companies have shifted their attention to other important oil areas such as the North Sea and the Gulf of Mexico. The embargo also contributed to the start of development of the giant Prudhoe Bay field in Alaska, with initial oil reserves exceeding 1.3 billion tons (9.5 billion barrels).
Gradually, OPEC's position was weakened.
During the 1980s, the price of oil fell steadily. If in 1981 it reached $40 per barrel, then five years later its level approached $10 per barrel. Iraqi President Saddam Hussein called on OPEC to raise the selling price, which became the reason for the Gulf War in 1990-1991. The Iraqi invasion of Kuwait and the ensuing Persian crisis deprived OPEC of unity and affected oil prices, which rose to $30 per barrel. As soon as the fear of oil shortages caused by these military conflicts dissipated, prices plummeted downward. In 1998, OPEC countries lifted all restrictions on production and exports, which immediately affected the markets - prices again dropped below $10 per barrel.
To solve the problem, it was proposed to reduce the production of “black gold” - this initiative is attributed to Venezuelan President Hugo Chavez. In 2000, Chavez convened a summit of OPEC heads of state for the first time in 25 years. However, the terrorist attacks of September 11, 2001 in the United States, as well as the invasions of Afghanistan and Iraq, caused a sharp rise in oil prices, which allowed them to far exceed the levels that OPEC members wanted to achieve.
OPEC energy and oil ministers meet twice a year to assess the state of the international oil market, decide on necessary actions to stabilize the market, and make forecasts for the future. Production volumes, which change in accordance with market demand dynamics, are adopted at OPEC conferences.
Today, the organization's members control approximately two-thirds of the planet's proven oil reserves. OPEC provides 40% of world production and half of world exports of this precious raw material. The organization coordinates oil production policy and world crude oil pricing, and also sets quotas for oil production volumes. And despite the popular belief that OPEC’s time has passed, it still remains one of the most influential global players in the oil industry, determining its further development.
OPEC is an organization of oil exporting countries (from the English OPEC, The Organization of the Petroleum Exporting Countries).
This structure is an international intergovernmental organization. It was created by states in which oil is produced in order to stabilize the price of oil. The organization includes states whose economies depend on profits from the export of “black gold”.
Creation of OPEC
To fight oil monopolies, developing countries that export oil decided that they needed to join forces and begin an active struggle. Thus, in 1960, in Baghdad, the main exporters of liquid fuels on the world market - Venezuela, Iraq, Iran, Kuwait and Saudi Arabia - became the founders of the Organization of Petroleum Exporting Countries (OPEC). OPEC registered with the United Nations on September 6, 1962 under UN Resolution No. 6363.
The formation of OPEC became possible thanks to the idea of Venezuela, which at that time was the most developed of all oil-producing states. And it was in this country that oil monopolies were exploited for a long time. Awareness of the urgent need to coordinate efforts against oil monopolies also arose in the Middle East. This is evidenced by the Iraqi-Saudi agreement on the coordination of Oil Policy, which was signed in 1953, as well as the meeting of the Arab League in 1959, which was devoted to oil problems. Representatives from Venezuela also attended this meeting.
The first charter was approved at the 2nd conference in Caracas on January 15-21, 1961. However, four years later the charter was completely revised. But even after this, numerous changes and additions were often made to the charter. Today, OPEC accounts for approximately 40% of global oil production. The first OPEC headquarters was located in Geneva (Switzerland), but later moved to Vienna (Austria).
Another impetus for the formation of the oil exporters' association was another drop in reference prices in 1959 by the International Petroleum Cartel, as well as the establishment of restrictions on oil imports into the United States.
Today, the OPEC organization consists of 14 countries: Algeria (since 1969), Indonesia (since 1962), Iraq (since 1960), Iran (since 1960), Kuwait (since 1960), Lebanon ( since 1962), Nigeria (since 1971), Qatar (since 1961), Saudi Arabia (since 1960), Angola, United Arab Emirates (since 1967) and Venezuela (since 1960) , Equatorial Guinea. Previously, Gabon and Ecuador belonged to OPEC, but they decided to end their membership in this organization. People often think that Russia is also a member of OPEC, but this is not true. Russia is not on the list of member states of the organization, but is required to attend all meetings of the organization.
Any state that exports a lot of oil and adheres to the same ideals that the organization follows can become a member of OPEC.
Why was OPEC created?
The main goals of creating such an organization include:
- coordination and unification of the oil policies of countries that are members of the organization
- identifying the most effective individual and collective methods of protecting the interests of such countries
- guarantee of a stable price for black gold on the global oil market
- stable incomes of oil producing states
- efficient, cost-effective and regular supply of consumer countries
- fair returns from investments in the oil industry
- environmental protection in the interests of living and future generations.
Organization structure
The Organization of Petroleum Exporting Countries has as the cartel's main governing body the Conference of Participating Countries, convened twice a year. The conference addresses the following issues:
- admission of new members
- formation of the composition of the Board of Governors
- budget volume and financial reporting
- elections of the Chairman of the Board of Governors, the Secretary General, as well as his deputies and auditor.
The Board of Governors develops issues for the Conference, manages the activities of the Secretariat, which is a permanent operating body. The Secretariat monitors and draws up initiatives for the Board of Governors and the Conference, monitors the implementation of approved resolutions, and draws up draft annual OPEC budgets.
In the early 80s, oil futures were introduced, as a result of which the financial market began to exert enormous pressure on the formation of the price of oil. It is worth noting that in 1983, oil futures positions for 1 billion barrels of oil appeared on the New York Mercantile Exchange, and in 2011 their number reached 365 billion barrels, which is 12 times the volume of global oil production in 2010.
OPEC members, in the process of adopting any resolutions on changing oil production quotas to adjust world prices, in reality only determine the desired direction for the movement of world prices. Participants in financial markets, especially “speculators,” provide active assistance and also use fluctuations in the price of oil for their own purposes, thereby significantly distorting the effect at which OPEC’s measures are aimed.
Russia and OPEC
In 1998, Russia became an observer in OPEC.
Since this year, Russian representatives have been taking part in sessions of the OPEC Conference. In addition, Russian experts attend meetings of specialists and other events of the organization together with representatives of states that are not members of it. Frequent meetings are held between Russian ministers and OPEC leadership and partners from OPEC countries.
Russia is the initiator of organizing a regular Russia-OPEC Energy Dialogue and signing an Agreement (Memorandum) on the Energy Dialogue. The authorized representative from Russia in this event is the Ministry of Energy of the Russian Federation.
Experts note Russia's significant influence on the organization's policies. As a result of fears that Russia will increase its volume in the market, OPEC does not want to reduce production unless Russia reduces it too. This situation is the main obstacle to the restoration of global oil prices. Two years ago, Russia was offered to become a member of OPEC, but refused.
oil production, OPEC, oil exports, oil exporters, oil cost, oil prices, OPEC
Heading: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 creating 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, which established their own rules and at one point significantly reduced purchase prices for oil.
The newly independent states wanted to independently manage their natural resources and do this only for the benefit of their state and society. Since oil was oversupplied at the time, 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 is currently located in Vienna.
Opinion: OPEC is a consequence. The desire to concentrate the management of the oil industry in a single block, to unify processes, to ensure an uninterrupted supply of raw materials to developed countries and world factories. It is also a powerful tool for influencing the world economy, Russia, through manipulation of oil production volumes and prices.
Initially, OPEC consisted of 5 founding countries. Subsequently, they were joined by 5 more: the UAE, Qatar, Libya, Indonesia and Algeria. At the moment, 12 countries are represented in OPEC: Venezuela, Kuwait, Iran, Iraq, UAE, 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 it has become an important instrument of political influence. The economies of some countries are very dependent on current oil prices and when they fall, they suffer colossal losses.
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, the Kuwait invasion of Iraq in 1990). Venezuela had a dictatorship under Hugo Chavez for a long time, which was replaced by his follower Muduro. Therefore, OPEC countries are faced with great difficulties, and even control of 2/3 of world oil reserves does not allow stabilizing the situation in the economy and political sphere.
The opinion is often circulated that OPEC is not a cartel at all, and this organization has long lost real leverage over the price of oil. Meanwhile, market observations in the context of OPEC meetings and decisions show the fallacy of this opinion.
OPEC is an abbreviation made up of the first letters of the English phrase The Organization of the Petroleum Exporting Countries (which stands for Organization of Petroleum Exporting Countries).Opinion: OPEC conspiracies to increase oil prices cause negativity in developed countries (not counting), the reverse reaction is the growth of alternative energy: wind, sun. The transition to electric vehicles is accelerating. The world is tired of depending on a handful of countries.
The tasks of OPEC members are to support economically justified and profitable prices for the production and sale of oil, which for many of them is the only export product. OPEC appeared in 1960, when the colonial system of the world was collapsing and new independent states, mainly African or Asian, began to appear on the international scene. At that time, their mineral resources were mined, among other things, by Western companies, the so-called "seven sisters" Exxon, Royal Dutch Shell, Texaco, Chevron, Mobil, Gulf Oil and British Petroleum
, who, of course, received the main profits in this process.
The first states that made up OPEC - Iran, Iraq, Kuwait, Saudi Arabia and Venezuela - decided to control the production and sale of oil themselves. The business turned out to be profitable and soon Qatar (1961), Indonesia and Libya (1962), the United Arab Emirates (1967), and Algeria (1969) joined the five founders. In 1971, 1973 and 1975, Nigeria, Ecuador, and Gabon were added to OPEC members.
- Algeria
- Angola
- Venezuela
- Qatar
- Kuwait
- Libya
- Nigeria
- Saudi Arabia
- Ecuador
OPEC currently consists of 12 countries
OPEC countries control the production of 30 to 40% of world oil
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At the same time, Brunei, Great Britain, Indonesia, Mexico, Norway, Oman, and Russia - also not the last countries in the oil production industry - are not included in OPEC.
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OPEC headquarters is located in Vienna
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The highest body is the conference of participating countries, convened every two years The price of oil is determined as the arithmetic average of the prices of 12 types produced in the participating countries. This is the so-called"OPEC basket"
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. The types of oil included in it change periodically
The last quota decision was made in November 2014: the Organization of Petroleum Exporting Countries decided not to reduce production and maintained its official maximum level of 30 million barrels per day, which caused a sharp drop in world prices from 100-90 dollars to 50-60 dollars per day. barrel
Barrel (English barrel - barrel) - a unit of volume. Equal to 42 gallons or 158.988 liters