The Organization

of the Petroleum
Exporting
Countries (OPEC)
Presented by : -
Alaa Sharaby Mohamed
Alyaa Ragab Mohamed
Esraa Nashat Elbanna
Habiba Motawea
Table of contents
01 Introduction

02 Objectives

03 The importance

04 Organization structure of OPEC

The importance of OPEC in the
05 global oil market
06 OPEC and the october 1973 war
 OPEC
OPEC is the Organization of Petroleum
Exporting Countries, established in 1960 in
Baghdad, and the founding countries are Iraq,
Suadi Arabia, Kuwait, Venezuela and Iran.

• After the Second world war, the international

economic, political and military blocs had
emerged , these included the emergence of
OPEC in 1960, OAPEC in 1968.
• These two organizations didn’t include all the
Arab and non-Arab oil exporting countries.
 The oil potential of OPEC
 OPEC reserves of countries
oil increased from about (439) billion
barrels in 1975, which constitutes 66% of the world oil
reserves to about 903 billion barrels in 2005, 78% of
global reserves, a large proportion.

 In terms of production, OPEC produced about 52% of

world production in 1975 and then its production fell to
about 45% of the total world production in 1980 after the
attempts of non-OPEC producers such as the United
States and the North Sea countries to increase
production to put pressure on OPEC Which has been
raising its oil prices significantly since 1974.

 After 1980, with the start of the Iraq-Iran war, oil prices
dropped
 Reasons for the emergence of OPEC
 The global conglomerate (the global cartel or the world oil
government).
 Mexico and Iran both nationalized their oil.
 The sense of oil states of injustice.
 The national and nationalist uprisings also had many objectives.
 The emergence of liberal leaders and thinkers focused on the
importance of political and economic independence.
 The transformation in the international economic and political
sense.
 Multinationals dominated the international oil market.
02
Objectives
of OPEC
 Objectives
• Coordinate and standardize oil policies among member states in order
to ensure fair and stable prices for oil producers.
• Keep the price of oil exploited by the international oil cartel
(multinational companies) beyond its borders at a high level.
• The Organization shall ensure the equality of its members.
• Unify the efforts of producing countries to extract a larger share of
profits from the exploitation of their own wealth.
• Regulate and strengthen the position of oil exporting countries in their
relationship with concessionary companies.
 But the ability of OPEC member states, when bargaining to ensure the
success of such negotiations initially faced several problems.
 GOALS
1. Coordination 3. Preserving oil
between members protecting
5.
wealth through
states in petroleum member states
production
policies and seek to technology
achieve individual
and social interests
Cooperation with the rest .6.4 Drop marketing
2. Finds ways and
of the world with a view expenses and rises the
means to achieve price tax rate on income and
to establishing anew
stability in global oil find way to compensate
world economic order
economy and prevent
based on fair principles for the bad effects on real
fluctuations in oil prices income of the barrel as a
and that achieving
by managing result of global monetary
prosperity for all
production levels and developments the trend of
peoples of the world
adjust supply to meet inflation rates
demand
 IMPORTANT
The importance of organization through economic
indicators that have enabled organization to
occupy important position in the oil market.

Such as: GDP population, crude oil

production. Internal energy agency,
crude oil reserve . volume exports of oil,
demand of oil.
THE MOST IMPORTANT INDICATORS
FOR OPEC ORGANIZATION
1. GDP: at current market prices (PIB): OPEC's GDP in 2012 was estimated
at US $ 3,354,224 billion

2. Population: The combined population of the OPEC countries in 2012 was

429,402 million

3. Crude oil production: OPEC's production in 2012 reached 32.424 million

barrels per day

4. Crude Oil Reserves: According to current estimates, proven crude oil

reserves for the OPEC countries in 2012 amounted to 1,200,830 billion barrels
THE MOST IMPORTANT INDICATORS
FOR OPEC ORGANIZATION
5. The volume of exports of oil: The volume of exports of OPEC countries in
2012 of crude oil by 25,281.4 million barrels per day

6. Value of oil exports: The value of oil exports in 2012 for OPEC countries was
estimated at US $ 1,688,229 billion.

7.Demand for oil is 8,657 million barrels per day, or 9.74% of world production
estimated at 88,868.5 million barrels per day.

It is clear that the importance of the Organization of Petroleum Exporting

Countries (OPEC) in the oil market clearly shows its great control of the supply
side without the demand side, by owning 81% of the world crude oil reserves
and producing 44% 9% of the world's crude oil production, and export of 54.3%
of the world's total exports, compared with a weak consumption estimated at
8.8% of world oil demand.
 conditions of accession to OPEC
• That the State • That the oil • Launching an e-
achieves a interests of the commerce platform
substantial Member State are to expand the reach
surplus of oil very similar to of the business and
for export, those of the increase online
after covering founding State of sales.
its domestic the Organization.
needs.
 The Advisory Body 0f OPEC
It dealt with the establishment of a
consultative organization that meets at least
once a year to discuss some points, the most
important of which are:
1. Improving contractual terms and the need to
consult on the subject of price changes;

2. Addressing the oil industry from a collective point

of view

3. Increasing the capacity of oil refineries in

producing countries

4. Establishment of national oil companies

5. Understanding regarding the maintenance,

production and exploration of oil resources;
 Organization Structure Of OPEC :
1.Ministerial Conference:
The supreme authority of the
Organization of the Petroleum Exporting
Countries (OPEC)
Tasks of the conference, approve the
general policy of the organization and
supervision of the implementation and
adoption of the budget and the
appointment of Secretary General of the
Organization and his deputy.
The Ministerial Council meets twice a
year at the headquarters of the
Permanent Organization to coordinate
and standardize oil policies
 2.The Board Of
Governor :
 The Board of Governors
shall consist of a
representative from each
member country approved by
the Conference.

 Tasks of it Implement the

decisions of the Conference
and submit
recommendations to the
Conference (within its
competence) and decision-
making.
General Secretaria
General Secretariat Established in 1961 and responsible for
implementing the activities of the Organization and acting in
accordance with the instructions of the Board of Governors.

It consists of the Secretary General, the Deputy Director

General, the Research Department, the Personnel and
Administrative Affairs Department, the Information Service, the
Office of the Secretary General, the Legal Affairs Unit.

In 1976, OPEC launched the International Development Fund

(OPEC) to provide assistance to developing countries.
Characteristics Of OPEC :
1- It is organized at the governmental level for countries that rely
heavily on oil exports in financing development.
2- Limit the right of membership in practice to developing
countries.
3- It has been shown as a political entity so that decisions are
made at the level of ministers and diplomats and require
unanimity with the consent of all governments.
4- Political matters are officially outside the scope of the
Organization.
5- Member States' exchange in the economic environment, the
level of growth and the size of the population, the absorptive
capacity of the investment and its relevance to international
policies.
6- OPEC has a basket of raw materials which is a reference for
the average price of a barrel.
The Basket of OPEC material include 12
types :
1) Sahara crude of Algeria
2) Minas of Indonesia
3) Heavy Iranian
4) Basra of Iraq
5) Crude of the Kuwaiti export
6) Libyan crude of Suder
7) Boni of Nigeria
8) Qatari crude
9) Saudi Arabian light crude
10) Merban of the UAE
11) Light crude of Venezuelan
12) Gyrasol of Angola.
The importance of OPEC in the global oil market
1 - Unification of privileges granted to companies in terms of terms and privileges.

2- Increasing the share of countries in profits by raising the income tax rate.

3 - Compelling companies to keep their accounts inside the country, taking in kind share
of production and selling them in the free market directly.
 OPEC and global
production
OPEC's share of global crude oil production was more than 40%, or 40.63
million barrels, according to 2010 and 66.6% for the rest of the non-OPEC
production of the same year, equivalent to 44873.66 thousand barrels per
day. At the level of OPEC total estimated at 39.4%, the Arab countries
represented in 7 countries take 25.06% or 18570 thousand barrels per day,
and the remaining 14.33% for non-Arab countries with a value of 10613.5 thousand
barrels per day.
 OPEC and the World Reserve
We note that OPEC reserves remained stable during the period from 2000 to
2011 and that it ranks first for the rest of the world, ie, 80.44% for the world
reserves. OPEC usually adjusts the reserve estimates for the last two years in
each report, especially for the OPEC member countries, so there may be no
difference, in its statistical tables.
However, with reference to its reserve estimates from its inception to the present
day, there is a significant difference. Based on this, the estimates for the Arab
countries combined increased to reach 712.4 billion barrels per day in 2011.
 OPEC and the World Reserve
According to current estimates, 80.4% (1,241.82 billion barrels) of the world's proven oil reserves
are located in OPEC Member Countries, with the bulk of OPEC oil reserves in the Middle East,
amounting to 67.1% of the OPEC total.
 OPEC and the October 1973 war
October 1973 saw the political role of OPEC and oil as a powerful lobbying tool in
international politics when Arab states decided to impose a ban on oil exports to pro-
Israel countries, including the United States and the Netherlands, and reduced their
production to support Egypt and Syria in their war against Israel.

The rise in oil prices significantly: -

On Saturday, October 6, 1973, Arab countries declared war on Israel. OPEC announced
its historic decision to raise the prices announced without negotiations with companies,
and on the same day met Arab oil ministers in Kuwait (OAPEC), and decided to approve
a program of progressive reduction of production, provided that the reduction of less
than 50% of the total production of September 1973 and be repeated every month so
that the United Nations to implement its resolution 242, which calls for Israel's
withdrawal from the occupied Arab territories in June 1967.