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Organization of Petroleum Exporting Countries OPEC

Introduction:
The Organization of Petroleum Exporting Countries (OPEC) is a group consisting of 12 of
the world's major oil-exporting nations. OPEC was founded in 1960 to coordinate the
petroleum policies of its members, and to provide member states with technical and
economic aid.
It is an Intergovernmental organization, was created in Baghdad in Sept. 1960, by its
founding members: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. The headquarters of the
organization are in Vienna, Austria, where the OPEC Secretariat, its executive organ, carries
out OPEC's day-to-day business
OPEC is a cartel that aims to manage the supply of oil in an effort to set the price of oil on
the world market, in order to avoid fluctuations that might affect the economies of both
producing and purchasing countries.
OPEC's objective is to co-ordinate and unify petroleum policies among Member
Countries, in order to secure fair and stable prices for petroleum producers; an efficient,
economic and regular supply of petroleum to consuming nations; and a fair return on
capital to those investing in the industry.
In accordance with its Statute, the mission of the Organization of the Petroleum Exporting
Countries (OPEC) is to coordinate and unify the petroleum policies of its Member Countries
and ensure the stabilization of oil markets in order to secure an efficient, economic and
regular supply of petroleum to consumers, a steady income to producers and a fair return on
capital for those investing in the petroleum industry.
OPEC Policies
Officially, OPEC's mission is to "coordinate and unify the petroleum policies of its Member
Countries and ensure the stabilization of oil markets in order to secure an efficient, economic
and regular supply of petroleum to consumers, a steady income to producers, and a fair
return on capital for those investing in the petroleum industry."
OPEC's influence on the market has been widely criticized. Because its member countries
hold the vast majority of crude oil reserves (about 80%) and nearly half of natural gas
reserves in the world, the organization has considerable power in these markets. As a cartel,
OPEC members have a strong incentive to keep oil prices as high as possible, while
maintaining their shares of the global market.
The advent of new technology, especially fracking in the United States, has had a major
effect on worldwide oil prices and has lessened OPEC's influence on the markets. As a result,
worldwide oil production has increased and prices have dropped significantly, leaving OPEC
in a delicate position. As late as June 2016, OPEC decided to maintain high production
levels, and consequently low prices, in an attempt to push higher-cost producers out of the
market and regain market share
The formation of OPEC marked a turning point toward national sovereignty over natural
resources, and OPEC decisions have come to play a prominent role in the global oil market
and international relations. The effect can be particularly strong when wars or civil disorders
lead to extended interruptions in supply. In the 1970s, restrictions in oil production led to a
dramatic rise in oil prices and OPEC's revenue and wealth, with long-lasting and far-reaching
consequences for the global economy. In the 1980s, OPEC started setting production targets
for its member nations; and generally when the production targets are reduced, oil prices
increase, most recently from the organization's 2008 and 2016 decisions to trim oversupply.
Current member countries
As of January 2017, OPEC has 13 member countries: six in the Middle East (Western Asia),
five in Africa, and two in South America. According to the US Energy Information
Administration, OPEC's combined rate of oil production (including gas condensate)
represented 42 percent of the world's total in 2015, and OPEC accounted for 73 percent of
the world's "proven" oil reserves, including 48 percent from just the six Middle Eastern
members
These countries were later joined by Qatar (1961), Indonesia (1962), Libya (1962), the
United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973), Gabon (1975)
and Angola (2007).
Ecuador suspended its membership in December 1992, but rejoined OPEC in October 2007.
Indonesia suspended its membership in January 2009, reactivated it again in January 2016,
but decided to suspend its membership once more at the 171st Meeting of the OPEC
Conference on 30 November 2016. Gabon terminated its membership in January 1995.
However, it rejoined the Organization in July 2016.
This means that, currently, the Organization has a total of 13 Member Countries. The OPEC
Statute distinguishes between the Founder Members and Full Members - those countries
whose applications for membership have been accepted by the Conference.
The Statute stipulates that any country with a substantial net export of crude petroleum,
which has fundamentally similar interests to those of Member Countries, may become a Full
Member of the Organization, if accepted by a majority of three-fourths of Full Members,
including the concurring votes of all Founder Members.
The Statute further provides for Associate Members which are those countries that do not
qualify for full membership, but are nevertheless admitted under such special conditions as
may be prescribed by the Conference.
Secretariat of OPEC
The OPEC Secretariat is the executive organ of the Organization of the Petroleum Exporting
Countries (OPEC). Located in Vienna, it also functions as the Headquarters of the
Organization, in accordance with the provisions of the OPEC Statute.
It is responsible for the implementation of all resolutions passed by the Conference and
carries out all decisions made by the Board of Governors. It also conducts research, the
findings of which constitute key inputs in decision-making.
The Secretariat consists of the Secretary General, who is the Organizations Chief Executive
Officer, as well as such staff as may be required for the Organizations operations. It further
consists of the Office of the Secretary General, the Legal Office, the Research Division and
the Support Services Division.
The Research Division comprises Data Services, Petroleum Studies and Energy Studies
departments. The Support Services Division includes Public Relations & Information,
Finance & Human Resources and Administration & IT Services departments.
The Secretariat was originally established in 1961 in Geneva, Switzerland. In April 1965, the
8th (Extraordinary) OPEC Conference approved a Host Agreement with the Government of
Austria, effectively moving the Organizations headquarters to the city of Vienna on
September 1, 1965.

Leadership and decision-making

The OPEC Conference is the supreme authority of the organization, and consists of
delegations normally headed by the oil ministers of member countries. The chief executive of
the organization is the OPEC Secretary General. The Conference ordinarily meets at the
Vienna headquarters, at least twice a year and in additional extraordinary sessions when
necessary. It generally operates on the principles of unanimity and "one member, one vote",
with each country paying an equal membership fee into the annual budget. However, since
Saudi Arabia is by far the largest and most-profitable oil exporter in the world, with enough
capacity to function as the traditional swing producer to balance the global market, it serves
as "OPEC's de facto leader".