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OPEC (Organization of Petroleum Exporting Countries )


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It's About the OPEC ( Organization of Petroleum Exporting Countries ) & Crude Oil.

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OPEC (Organization of Petroleum Exporting Countries )

  1. 1. Asit Dholakia &TEAM-Chetan Rajgor-Yogendrasinh GohilDepartment ofCommerce andManagement.
  2. 2. Organization of the Petroleum Exporting CountriesOrganization of the Petroleum Exporting CountriesHeadquarters :Vienna, AustriaPresident : Rostam GhasemiSecretary General : Abdallah el-Badri
  3. 3. Organization of Petroleum Exporting CountriesOrganization of Petroleum Exporting CountriesPermanent inter-governmental organizationPermanent inter-governmental organization12 oil producing and exporting countries12 oil producing and exporting countriesthroughout Africa and Asiathroughout Africa and AsiaFor these countries oil is the key toFor these countries oil is the key todevelopmentdevelopmentWhat is OPEC?What is OPEC?
  4. 4. OPEC was formed at a meeting held onOPEC was formed at a meeting held onSeptember 14, 1960 in Baghdad, Iraq, by fiveSeptember 14, 1960 in Baghdad, Iraq, by fiveFounder Members: Iran, Iraq, Kuwait, SaudiFounder Members: Iran, Iraq, Kuwait, SaudiArabia and Venezuela.Arabia and Venezuela. U.S. dollar is the unit of oil sales.U.S. dollar is the unit of oil sales. English is the official languageEnglish is the official language.. 41.7% of the world’s oil production comes41.7% of the world’s oil production comesfrom OPEC.from OPEC.
  5. 5. Member CountriesMember Countries1. Algerialgeria2. Angola3. Ecuador4. Iran5. Iraq6. Kuwait7.7. LibyaLibya8.8. NigeriaNigeria9.9. QatarQatar10.10. Saudi ArabiaSaudi Arabia11.11. United Arab EmiratesUnited Arab Emirates12.12. VenezuelaVenezuela
  6. 6. • OPEC’s mission is to coordinate &unify the petroleum policies ofMember Countries.• Ensure the stabilization of oilprices• Regular supply of petroleum toconsumers• Fair return on capital to thoseinvesting in the petroleumindustry.OPEC’s central objectives
  7. 7. • THE OIL PRICE DEPENDON… The price of a barrel of oil is the result of anumber of competing factors. (A Barrel of CrudeOil contains 42 US Gallons (or 158.987 Liters) ofPetroleum Products.) How much oil is available, how much oil isdemanded by consumers, how much it costs toget oil from the ground to the consumer, the priceof dollars and the potential that oil speculatorssee for the price to rise and fall.
  8. 8. World Oil Production byRegion•More than 2/3 ofincrease in oildemand will besupplied by OPEC.•They supply 40%of the worlds oilproduction and halfof the exports.•Least oil SuppliedBy Eastern Europeand FSU (FormerSoviet Union)
  9. 9. OPEC Conferences Meets every March & September. Unify policies to promote stability andharmony in oil market. New member applications arediscussed. Budgets are decided upon. Recommendations and reports aresubmitted.
  10. 10. FUNCTIONING OF OPECFUNCTIONING OF OPECRepresentatives of OPEC Member CountriesRepresentatives of OPEC Member Countries(Heads of Delegation) meet at the OPEC(Heads of Delegation) meet at the OPECConference to coordinate and unify theirConference to coordinate and unify theirpetroleum policies in order to promote stabilitypetroleum policies in order to promote stabilityand harmony in the oil market.and harmony in the oil market.The Member Countries consider the currentThe Member Countries consider the currentsituation and forecasts of market fundamentals.situation and forecasts of market fundamentals.Any changes to be made in the petroleum policiesAny changes to be made in the petroleum policiesare considered.are considered.
  11. 11. Goal # 1: OPEC seeks to ensure thestabilization of oil prices in international oilmarkets, with a view to eliminating harmfuland unnecessary fluctuations
  12. 12. Goal # 2: OPEC’s role in overseeingan efficient, economic and regularsupply of petroleum to consumingnations.
  13. 13. Goal # 3: Ensure a fair returnon capital to those investing inthe petroleum industry.
  14. 14. Other Goals..Other Goals..•Have stability in the market.Have stability in the market.•Deliver steady supply of oil toDeliver steady supply of oil toconsumers.consumers.•Get oil to people at reasonableGet oil to people at reasonableand fair prices.and fair prices.•To obtain these goals, OPECTo obtain these goals, OPECvoluntarily produces less oil.voluntarily produces less oil.
  15. 15. INFLUENCING FACTORS FOR PRICERISE OF PETROL IN INDIA: Cost of crude oil:Increase in crude oilprices in the internationalmarket is one important factorresponsible for increase in petrolprices in Indian domestic market. Increased demand:Strong economic growth of India and otherdeveloping countries in Asia have increased hugedemand of petrol and other related essential fuelsresulted price hike in petrol in India.
  16. 16.  Mismatch of supply and demand:Indian oil companies face problem to meet demands of petrolwith shortage of production and supply from oil refineries dueto high input cost in crude oil price. Tax burden:Prices of petroland other petroleumproducts variesaccording to localgovernment policiesin imposing taxes on fuels.Whenevergovernment of India increases tax on fuelsthe oil companies in India have noother alternative to increase thepetrol price to recover losses andmaintaining marginal profits inoil business in India.
  17. 17. • OPEC established the OPEC Fund forInternational Development (OFID) inJanuary 1976 to promote cooperationbetween OPEC Member Countries andother developing countries.• It has supported a wide range ofprojects, from providing clean waterand energy to remote villages, to buildingschools, hospitals and roadsand developing industry, farming andtrade opportunities.
  18. 18. In particular, OFID aims to helppoorer, low-income non-OPECcountries in their pursuit ofsocial and economicadvancement. OFID is active in many regions,including Africa, Asia, Europeand Latin America.
  19. 19. OPEC support environmental policies1. OPEC is looking to participate ininternational collaborative efforts inResearch and development (R&D) programsgeared at improving carbon capture andstorage technology.2. OPEC Member Countries are also investingheavily to improve the environmentalcredentials of oil by tackling gas-flaring andpromoting safer and cleaner drilling,transportation and refining processes.
  20. 20. 3 . OPEC is concerned about theenvironment and wants to ensure that itis clean and healthy for futuregenerations.4. OPEC considers that the development oftechnology is important for limiting orreducing greenhouse gas emissions.
  21. 21. OPEC’s attitude towards fuel-efficiency..OPEC fully supports technologicalimprovements that maketransportation cleaner, safer andmore efficient.The Organization would like morepeople to enjoy the benefits ofpersonal mobility in anenvironmentally sustainable manner.
  22. 22. •OPEC has always recognized that crude oil is a finiteresource. By managing its production, theOrganization aims to enable many generations tobenefit from its use.•During the 20th century, oil dramatically transformedthe world for industrialized countries.• It is doing the same for developing countries.Technologies that enhance fuel efficiency are,therefore, welcome.
  23. 23. WHAT DOES THE OILWHAT DOES THE OILPRICE DEPEND ON?PRICE DEPEND ON?• The price of a barrel of oil is the result of anumber of competing factors: How muchoil is available, how much oil is demandedby consumers, how much it costs to get oilfrom the ground to the consumer, theprice of dollars and the potential that oilspeculators see for the price to rise andfall.
  24. 24. ConclusionConclusion• This implies that if OPEC adopts a unified strategy whichis almost impossible to achieve--of contrived scarcitywhereby oil production is to be curtailed, it will haveonly a limited effect on international oil markets, leavingthe dominant effects to the interaction of world suppliesand world demand for oil.