ORGANIZATION OF THE PETROLEUM EXPORTING COUNTRIES (OPEC)
Organization of the Petroleum Exporting Countries(OPEC) is an intergovernmental organization found in a period of transition in terms of international economic and political landscape, with 5 founding member nations in 1960.The organisation came into existence with Baghdad Conference in September 1960.The founding members were Saudi Arabia,Iran, Iraq, Venezuela, Kuwait.The headquarters was established in Geneva, Switzerland but was later shifted to Vienna, Austria in 1965. The primary aim of the organization was to strengthen the petroleum industry by coordinating and unifying petroleum policies of member nations enabling secure,fair and stable prices of products. The organization also kept focus on ensuring efficient and regular supply of petroleum industry products to consuming nations and capital returns to investors.
By 1970s, OPEC had become internationally prominent as they were able to take control over the domestic crude oil industry in the nations and also influence the pricing.
The aim of OPEC has gradually changed over decades by acknowledging the issues at hand affecting the nations. In 1976, to devise socio-economic development schemes, OPEC established Fund for International Development to address the plight of poorer nations. In 1990s, UN sponsored climate change negotiations led to OPEC adding fairness, balance and realism in treatment of Oil supplies to its objectives. With the upcoming decades OPEC led the crude oil industry through The Recession in global economy, changes with high technologies, sustainable development goals etc.
OPEC Statue
The statue stipulates the legal framework under which full members and associate members are classified. The countries that have substantial net export of crude oil and have the same interests as that of OPEC are given full membership after securing majority of 3/4th of full members. The Associate members are countries which do not qualify for full membership but are admitted by conference.
OPEC members
Over the next few decades it was joined by many nations such as Qatar, Indonesia, Libya etc. However currently it has 13 active members. These members are the five founding members and Indonesia,Libya,Nigeria,UAE,Algeria,Equatorial Guinea, Angola and Gabon. Ecuador,14th member decided to leave from January 1,2020 effectively.
OPEC+ Members
The Non OPEC members are the nations which have a substantial export of crude oil along with OPEC members are called as OPEC+ members. These members are Azerbaijan, Bahrain, Brunei, Malaysia, Kazakhstan, Mexico, Russia, Oman,South Sudan and Sudan.
Why OPEC+?
OPEC controls 35% of global oil supplies and credits of 82% of reserves. The plus member nations formed an alliance in a historic meeting in Algiers in 2017 through Declaration of Cooperation. This increased the global oil supplies to 55%.
This played a significant role in setting up the OPEC+ in the World economic Market and thus
The sustainable oil market stability sought by the Declaration is in the interests of producers, consumers, investors and the global economy at large. The core principles of transparency, equity and fairness which have underpinned the Declaration of Cooperation infuse all aspects of OPEC’s interactions with its non-OPEC oil producing partners, including cooperation at the research and technical levels.
OPEC Declaration of Cooperation
Declaration of Cooperation is the landmark agreement which marked the cooperation between the OPEC and non-OPEC members in stabilizing the crude oil prices, and further helping in planning and monitoring of fair trade in the industry.
What’s in For India?
The OPEC contributes for 80% of India’s crude oil imports. India has been one of the top consumer nations across globe. OPEC has been closely monitoring the Indian consumer market for trends and technologies. Any production cut by the OPEC plus arrangement impacts India’s energy security efforts in the short run. OPEC and India has maintained ties via OPEC-India dialogues.
Current scenario
In the recent OPEC meetings in June to assess the market and plan its recovery the oil production was restricted under limits. For July the industry saw recovery with increased productions across many members nation and many of the OPEC Countries were observed to have completed 97% of their obligations under oil production cut deal. In August, OPEC+ reduced to 7.7 million barrels per day (bpd) from 9.7 million bpd previously.
However OPEC has downgraded its outlook owing to the changes in labour market and fallen demands across globe.
Sources:
- http://www.opec.org
- https://oilprice.com/Energy/Crude-Oil/OPEC-Complied-95-With-Oil-Production-Cuts-In-July.html
–SNEHA NAYAK