Organization of the Organization of the Petroleum Exporting Petroleum Exporting

CountriesCountries

Chad GeurinkChad Geurink

February 14, 2007February 14, 2007

Model UNModel UN

World View of OPECWorld View of OPEC

OPEC’s ObjectiveOPEC’s Objective

• To co-ordinate and unify petroleum To co-ordinate and unify petroleum policies among Member Countriespolicies among Member Countries

• Secure fair and stable prices for Secure fair and stable prices for petroleum producerspetroleum producers

• Produce an efficient, economic and Produce an efficient, economic and regular supply of petroleum to consuming regular supply of petroleum to consuming nationsnations

• Receive a fair return on capital to those Receive a fair return on capital to those investing in the industryinvesting in the industry

1960’s1960’s

• OPEC’s formative yearsOPEC’s formative years• Started as a group of five oil-producing, Started as a group of five oil-producing,

developing countriesdeveloping countries– Iraq, Iran, Kuwait, Saudi Arabia and VenezuelaIraq, Iran, Kuwait, Saudi Arabia and Venezuela

• Wanted to assert its Member Countries legitimate Wanted to assert its Member Countries legitimate rights in an international oil marketrights in an international oil market

• Activities were generally of a low-profile natureActivities were generally of a low-profile nature• Headquarters moved from Geneva to Vienna in Headquarters moved from Geneva to Vienna in

19651965• Membership grew to ten during the decadeMembership grew to ten during the decade

1970’s1970’s

• OPEC rose to international prominenceOPEC rose to international prominence

• Member Countries took control of their domestic Member Countries took control of their domestic petroleum industriespetroleum industries

• They acquired a major say in the pricing of crude They acquired a major say in the pricing of crude oil on world marketsoil on world markets

• OPEC acquired its 11OPEC acquired its 11thth and final current member and final current member

• Two oil pricing crisesTwo oil pricing crises– Arab oil embargoArab oil embargo– Iranian RevolutionIranian Revolution– Both steeply raised oil pricesBoth steeply raised oil prices

1980’s1980’s

• Oil prices peaked at the beginning of the Oil prices peaked at the beginning of the decadedecade

• Prices also began a dramatic decline Prices also began a dramatic decline which culminated in a collapse in 1986which culminated in a collapse in 1986

• Awareness grew of the need for joint Awareness grew of the need for joint action among oil producers if market action among oil producers if market stability with reasonable prices was to be stability with reasonable prices was to be achieved in the futureachieved in the future

• Environmental issues began to appear on Environmental issues began to appear on the international agendathe international agenda

1990’s1990’s

• Hostilities in the Middle East caused OPEC to Hostilities in the Middle East caused OPEC to increase output in order to keep prices more increase output in order to keep prices more stable stable

• Prices then remained relatively stable Prices then remained relatively stable • As the decade ended, there was a spate of As the decade ended, there was a spate of

mega-mergers among the major international mega-mergers among the major international oil companies in an industry that was oil companies in an industry that was experiencing major technological advancesexperiencing major technological advances

• For most of the 1990s, the ongoing For most of the 1990s, the ongoing international climate change negotiations international climate change negotiations threatened heavy decreases in future oil threatened heavy decreases in future oil demand demand

Brief ReviewBrief Review

• OPEC BeginningOPEC Beginning– Iraq, Iran, Kuwait, Iraq, Iran, Kuwait,

Saudi Arabia and Saudi Arabia and VenezuelaVenezuela

– Headquarters Headquarters originally in originally in Geneva, Geneva, SwitzerlandSwitzerland

• OPEC ExpansionOPEC Expansion– Algeria, Angola, Algeria, Angola,

Indonesia, Libya, Indonesia, Libya, Nigeria, Qatar, and Nigeria, Qatar, and United Arab United Arab EmiratesEmirates

– Headquarters Headquarters moved to Vienna, moved to Vienna, Austria Austria

Where does your money go?Where does your money go?