Contents:

 Introduction.
 History, Objectives, Membership and Organization.
 Oil Reserves.
 End of 2008 Reported Oil Production to each Member.
 Oil Production history.
 Changing Production Share in World Market.
 Oil Export to Production.
 Cumulative Oil Production Related to Reserves.
 Future Potentials.

By: Mahmud [Link]. Page 1

Introduction:
(OPEC) Organization of the Petroleum Exporting Countries is
an international organization, where was founded at a meeting
held in Baghdad, Iraq; in September 14, 1960 by five oil
producing countries: Iran, Iraq, Kuwait, Saudi Arabia and
Venezuela.

Today, OPEC consists of twelve members as shown in the

table below, which are heavily reliant on oil revenues as their
main source of income. OPEC coordinates and unifies the
petroleum policies of its member countries.

Location Year of Country

accession
South America 1960 Venezuela
Middle East 1960 Saudi Arabia
Middle East 1960 Kuwait

Middle East 1960 Iran

Middle East 1960 Iraq
Middle East 1961 Qatar
Africa 1962 Libya
Middle East 1967 United Arab Emirates

Africa 1969 Algeria

Africa 1971 Nigeria

Africa 2007 Angola

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 South america 2008 Ecuador

 Indonesia joined in 1962 and withdrew its membership in

OPEC in 2008 after it became a net importer of oil
 Ecuador joined OPEC from1973 to 1992 and joined back in
2007.
 Gabon joined OPEC from 1975 to 1994.

OPEC’s oil reserves are about 955.8 Billion barrels in

2008; which about 76 % of world proven oil reserves which is a
total of 1258.0 billion barrels , producing about 36.705 Million
barrels per day in 2008; which about 44.8% of total world oil
production which is equal to 81.82 million barrels per day
and export 28.1 Million barrels per day of its total production.

Oil Reserves
24.1% Non-
OPEC

75.9 %
OPEC

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 Oil Production

44.8% OPEC

55.2% Non-
OPEC

OPEC History:
OPEC passes with stages started from September1960 to today
can be summarized in the following table:

Date Occasion
September1960: OPEC was founded at a meeting held in
Baghdad, Iraq, by five oil producing
countries: Iran, Iraq, Kuwait, Saudi Arabia
and Venezuela. These countries are referred
as the Founder Members of the
Organization.
1962: OPEC was registered with the United
Nations Secretariat.
1970: The effects of the leading decision of
revolution of September to nationalization
the petroleum companies.
1973: Arab exporting nations imposed an
embargo on the countries supporting Israel.
1975: The first Summit of OPEC Sovereigns and
Heads of State was held in Algiers.

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1979: The outbreak of the Iranian Revolution
which resulted in the loss of 2 to 2.5 million
barrels of oil per day.
1980: Iraq invaded Iran; the combined production
of both countries was only a million barrels
per day and the prices peaked at the
beginning of the decade.
1986: A dramatic decline in prices because of the
increase in oil production by Middle East
countries to cover expenditure of war.
1990: Increase in oil price due to Gulf War.
1998: The rapid growth in Asian economies had
been halt.
1999: OPEC production drop by about 2.1 million
barrels per day for increase of oil price.
2001: Weak USA economy and increases in non-
OPEC production.
2003: USA invaded Iraq.
January 2007: OPEC acquired its 12th and final current
Member, Angola.
November 2007: The Third Summit of Heads of State and
Government of OPEC Member Countries in
Saudi Arabia.
2008: The world Economic crisis which caused
OPEC countries to lower their Production.

By: Mahmud [Link]. Page 5

  OPEC Membership:
a. Founder Members of the Organization are those countries
which were represented at the First Conference, held in
Baghdad, and which signed the original agreement of the
establishment of the Organization.

b. Full Members shall be the Founder Members as well as

those countries whose application for membership has
been accepted by the Conference.

c. Any other country with a substantial net export of crude

petroleum, which has fundamentally similar interests to
those of Member Countries, may become a Full Member of
the Organization, if accepted by a majority of three-
fourths of Full Members, including the concurrent vote of
all Founder Members.

d. A net petroleum-exporting country, which does not qualify

for membership under paragraph C above, may

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 nevertheless be admitted as an Associate Member by the
Conference under such special conditions as may be
prescribed by the Conference, if accepted by a majority of
three-fourths, including the concurrent vote of all Founder
Members.

e. Associate Members may be invited by the Conference to

attend any Meeting of a Conference, the Board of
Governors or Consultative Meetings and to participate in
their deliberations without the right to vote. They are,
however, fully entitled to benefit from all general facilities
of the Secretariat, including its publications and library,
as any Full Member.
f. Whenever the words “Members” or “Member Countries”
occur in this Statute, they mean a Full Member of the
Organization, unless the context demonstrates to the
contrary.

 OPEC Objectives:

The main objectives of OPEC are:

1. The principal aim of the Organization shall be the

coordination and unification of the petroleum policies of
Member Countries and the determination of the best
means for safeguarding their interests, individually and
collectively.

2. The Organization shall devise ways and means of ensuring

the stabilization of prices in international oil markets with
a view to eliminating harmful and unnecessary
fluctuations.

3. Due regard shall be given at all times to the interests of

the producing nations and to the necessity of securing a
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 steady income to the producing countries; an efficient,
economic and regular supply of petroleum to consuming
nations; and a fair return on their capital to those
investing in the petroleum industry.

 The Classification of OPEC

Departments:
1. The Conference:

 The Conference that be the supreme authority of the

Organization.

 The Conference Members consist of delegations

representing the Countries, when a delegation consists of
more than one person nominates one person as the Head
of the Delegation.

 The Conference should hold two Ordinary Meetings a

year.

 The Conference shall elect a President and an Alternate

President at its first Preliminary Meeting and shall retain
the title until the next Meeting.

2. The Board of Governors:

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  The Board of Governors composed of Governors
nominated by the Member Countries and confirmed by the
Conference.

 The Board of Governors should meet no less than twice

each year.

 The Chairman of the Board of Governors and the

Alternate Chairman appoint by the Conference from
among the Governors for a period of one year.

3. Secretariat Management:

The Secretariat Management consists of the following:

Secretary General:

 He administers the affairs of the Organization in

accordance with the directions of the Board of
Governors.
 The Conference appoints the Secretary General for a
period of three years.

The Secretary General consists of the following:

A. The Legal Office: provides legal advice to the Secretary

General, supervises the secretariat’s legal.

B. The Secretary General Office: provides him with

executive assistance, particularly in establishing and
maintaining contacts with governments.

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 Research Division:
The Research Division divided into:

A. The Data Services Department: performs the function of

data provider for Member Countries and as a point of
reference for OPEC data for the international
community.

B. The Petroleum Market Analysis Department: monitors

and analyzes short-term oil market indicators and world
economic developments. As well as the latest developments
in energy policies which directly affect prices.

. C. The Energy Studies Department: the main functions

are analyzes and forecasts world energy developments in
the medium and long term, as well as technological
developments affecting hydrocarbons and products, and
prepares long-term forecasts of the demand for OPEC oil
and gas.

The Administration and Human Resources Department:

Is responsible for administrative services for all meetings,
personnel matters, budgets and accounts, it studies and review
general administrative policies.

The Public Relations and Information Department:

Is responsible for presenting OPEC’s objectives, decisions
and actions of organization, its activities include press relations.

By: Mahmud [Link]. Page 10

  Oil Reserves:
OPEC’s oil reserves are about 955.8 Billion barrels in 2008;
OPEC has about 75.9% of world proven oil reserves which
equals about 1258.0 Billion barrels. Saudi Arabia, Iran and
Iraq combined account for about 56.5% of the OPEC’s oil
reserves (42.8% of total world oil reserves).

Country Oil Reserves Percent of Percent of

(Billion OPEC Total World
Barrels) Reserves Reserves
Saudi
Arabia 264.1 27.631% 20.993%
Iran 137.6 14.396% 10.937%
Iraq 115.0 12.031% 9.1414%
Kuwait 101.5 10.619% 8.0683%
Venezuela 99.40 10.399% 7.9014%
UAE 97.80 10.232% 7.7742%
Libya 43.70 4.5720% 3.4737%
Nigeria 36.20 3.7874% 2.8775%
Qatar 27.30 2.8562% 2.1701%
Angola 13.50 1.4124% 1.0731%
Algeria 12.20 1.2764% 0.9697%
By: Mahmud [Link]. Page 11
 Ecuador 3.800 0.3975% 0.3020%
OPEC 955.8 100.00% 75.980%
Non OPEC 302.2 --- 24.020%
Total world 1258 *

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 300
Oil reserves by member in end of 2008

250

200
bilion barrels

150

100

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Oil reserves by each member in OPEC

By: Mahmud [Link]. Page 13

The figure below shows the history of proven Oil Reserves for OPEC compared
to the Oil Reserves for the whole World since the beginning of the organization
in 1960 until the End of the year 2008 .

OPEC and World reserves history

1400
Series2; 1258

1200

World

1000 955.8

800

OPEC
600

400

200
Oil reserves in ( billion Bll )

OPEC and World reserves history since 1960 to 2008

Oil Production in 2008:

By: Mahmud [Link]. Page 14
 OPEC’s oil production is about 36.705 Million barrels per
day in 2008; OPEC has about 44.86% of world oil production
which equals about 81.82Million barrels per day.

OPEC Oil Production by Member Country in 2008

Country Average Oil Percent (%) Percent (%)

Production of OPEC Oil of World Oil
(Million Production Production
B/D)
Saudi 13.255%
10.846 29.549%
Arabia
Iran 4.325 11.783% 5.2859%
UAE 2.98 8.1187% 3.6421%
Kuwait 2.784 7.5847% 3.4025%
Venezuela 2.566 6.9636% 3.1239%
Iraq 2.423 6.6012% 2.9613%
Nigeria 2.17 5.9120% 2.6521%
Algeria 1.993 5.4297% 2.4358%
Angola 1.875 5.1082% 2.2916%
Libya 1.846 5.0292% 2.2561%
Qatar 1.378 3.7542% 1.6841%
Ecuador .514 1.4003% 0.6282%
OPEC 36.705 100% 44.860%

By: Mahmud [Link]. Page 15

 Oil Production for each member in OPEC

12

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Oil production ( million B/D)

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Oil production for each member of OPEC

By: Mahmud [Link]. Page 16

 OPEC Production History (since
organization)

90.00 OPEC and World Production History

80.00

World
70.00

60.00

50.00

40.00
OPEC

Oil Production ( million B/D)

30.00

20.00

10.00

0.00
1950 1960 1970 1980 1990 2000 2010 2020

Years
OPEC
World

OPEC and World Production History

By: Mahmud [Link]. Page 17

Changing Production Share in
World Market,
As shown previous the OPEC oil production was changed
through the past years, where these changed depending on many
factors such as oil prices, world demand, incident politics, wars
in the world, and technology development.

OPEC Oil Production Share in World Market

90.00
OPEC
80.00
TW
70.00
Non-OPEC
Oil Production ( million B/D)

60.00

50.00

40.00

30.00

20.00

10.00

0.00
1950 1960 1970 1980 1990 2000 2010 2020

year

OPEC Oil Production Share in World Market.

By: Mahmud [Link]. Page 18

 The OPEC’s oil production reaches to the minimum level
of production in period (from 1982 to 1987) at approximation
16 Million barrel per day, the maximum level of production in
the periods (from 1973 to 1979) and in (from 2004 to 2006) at
approximation (30 - 35 Million barrel per day).

On the other hand; the OPEC’s share in world market

reaches to the minimum level at 28.5% in 1985, and the
maximum level at 55.1% in 1973.

And at the end of year 2008 OPEC production is equal to

36.705 Million B/D, which represent 44.86% of the world Oil
production which is Equal to 81.82 Million B/D.

By: Mahmud [Link]. Page 19

OPEC Oil Export to Production in
2008:

Country Oil Oil Export Export to

Production (Million Production
(Million B/D) B/D) percentage
Saudi
Arabia 10.846 8.622 79.5%
Iran 4.325 2.595 60%
Venezuela 2.566 1.847 72%
Kuwait 2.784 2.484 89%
UAE 2.98 2.513 84.32%
Nigeria 2.17 1.92 88.5%
Iraq 2.423 1.93 79.65%
Libya 1.846 1.43 77.5%
Angola 1.875 1.58 84.3%
Algeria 1.993 1.682 84.4%
Ecuador .514 .31 60.3%
Qatar 1.378 1.274 92.4%
OPEC 36.705 28.007 76.3%

By: Mahmud [Link]. Page 20

 OPEC`s Total Export to Production ratio
in end of 2008

Consumption 24%

Exporting 76%

Exporting and Consumption to Production percentage for OPEC

There`s a decline in the exporting rates and that was because of the drop of Oil
prices which happened due to the decline of world oil demand that happened in
the last half of year 2008 due to the World crisis .

By: Mahmud [Link]. Page 21

OPEC Cumulative Oil Production
Related to Reserves

OPEC Cumulative Oil Production Related to

Reserves in 2008

Count Total Cumulat Cum Remaini Theoreti

ry Reserv ive Producti ng cal Life
es Producti on to Reserve (Years)
(B on total s
bbl) (B bbl) reserves (B bbl)
Saudi
Arabi 117.6 44.53% 146.5 37
a 264.1
IR
Iran 137.6 62.76 45.6% 74.84 47
Iraq 115.0 33 28.7% 82 92.7
Libya 43.7 26.62 60.91% 17.08 25.

By: Mahmud [Link]. Page 22

 Theoretical reserves life
100
90
80
70
60
50
40
Years

30
20
10
0

Saudi Arabia Iran Iraq Libya

country

Theoretical reserves life for the main four OPEC members

Future Potentials:
There are two scenarios for future potentials based on oil
prices and values of tar sand production.

In case of oil prices below $100 :

 The world oil production will be increased even 2010,

after that will be decreased.

 OPEC and non-OPEC crossover point at 2007.

 After 2008, the OPEC will come to dominant world oil

production, because the most of the world oil reserves are
concentrate in the OPEC members and non-OPEC are
producing the total amount of its reserves.
By: Mahmud [Link]. Page 23
  After 2015, the OPEC production will be starting in
decline.

Future Potentials.

In case of oil prices above $100 :

 The world oil production will reach the peak in 2015,

after that will be decreased.

 Non-OPEC countries starting in producing substitution

reserves (Tar Sand).

 OPEC and non-OPEC may be equalization in the

production.

 The OPEC will stay the main source of conventional

reserves in the world, where the most of the world oil
reserves are concentrating in the OPEC members.
By: Mahmud [Link]. Page 24
Oil prices since the start of OPEC :

Oil prices since 1960

120.00

100.00

80.00
Oil price in ( dollar /b)

60.00

40.00

20.00

0.00
1950 1960 1970 1980 1990 2000 2010 2020

Year

Crude Oil prices since 1960

By: Mahmud [Link]. Page 25

References:
 Arab Oil & Gas Directory (2005).

 OPEC Annual Statistical Bulletin (2006).

 Old seminar by Waleed el-gmati (2006)

Web Sites:
[Link]
[Link]
www. [Link]

By: Mahmud [Link]. Page 26