Trusteeship countries include: Organization of Petroleum Exporting Countries (OPEC): organizational characteristics and operational goals
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 of Russian ministers are held with the leadership of OPEC 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:What is OPEC? The name of this organization is mentioned quite often in the media. What is the purpose of its creation? What problems are being solved? What countries are included? What does a basket mean and why are quotas needed for OPEC countries? How does OPEC affect the global economy? Are there problems in relations with Russia? There are many questions. Let's look at the answers.
What does OPEC mean: concept and decoding of the abbreviation OPEC
The states involved in the extraction and export of “black gold” in the second half of the last century united into an international cartel. This organization received the abbreviated name OPEC. This is the English version of the abbreviation. In the Russian free interpretation, the acronym OPEC means: an association of countries that export oil. As you can see, the name is simple, but the idea is clear.
What is the purpose of the Organization of Petroleum Exporting Countries: functions and tasks of OPEC
Date of creation: September 60th last century. The initiative came from only five states - the five major oil exporters of that period.
What happened on the world stage in those years:
- Liberation of colonies or dependent regions from the pressure of the metropolises.
- The dominance of the oil market belonged to Western companies, which proposed to lower the price of oil.
- There was no acute oil shortage. Available supply clearly prevailed over demand.
That is why it was important for the countries that founded OPEC to control their resources, get out of the sphere of influence of large cartels, and prevent the decline in oil prices on a global scale. The development of their economy completely depended and still depends on the volume of oil sold.
The main goals of the organization have not changed even now, OPEC was created to perform two functions:
- Control natural resources of national importance.
- by monitoring pricing trends in the core area.
In other words, what does ORES do:
- Coordinates and unifies the oil policy of the countries included in the organization.
- Protects the interests of OPEC members by determining the most effective protective measures, which may look like individual or collective methods.
- In addition, the organization is developing the infrastructure of oil supplies and is engaged in the wise investment of profits received from oil exports.
OPEC actively cooperates with states that are not members of this structure. The purpose of communication is the implementation of proposals aimed at stabilizing the global oil market.
How OPEC works: operating principle and structure of OPEC
The leading governing body of OPEC is the Conference. Representatives of the participating states take part in it. The work or convening of the Conference is held twice a year.
This format involves consideration of the following questions:
- Admission of new members, that is, states, into the organization.
- Approval of the budget and financial report.
- Personnel appointments – candidates for the head of the Board of Governors, the Secretary General, his deputies and the Audit Commission are approved.
- Discussion of strategic and other issues.
The Board of Governors has the right to:
- Engage in formulating relevant topics for the Conference.
- Monitor the implementation of decisions made.
- Manage the Secretariat, a body that operates permanently.
The Secretariat consists of specialized departments,Everyone deals with core issues:
- Administrative or economic.
- Legal or informational.
- Technical.
Their functions: conducting research, drawing up an annual budget, preparing a variety of proposals.
The Secretariat office is located in the Austrian capital.
OPEC on the world map: list of countries that are part of OPEC
Let us recall that the proposal to create an organization belongs to the five powers: Iran, Iraq, Saudi Arabia, Kuwait and Venezuela. These states became the first OPEC participants back in 1960.
After just nine years, membership in the organization was an important step for Qatar, Libya, Indonesia, the United Arab Emirates and Algeria. In the mid-70s, new members were accepted - Nigeria and Gabon, as well as Ecuador. As we see, the geography of the continents has been steadily expanding. It was during this period that the organization’s influence on the oil market increased. This became possible thanks to control over the production of “black gold” by government agencies belonging to OPEC member states.
After some time, Gabon left the ranks of OPEC, and Ecuador, although it remained, is not engaged in activities, they are simply suspended. But a new participant appeared, it was Angola.
There are 12 countries in the OPEC structure. Why is Russia not among them? The reasons are mainly historical. At the time of the creation of the organization, the USSR did not play the role of a key player in the field of oil production and sale.
OPEC activities - why quotas are needed and what the OPEC basket means
The essence of OPEC's activities is to regulate the oil market on a global scale.
The mechanism looks quite simple:
- For member states of the organization, a total limit (quota) for energy production is established. This indicator is regularly adjusted. The reason for the changes is the current price of oil on the market.
- The total limit is distributed among the members of the organization.
- The established quotas are strictly controlled by OPEC representatives.
Quota – the value of the daily volume of oil produced . Each state has its own figure, which changes periodically. Reducing quotas indicates an increase in prices, which is caused by an increased shortage. Quotas that remain at the same level or are increased change the trend of prices towards their reduction.
How is the price of “black gold” determined for OPEC members? There are price guidelines. One of them is called a “basket”, that is, the cost of certain brands of oil produced in various OPEC member countries is summed up, the sum divided by the number of terms. The result is an arithmetic average. In this case, this is the basket.
For reference . The name of the oil often reflects the country in which it was produced and the type of product. It can be of the “light” or “heavy” type. Here is a clear example: Iran Heavy is a heavy grade of Iranian oil.
If we recall the maximum value of the basket, then we need to return to the crisis year of 2008. At that time, the figure increased to $140.73.
How does OPEC influence the world market? Relations between OPEC and Russia
OPEC has intergovernmental status. This rank allows the organization to exert influence on the world political arena. Official communication has been established with the UN. Since the first years of activity, contact has been established between the OPEC and UN Councils. OPEC is a permanent participant in UN Conferences on issues related to trade.
Holding several annual meetings with the presence of ministers of OPEC member states also contribute to the development of joint strategic plans for further work in the wider market.
Russia is on a par with OPEC members among the leading suppliers of “black gold” .
There have been periods of serious confrontation between them in the past. Thus, at the beginning of this century, OPEC addressed Moscow with a demand to reduce oil sales. Although available statistical data have not recorded a decrease in volumes exported from Russia. On the contrary, they only increased.
Since the mid-2000s, when there was a rapid increase in the price of oil, the confrontation between the Russian Federation and OPEC came to an end. Now the relationship is exclusively constructive, which is reflected in consultations on “oil” issues at the highest level. The coincidence of strategic interests among oil sellers seems quite logical.
What awaits OPEC in the near future: problems and prospects for OPEC
The countries included in the organization are characterized by a polarity of interests.
Just two examples:
- The states located on the Arabian Peninsula have a small population, but have large oil reserves. They receive large foreign investments for the development of deposits.
- In Venezuela the situation is different - a large, impoverished population. Expensive development programs are being implemented, and there are huge debts. Therefore, the state is forced to sell oil in large quantities.
In addition to the above, OPEC must take into account a number of other problems:
- OPEC quota agreements are often violated. There is no regulated control mechanism.
- The implementation of large-scale oil production by states that are not OPEC participants (Russia, the USA, China, Canada, and so on) has reduced the influence of the united exporters on the world market.
- Oil production is complicated by political instability. Suffice it to recall Iraq and Libya, the instability of the political system in Nigeria, the turbulent situation in Venezuela and sanctions against Iran.
In addition, there is some uncertainty in the future.
Much depends on further energy development:
- The introduction of alternative energy sources will reduce OPEC's influence on the global economy.
- There are forecasts from official sources predicting the primacy of “black gold” as the main resource for energy production. In this situation, successful activity is guaranteed - the depletion of oil fields is expected only after 35 years.
The vagueness of prospects is complicated by the current geopolitical situation in the world. The creation of OPEC took place in conditions of a relative balance of power - there were two opposing sides: the socialist camp and the capitalist powers. The current monopolarity greatly increases instability. The United States is increasingly taking on the functions of a “world policeman” in relation to states that are “guilty” of something; the actions of Islamic fundamentalists are generally difficult to calculate. Such factors only weaken OPEC. Besides,
Details OrganizationsOPEC(transliteration of the English abbreviation OPEC- The Organization of Petroleum Exporting Countries, literally translated as the Organization of Petroleum Exporting Countries) is an international intergovernmental organization of oil-producing countries created to stabilize oil prices .
The organization was formed during an industry conference in Baghdad on September 10-14, 1960, on the initiative of five developing oil-producing countries: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Subsequently, several more countries joined them.
Organization of Petroleum Exporting Countries | ©site | |
---|---|---|
Date of foundation | September 10 - 14, 1960 | |
Start date of activity | 1961 | |
Headquarters location | Vienna, Austria | |
The president | Rostam Ghasemi | |
Secretary General | Abdullah Salem al-Badri | |
Official site | opec.org |
OPEC's goal is to coordinate activities and develop a common policy regarding oil production among the member countries of the organization, maintaining the stability of world oil prices, ensuring uninterrupted supplies of raw materials to consumers and obtaining returns from investments in the oil industry.
To more effectively calculate the cost of oil produced in the member countries of the organization, the so-called " OPEC oil basket" - a certain set of types of oil produced in these countries. The price of this basket is calculated as the arithmetic average of the cost of the types included in it.
Composition of OPEC
A country | Year of entry | ©site |
---|---|---|
Iran | 1960 | |
Iraq | 1960 | |
Kuwait | 1960 | |
Saudi Arabia | 1960 | |
Venezuela | 1960 | |
Qatar | 1961 | |
Libya | 1962 | |
United Arab Emirates | 1967 | |
Algeria | 1969 | |
Nigeria | 1971 | |
Ecuador* | 1973 | |
Gabon** | 1975 | |
Angola | 2007 | |
Equatorial Guinea | 2017 | |
Congo | 2018 |
*Ecuador was not a member of the organization from December 1992 to October 2007.
**Gabon suspended membership in the organization from January 1995 to July 2016.
In addition, Indonesia was part of OPEC - from 1962 to 2009, and from January 2016 to November 30, 2016.
Background and history of creation
In the 1960s of the last century, some states, in particular those that later joined OPEC, gained their independence. At the time, global oil production was ruled by a seven-company cartel known as Seven sisters":
- Exxon
- Royal Dutch Shell
- Texaco
- Chevron
- Mobile
- Gulf Oil
- British Petroleum
At some point, this cartel decided to unilaterally reduce the purchase price of oil, resulting in a reduction in taxes and rents that they paid to countries for the right to develop oil fields on their territory. This event served as a catalyst for the establishment of OPEC, whose goal was to gain new independent states control over their resources and their exploitation, taking into account national interests, as well as to prevent a further fall in oil prices.
The organization began its activities in January 1961, creating the Secretariat of the organization in Geneva. In September 1965 he was moved to Vienna. In 1962, the Organization of the Petroleum Exporting Countries was registered with the UN Secretariat as a full-fledged intergovernmental organization.
In 1968, the Declaration “On the Oil Policy of OPEC Member Countries” was adopted, the content of which emphasized the inalienable right of the member countries of the organization to exercise permanent sovereignty over their natural resources in the interests of their national development.
During the 1970s, OPEC's influence on the world market not only grew, but it became the most important organization on whose policies crude oil prices began to depend. This state of affairs was facilitated, firstly, by the governments of states taking oil production on their territories under strict control, secondly, by the embargo on oil supplies by Arab countries in 1973, and thirdly, by the beginning of the Iranian revolution in 1979.
A country | Field | ©site | Year of start of production | Year of export start |
---|---|---|---|---|
Algeria | Edjelleh | 1956 | 1958 | |
Angola | Benfica(Cuanza Basin) | 1955 | ||
Venezuela | Zumaque I (Mene Grande deposit) | 1914 | ||
Iraq | Baba (Kirkuk field) | 1927 | ||
Iran | Masjid-i-Solaiman (Khozestan Province)* | 1908 | ||
Qatar | Dukhan | 1935 | 1939 - 1940 | |
Kuwait | Al Burqan | 1938 | 1946 | |
Libya | Amal and Zelten (modern Nasser) | 1959 | 1961 | |
Nigeria | Oloibiri (Bayelsa State) | 1956 | ||
UAE | Bab-2 and Umm Shaif | 1958 | ||
Saudi Arabia | Dammam | 1938 | ||
Ecuador | Ancon 1 (Santa Elena Peninsula) | 1921 |
*first oil well in the Middle East.
The first summit meeting of the heads of state and government of the Organization of the Petroleum Exporting Countries took place in Algeria in 1975. (By the way, in the same year, on December 21, the headquarters of the organization was captured by a group of six armed terrorists led by Carlos the Jackal).
In 1986, oil prices hit an all-time low of about US$10 per barrel. OPEC's share in global oil production decreased, and sales revenue fell by a third. This caused serious economic difficulties for almost all members of the organization.
Thanks to the concerted actions of OPEC member states, in particular the establishment of oil production quotas and a pricing mechanism, oil prices were able to stabilize at a level approximately equal to half the price level of the early 1980s (it was in the early 80s that oil prices reached their record values ). After this, the role of the Organization of Petroleum Exporting Countries in the context of newly growing world production began to recover.
OPEC in numbers (data for 2014) | ©site | |
---|---|---|
1206.2 billion barrels | Total proven oil reserves of OPEC member countries | |
2/3 | Share of total world oil reserves | |
40% | World oil production | |
50% | World oil exports |
The Chairman of the Organization of the Petroleum Exporting Countries (OPEC), Algerian Energy Minister Shakib Khelil hopes that Russia will join the Organization and this will strengthen the cartel, Agence France-Presse reported on Monday.
OPEC - The Organization of the Petroleum Exporting Countries (OPEC, The Organization of the Petroleum Exporting Countries) is an international intergovernmental organization created by oil-producing powers to stabilize oil prices. The organization's members are countries whose economies largely depend on revenues from oil exports.
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. These five founding countries were later joined by nine more: Qatar (1961), Indonesia (1962), Libya (1962), United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973-1992) , 2007), Gabon (1975-1994), Angola (2007). Currently, OPEC has 13 members, taking into account the composition changes that occurred in 2007 - the emergence of a new member of the organization - Angola and the return of Ecuador to the organization.
The goal of OPEC is to coordinate activities and develop a common policy regarding oil production among the member countries of the organization, maintaining stable oil prices, ensuring stable supplies of oil to consumers, and obtaining returns from investments in the oil industry.
Ideas about creating a “gas OPEC” were first expressed in 2005. In April 2005, at the 5th meeting of ministers of gas exporting countries in Port of Spain, forum participants tried to develop mechanisms to establish fairer gas prices. The idea was put forward to create a special organization with a coordination center in Doha. However, the idea was not implemented due to disagreements among the participants, as well as certain pressure from the United States and the European Union.
On January 28, 2007, the spiritual leader of Iran, Ayatollah Ali Khamenei, again spoke about the creation of a gas cartel. At a meeting with the Secretary of the Russian Security Council, Igor Ivanov, he officially proposed that Russia create a gas cartel similar to OPEC. Russian President Vladimir Putin did not immediately indicate his position, but during his visit to the Middle East in February 2007, he discussed coordination of actions in the gas sector with the Emir of Qatar. Putin called the initiative to create a gas cartel an interesting proposal. The idea was supported by the Emir of Qatar and Venezuelan President Hugo Chavez.
It was expected that the creation of a “gas OPEC” would be announced in April 2007 at a conference of gas exporting countries in the Qatari capital Doha, but this prospect caused a sharply negative reaction from the United States and the European Union. The American Congress even adopted a special resolution in which the creation of a “gas OPEC” is qualified as a “threat to US national security.”
On October 28, 2007, at a meeting of the Committee of the Gas Exporting Countries Forum (GECF) in Doha, Deputy Minister of Industry and Energy of the Russian Federation Anatoly Yanovsky accepted for consideration the draft charter of the new organization, which was sent for approval to the relevant ministries and departments. Similar work was carried out by all GECF members.
On January 23, 2008, a meeting of the GECF high-level committee was held in Egypt, in which specialists from Gazprom and the Russian Ministry of Industry and Energy took part. At the meeting, the possibility of transforming the GECF from an informal club into a more serious organization influencing the gas market was discussed. However, Gazprom decided that the project requires significant refinement, since “it is necessary to take into account the specifics of the gas business.” As a result, the final agreement on the positions of the GECF participants was postponed until the next meeting of the committee.
In October 2008, Russia, Iran and Qatar came to a consensus on the creation of the Organization of Gas Producing and Exporting Countries - gas OPEC. The trilateral meeting held on this occasion, which took place on October 21, 2008, was attended by the Minister of Energy and Industry of Qatar Abdullah bin Hamad al-Atiyah, the Minister of Oil of Iran Ghollam Hussein Nozari and the Chairman of the Board of Gazprom Alexey Miller.
OPEC 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.
Trusteeship countries
The abbreviation OPEC stands for "Association of Petroleum Exporting Countries". The main goal of the organization was to regulate prices for black gold on the world market. The need to create such an organization was obvious. In the middle of the 20th century, oil prices began to fall due to market glut. The Middle East sold the most oil. It was there that the richest deposits of black gold were discovered.
In order to pursue a policy to maintain oil prices on a global scale, it was necessary to force oil-producing countries to reduce the rate of its production. This was the only way to remove excess hydrocarbons from the world market and raise prices. OPEC was created to solve this problem.
List of countries that are members of OPEC
Today, 14 countries take part in the organization’s work. Consultations between representatives of the organization are held twice a year at OPEC headquarters in Vienna. At such meetings, decisions are made to increase or decrease oil production quotas for individual countries or the entire OPEC.
Venezuela is considered the founder of OPEC, although this country is not a leader in oil production. The palm in terms of volumes belongs to Saudi Arabia, followed by Iran and Iraq. In total, OPEC controls about half of the world's black gold exports. In almost all member countries of the organization, the oil industry is the leading industry in the economy. Therefore, the decline in world oil prices causes a strong blow to the income of OPEC members.
African countries that are part of OPEC
Of the 54 African states, only 6 are members of OPEC:
Most of the “African” OPEC participants joined the organization in the 1960-1970s. At that time, many African states freed themselves from the colonial rule of European countries and gained independence. The economy of these countries was focused mainly on the extraction of minerals and their subsequent export abroad. African countries are characterized by high populations but also high rates of poverty. To cover the costs of social programs, the governments of these countries are forced to produce a lot of crude oil. In order to withstand competition from European and American oil-producing transnational corporations, African countries joined OPEC.
Asian countries included in OPEC
Political instability in the Middle East predetermined the entry of Iran, Saudi Arabia, Kuwait, Iraq, Qatar, and the United Arab Emirates. The organization's Asian member countries are characterized by low population density and huge foreign investment. Oil revenues are so enormous that Iran and Iraq paid for their military expenses in the 1980s by selling oil. Moreover, these countries fought against each other.
Today, political instability in the Middle East threatens not only the region itself, but also threatens world oil prices. There is a civil war in Iraq and Libya. The lifting of sanctions from Iran threatens to increase oil production in this country, despite the obvious exceeding of the OPEC oil production quota.
Latin American countries that are members of OPEC
Only two Latin American countries are members of OPEC - Venezuela and Ecuador. Despite the fact that Venezuela is the country that initiated the founding of OPEC, the state itself is politically unstable. Recently (in 2017), a wave of anti-government protests swept across Venezuela due to the government’s ill-conceived economic policies. Recently, the country's public debt has increased significantly. For some time, the country kept afloat due to high oil prices. But as prices fell, the Venezuelan economy also collapsed.
Non-OPEC oil exporting countries
Recently, OPEC has lost its leverage over its members. This situation is largely due to the fact that several oil importing countries that are not members of OPEC have appeared on the world market.
First of all this:
Despite the fact that Russia is not a member of OPEC, it is a permanent observer in the organization. An increase in oil production by non-OPEC countries leads to a decrease in the price of oil on the world market. However, OPEC cannot influence them, since even members of the organization do not always comply with agreements and exceed permissible quotas.
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general information
OPEC countries meeting
Which states are included?
Oil production in Iran
- tourism;
- timber extraction;
- gas sales;
- sale of other raw materials.
Organization policy
Meeting of OPEC member countries
Attempts to resolve the situation
Falling oil prices
Price policy
Extraordinary meeting
OPEC meeting in Vienna
Finally
Countries that are part of OPEC
Last September, OPEC celebrated its anniversary. It was created in 1960. Today, OPEC countries occupy a leading position in the field of economic development.
general information
OPEC translated from English “OPEC” - “Organization of Petroleum Exporting Countries”. This is an international organization created to control the volume of sales of crude oil and set its price.
By the time OPEC was created, there was a significant surplus of black gold in the oil market. The appearance of excess oil is explained by the rapid development of its vast deposits. The main supplier of oil was the Middle East. In the mid-50s of the twentieth century, the USSR entered the oil market. The volume of black gold production in our country has doubled.
The result of this was the emergence of serious competition in the market. Against this background, oil prices fell significantly. This contributed to the creation of OPEC. 55 years ago, this organization pursued the goal of maintaining an adequate level of oil prices.
OPEC countries meeting
Which states are included?
Today this organization includes 12 powers. These include states in the Middle East, Africa and Asia.
Russia is not a member of OPEC. Characterizing the powers that are part of this organization is not an easy matter. Only one thing can be said with confidence: just like 55 years ago, today the countries on the list are united by oil policy.
The initiator of the creation of this organization was Venezuela. Initially, the list included it, as well as the leading oil exporting states. After this, the list was replenished with Qatar and Indonesia. Libya was included in the list not during the time of Colonel Gaddafi, as many people think, but under King Idris, in 1962. The Emirates entered the list only in 1967.
In the period 1969-1973. the list was supplemented by such members as Algeria, Nigeria and Ecuador. In 1975, Gabon joined the list. In 2007, Angola joined the list. It is not known for certain whether OPEC will be added to the list in the near future.
Countries that are part of OPEC
What are countries?
The states that are part of this organization in 2018 produce only 44% of the world's oil production. But these countries have a huge influence 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 throughout 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 production is given to Iran. Today this state, a major oil exporter, occupies 5.5% of the world market. Kuwait should be considered an equally large exporter. The extraction of black gold brings the country 90% of its profits.
Oil production in Iran
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.
Iraq has the third largest oil reserves. The southern deposits of this country can produce up to 1.8 million black gold in just one day.
It can be concluded that most of the states that are members of OPEC are dependent on the profits that their oil industry brings. The only exception among these 12 states is Indonesia. This country also receives income from such industries as:
- tourism;
- timber extraction;
- gas sales;
- sale of other raw materials.
Indonesia as part of OPEC countries
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, states with rich oil reserves have only one option - to diversify the economy as quickly as possible.
Organization policy
This happens due to the development of new technologies that help save resources.
In addition to the goal of unifying and coordinating oil policy, the organization has an equally priority task - to stimulate economical and regular supplies of goods by members to those states that are consumers. Another important goal is to achieve a fair return on capital. This is relevant for those who actively invest in industry.
The main governing bodies of OPEC include:
The conference is the highest body of this organization. The highest position should be considered the position of Secretary General.
Meeting of OPEC member countries
Meetings between 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 is to develop a clear plan to stabilize the situation. The third purpose of the meeting is to forecast the situation.
The organization’s forecast 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 maintained at $40-50 per barrel. At the same time, representatives of these states did not rule out that prices could rise to $60. This could only happen if China’s economy grew intensively.
Judging by the latest information, the plans of the management of this organization have no desire to reduce the amount of oil products produced. Also, OPEC has no plans to interfere in the activities of international markets. According to the organization's management, it is necessary to give the international market a chance to regulate itself.
Attempts to resolve the situation
Falling oil prices
Today, oil prices are close to a critical point. But the market situation is such that prices can either rapidly fall or rise.
Judging by the forecast given by the organization’s experts at the end of 2015, the crisis will not affect only Qatar. In 2016, the price of Brent oil was about $60 per barrel.
Price policy
Today the situation for the OPEC participants themselves is as follows:
- Iran - the price that ensures a deficit-free state budget is $87 (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 held in December 2015, Venezuela made a proposal to reduce current oil production to 5 percent. This information has not yet been confirmed.
Saudi Arabian Oil Minister Ali al-Naimi
The situation within the organization itself can be called critical. A year of significantly lower prices for black gold has hit the OPEC countries hard in the pocket. According to some estimates, the total income of member states could drop to $550 billion per year. The previous five-year plan showed much higher indicators. Then the annual income of these countries is 1 trillion. US dollars.
Extraordinary meeting
According to the Minister of Oil Industry of Iran, the existing problem can only be solved in the long term.
In February 2016, a decision was made to hold another meeting. The initiative was taken by six OPEC members:
The Russian Federation and Oman were also supposed to take part in the discussion. The objective of the extraordinary meeting was to conclude an agreement that would suit all participants of the 2016 meeting.
OPEC meeting in Vienna
One of the largest oil exporters, Saudi Arabia, did not hide the fact that it was not going to discuss lowering production with other OPEC members and “observers.” Iran also plans to significantly increase its production volumes. Today this state declares that its plans are to increase the volume to 500 thousand barrels/day.
On November 30, 2017, a new meeting of the member countries of the organization was held. Unfortunately, it was again impossible to accept the agreement. According to experts, the situation with oil prices in 2017 and 2018 will not stabilize.
Finally
OPEC headquarters building in Vienna
In 2018, members of the organization will adhere to the traditional course. Presumably, some restrictions are planned. But the hypothetical “sanctions” will most likely be symbolic. This is because countries will not comply with the proposed restrictions.
Trusteeship countries 2018 list
The Organization of Petroleum Exporting Countries and Non-Cartel Countries (OPEC+) has concluded that the decision to extend the deal to reduce oil production in 2018 must be left unchanged. This was reported by TASS with reference to Russian Energy Minister Alexander Novak, who on Sunday took part in a meeting of the OPEC+ monitoring committee in the Omani capital Muscat.
“The main conclusion of today’s meeting: we once again confirm the need for and commitment to the agreements that were reached on November 29–30 for the entire period of 2018,” said the head of the Russian department.
He explained the decision taken by the ministers by the fact that the market has not yet reached a balance between demand and supply of oil. Giving forecasts for the year, Novak said that Russia is optimistic about the degree to which participants will implement the OPEC+ deal, which was 107% implemented in the previous year. The minister also added that the deal is effective and brings results.
Novak pointed out that average oil prices in 2017 were 30% higher than the year before. After this fall, experts recorded an increase in investment in the industry by 6%. Also last year, according to the head of the Russian energy department, there was an increase in oil demand by 1.5 million barrels. per day - this turned out to be higher than predicted.
Before the start of the negotiations, Novak told reporters that oil prices are not the only factor in the decision of OPEC+ member countries on a possible withdrawal from the agreement to reduce production.
“The price factor is not the only factor when you need to start exiting a deal. We will look at the market situation. We don't want any individual indicators as indicators. There must be a complete recovery of the market,” he answered the corresponding question.