ORGANIZATION OF PETROLEUM EXPORTING COUNTRIES (OPEC)
ORIGIN OF OPEC
Organization of Petroleum Exporting Countries (0PEC) , comprises of 13 third world petroleum producing countries , formed in 1960 to promote and protect the interest of its members. OPEC as an organization was formed as a reaction to the exploitative motives of multinational companies, which as at that time were controlling oil operation in the oil producing countries in 1960. Five oil producing countries met in Baghdad the capital of Iraq to form a union that will fight against the exploitative tendencies of multinational companies. The five countries that held the meeting were; Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Some other countries later joined the organization because of its effort in curtailing the activities of the oil companies. Countries like Algeria (1969), Nigeria (1971), Gabon and United Arab Emirate (1973), joined the organization.
AIMS AND OBJECTIVES
- OPEC was established so as to stabilize price of oil in the World market
- To co-ordinate and unify: OPEC was formed to co-ordinate and harmonize oil policies of member nations to bring them in line with the standard set by OPEC.
- Steady Income: It was also formed to stabilize oil income of its members states.
- To ensure steady supply of oil to consuming nations.
- Quota: To fix and allocate production quotas to member nations.
- Protection of member states: It was formed to protect the interest of member states and also to ensure the participation of foreign multi-national companies in oil exploitation does not threaten the interest of member nations.
- To negotiate for the participation of member nations in oil exploitation and exploration.
ORGANS OF OPEC
- The conference
- The board of Governors
- The Secretariat.
The Conference is the supreme organ of OPEC. Each member-nation is represented by its Minister of Petroleum who lead the a delegation to OPEC meetings. It meets twice in a year but the Secretary General can call for extra-ordinary meeting after due consultation with the President of the Conference and approved by a simple majority of member-states. The ordinary meetings of the Conference are held in Vienna, Austria, the organization’s headquarters and each member has a simple vote.
FUNCTIONS OF THE CONFERENCE
- The Conference formulates the general policy of the organization and determines the appropriate methods and means of its implantation.
- It appoints the Secretary General, the Deputy Secretary, the Chairman and the Alternate Chairman of the Board of Governors.
- It approves the appointment of the members of the Board of Governors.
- It considers the applications for membership of OPEC.
- It approves the budget of the Organization.
- The Conference considers and approves all reports and recommendations submitted by the Board of Governors.
- It appoints auditors that examine the accounts of the organization.
THE BOARD OF GOVERNORS
This organ is made up of representatives called governor. Every governor has one vote and serves for a term of two years. The board meets at least twice a year.
FUNCTIONS OF THE BOARD OF GOVERNORS
- It manages the affairs of the organization
- It prepares agenda for the meeting of the conference.
- The board implements the decisions made by the conference.
- The board nominates the auditor of the organization.
- The board also prepares the budget of the organization.
- The board considers and submits the statement of account and the auditor’s report to the conference for approval.
- The board considers and takes decisions on any report submitted by the Secretary General.
The Secretariat of OPEC is located in its headquarters in Vienna, Austria. The organ carries out the executive functions of the organization. The head of the secretariat is the Secretary General, assisted by a deputy Secretary General and other members of staff. The Secretary General has three years tenure and could be re-appointed.
FUNCTIONS OF THE SECRETARIAT
- The secretariat is responsible for all the correspondence of the organization.
- It performs the executive and administrative functions of the organization.
- It represents the organization.
The departments of the secretariat are;
- Information department
- Economic department
iii. Administrative department.
- Technical department.
ACHIEVEMENTS OF OPEC
- The organization has created a forum where member states can resolve their problems.
- The organization has put the activities of multi-national companies to check.
- The common fund established by the organization has helped to reduce the financial problems of the members.
- The organization has encouraged member states to take part in oil exploration.
- OPEC has succeeded to some extent in regulating production of oil and raising the prize of oil in recent time.
PROBLEMS OF OPEC
- The issue of quota: Member states do not abide by the directives of the organization on oil quota.
- The discovery of North sea oil and the competition is a great threat to prize stabilization.
- Oil storage: The rate at which some developed countries are storing crude oil, is a great threat to OPEC.
- Frequent international crisis has affected the prize of oil. e.g the Gulf war (1990-1991).
- Economic depression worldwide can bring down the prize of oil.
- Research: Some developed counties are carrying out research to find alternative to oil. This has negatively affected the prize of oil.
GENERAL EVALUATION/REVISION QUESTIONS
- Highlight 4 functions of the Secretariat of OPEC.
- What are the reasons for Nigeria making Africa the centre-piece of her foreign policy.
- Mention the aims of O.A.U.
- Mention the factors affecting Nigeria’s foreign policy.