OPEC | Organization of the Petroleum Exporting Countries

OPEC means the Organization of the Petroleum Exporting Countries. It was founded in 14 September 1960 in Baghdad, Iraq. It is made up of 13 member’s oil producing state. OPEC was formed as a result of exploitative motives of multinational companies engaged in oil exploration.

Some oil producing states formed the organization as a means of protecting their interest against exploitation. The formation of OPEC represented a collective act of sovereignty by oil exporting nations, and it marked a turning point in state control over natural resources. In the 1060s, OPEC ensured that oil companies could not unilaterally cut prices.

OPEC has a mandate to coordinate and unify the petroleum policies of its members and to ensure the stabilization oil markets in order to secure an efficient economic and regular supply of petroleum to consumers, a steady income to producers and fair return on capital for those investing in the petroleum industry.

Organs of OPEC

  • The Conference
  • Board of Directors
  • Secretariat

The Conference: the conference is the supreme authority made up of high level representatives of the member government, which meets at least twice a year. An extraordinary meeting of the conference may be convened at the request of a member country by the Secretary General after due consultation with the president and approval by majority of member state.

Delegation to the conference may consist of one more delegates as well as advisors and observers. When delegation consists of more than one person, the appointing country shall nominate one person as the head of the delegation.

Functions of the Conference

  • Formulation of general policy of the organization and determining the appropriate way and means of its implementation.
  • Decide upon any application for membership of the organization.
  • Confirm the appointment of member of board of governors.
  • Direct the board of governors to submit report or make recommendations in matter of interest to the organization.
  • Consider the report and recommendation submitted by the board of governors on the affairs of the organization.
  • Approve any amendment of its statue.
  • Appoint the chairman of Board of Governors

Board of Governors

The Board of Governor shall be composed of governors nominated by the member countries and confirmed by the conference. Each members of the organization shall be represented at the meeting by the board of governors. A quorum of two third shall be necessary for holding of meetings.

When for any reason, a governor is prevented from attending a meeting of the board of governors; a substitute adhoc governor shall be nominated by the corresponding member country. Such nomination shall not require confirmation by the conference.

At the meeting which he attends, the adhoc governor shall have the same status as the other governors, except as regards qualification for chairmanship of the board of governors. Each governor shall have one vote and the term of office for each governor shall be two years.

Functions of the Board of Governors

  • The board of governors manages the affairs of the organization and implements the decision of the conference.
  • The board considers any report submitted y the secretary general.
  • The board submits report and makes recommendation to the conference on the affairs of the organization.
  • Draws up the budget of the organization for each calendar year and submit it to the conference for approval.
  • The board nominates the auditor of the organization for duration of one year.
  • Considers the statement of accounts and the auditor reports and submit them to the conference for approval.
  • Another function of the board is to convene an extraordinary meeting of the conference and prepares the agenda for the conference.

The Secretariat

The secretariat is responsible for the executive functions of the organization in accordance with the provisions of establishing statute under the direction of the board of governors. The secretariat of the organization consists of the secretary general and other staff as may be required. It functions is at the headquarters of the organization.

Duties of the Secretary General

  • The secretary general is the legally authorized representatives of the organization.
  • The secretary general is the chief of the organization in accordance with directions of the board of governors.
  • The secretary general organizes and administers the work of the organization.
  • The secretary general ensures that the function and duties assigned to the different departments of the secretariat are carried out.

Achievement of OPEC

  • Since its formation in 1960, OPEC has ensured a stable, secure and well managed oil sector. The very first resolution of the organization is to achieve stable oil prices, with a view to eliminating harmful and unnecessary fluctuations.
  • OPEC whose membership comes from the developing world has a high priority on easing the plight of impoverished nations, in particular by helping them pursue the goals of sustainable development.
  • The oil industry through human ingenuity and technological development has a long history of successfully improving the environmental credentials of oil in both production and use. And OPEC member countries, both individually and collectively have themselves been at the forefront of many important environmental focused development. This includes investing billions of dollars over the past decades in flared gas recovery project.
  • OPEC has attached great importance to the continued strengthening of its members country, national oil companies which was dominated by the multinational oil companies that controlled the quantities of oil extracted and sold. Over the past few decades the national oil companies have gradually increased in size, stature and strength, with their roles, responsibility and capabilities advancing enormously. This has helped to reduce the exploitative tendencies of the multinational companies.

Problems of OPEC

  • The member states often disagree and do not always cooperate on oil quota. Some of them produce more than the quota allocated to them.
  • The rate at which some developed countries are storing oil is a source of worry to OPEC. It had resulted to fall in oil prices.
  • The discovery of oil in some developed countries has led to the fall of oil prices in the international market. OPEC members have been unable to decide on what step to take.
  • The increase in production by non OPEC members is not OPEC only problem. The continued drive to conserve energy, which has continued despite lower oil prices, has halted the oil market.

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