History of the Establishment of Opec (Organization Of The Petroleum Exporting Countries)

History of the Establishment of Opec (Organization Of The Petroleum Exporting Countries)

History of the Formation of OPEC - OPEC was founded on September 14, 1960 in Baghdad, Iraq. Then it was moved to Vienna, Austria on September 1, 1965. Venezuela was the first country to initiate the formation of OPEC by approaching Gabon, Iran, Libya, Saudi Arabia and Kuwait in 1949.






History of the Formation of OPEC


A. History of the Establishment of Opec (Organization Of The Petroleum Exporting Countries)


Venezuela was the first country to initiate the formation of the OPEC organization by approaching Iran, Gabon, Libya, Kuwait and Saudi Arabia in 1949, suggesting they exchange views and explore wider avenues and closer communication between the oil producing countries. On 10 – 14 September 1960, at the suggestion of the Venezuelan Minister of Mines and Energy Juan Pablo Pérez Alfonzo and the Minister of Mines and Energy of Saudi Arabia Abdullah Al Tariki, the governments of Iraq, Persia, Kuwait, Saudi Arabia and Venezuela met in Baghdad to discuss ways to increase the price of crude oil produced by each country. OPEC was founded in Baghdad, was sparked by a 1960 law passed by American President Dwight Eisenhower that imposed quotas on imports of Venezuelan and Persian Gulf oil as well as the Canadian and Mexican oil industries. Eisenhower established national security, ground access to energy supplies, in time of war. Lowering the price of world oil in the region, Venezuelan President Romulo Betancourt reacted by seeking to form alliances with oil-producing Arab countries as a strategy to protect the autonomy and profitability of Venezuelan oil. As a result, OPEC was created to unify and coordinate the policies of the member countries as a continuation of what had been done. Lowering the price of world oil in the region, Venezuelan President Romulo Betancourt reacted by seeking to form alliances with oil-producing Arab countries as a strategy to protect the autonomy and profitability of Venezuelan oil. As a result, OPEC was created to unify and coordinate the policies of the member countries as a continuation of what had been done. Lowering the price of world oil in the region, Venezuelan President Romulo Betancourt reacted by seeking to form alliances with oil-producing Arab countries as a strategy to protect the autonomy and profitability of Venezuelan oil. As a result, OPEC was created to unify and coordinate the policies of the member countries as a continuation of what had been done.


B. Background to the Formation of OPEC


OPEC is an intergovernmental organization founded in 1960. Its member countries are oil exporters which currently consist of Saudi Arabia, Iran, Iraq, Kuwait, Venezuela, Nigeria, Algeria, Qatar, Libya, UAE and Indonesia. Previously Ecuador, Gabon was also a member but left in 1992 and 1994.


The formation of OPEC was triggered by the unilateral decision of the multinational oil company (The Seven Sisters) in 1959/1960 which controlled the oil industry and set prices in the international market. "The Tripoli-Tehran Agreement" between OPEC and these private companies in 1970 put OPEC in full control of the international oil market.


1. Basic Organization of OPEC


This organization was established so that each oil-producing member country adopts policies in the oil sector and oil prices can benefit member or producer countries, therefore it is this organization that can prevent unhealthy competition from oil-producing countries.


2. OPEC goals


After more than 40 years of existence, OPEC has implemented various strategies in achieving its goals. From this experience, OPEC has finally set a goal to achieve, namely: "preserving and enhancing the role of oil as a prime energy source in achieving sustainable economic development."

through:


Coordination and unification of petroleum policies among member countries;
Establish appropriate strategies to protect the interests of member countries;
Applying methods to stabilize oil prices on the international market so that price fluctuations do not occur;
Guarantee a steady income for oil producing countries;
Ensuring the supply of oil for consumers;
Ensuring a fair return of investor capital in the oil sector.3. OPEC Organizational Structure

a. OPEC conference
b. board of governors
c. sub committee monitoring material
d. secretary
e. economic commission board
f. internal auditors
g. SG office
h. law office
i. research division
j. Service Division Support
k. data service department
l. kerosene study department
m. department of energy studies
n. department of multilateral relations
o. PR and information department
p. department of finance and human resources
q. admin and service department


C. OPEC Main Body


The OPEC organization consists of 3 main bodies namely the OPEC Conference, the Board of Governors, and the Secretariat along with other bodies that are under the main body according to the OPEC structure.


1. Conference: Which has the highest authority in determining policy.


2. Board of Governors : Consists of Governors who are elected by each OPEC member to sit on the Council which meets at least twice a year.
Council Duties:
a) Carry out the decisions of the Conference
b) To consider and decide on the reports submitted by the secretary general
c) Provide recommendations and reports to OPEC conference meetings
d) Consider all financial reports and appoint an auditor for a term of 1 year
e) Approve the appointment of Director-Director of Division, Head of Section as proposed by member countries
f) Organize the OPEC Conference Extraordinary meeting and prepare the meeting agenda
g) Make the organization's financial budget and submit it to the Conference Session every year

3. Secretariat


Executive executive of the organization in accordance with the status and direction of the Board of Governors. The Secretary General is the official representative of the organization who is elected for a period of 3 years and can be renewed once for the same period. In carrying out his duties the Secretary General is responsible to the Board of Governors and receives assistance from the Heads of Divisions and Sections.


4. The Economic Commission Board, which is tasked with reviewing and preparing materials and requirements for the conference, especially regarding technical matters in the petroleum sector.

D. OPEC Summit


The OPEC Summit is held 2 times a year. But extra-ordinary meetings can be held if needed (articles 11-12). The OPEC Conference is chaired by the President and Vice President of OPEC who are elected by the members at the Conference meeting (Article 14). Article 15 stipulates that the OPEC Conference shall be tasked with formulating the general policies of the organization and seeking efforts to implement these policies. As the highest organization, the meeting of the OPEC Conference confirmed the appointment of the members of the Board of Governors and the Secretary General of OPEC