The OAPEC (which stands for Organization of Arab Petroleum Exporting Countries on ABBREVIATIONFINDER) was established in 1968 to promote cooperation between Member States on economic issues related to the oil industry. Secretary-General Abbas Ali Al-Naqi took office in 2008. Oapec currently has eleven member states.
Introduction
In 1968, Kuwait, Libya, and Saudi Arabia formed the Organization of Arab Petroleum Exporting Countries (OAPEC).
The organization’s main objective is to promote cooperation between Member States on economic issues related to the oil industry. In addition, OAPEC will safeguard the interests of the Member States and pave the way for a level playing field in oil production.
OAPEC has never participated in the pricing or determination of production quotas, but has left this to OPEC.
Today, OAPEC has ten members, two of whom are not members of OPEC (Bahrain and Egypt). OAPEC members accounted for close to 60 percent of the world’s oil reserves in 2004.
The emergence
Behind the formation of the OAPEC was a growing conflict within, among others, the Arab League over whether the Arab states’ oil resources could be used as a weapon in the fight against Israel.
To curb Egyptian President Nasser’s demand that oil be used as a political weapon, three Western-friendly monarchies – Libya, Kuwait and Saudi Arabia – formed the 1968 OAPEC to strengthen their front. These three countries were particularly dependent on oil export revenues and on technology from the West.
To exclude Arab oil states with other views, the organization allowed only those states that had oil as their main source of export. At the time of the formation of the OAPEC, in addition to the three founding states, there was only one other state that was both Arab and had oil as its main income: Iraq. But the Iraqi government had no interest in OAPEC but expressed strong reluctance to be identified with what Baghdad called “the Conservatives’ club”.
Libya’s stance, in turn, was radicalized by a military coup that brought Arab nationalist Moammar Gaddafi to power in 1969. Thus, the very basic idea of OAPEC was lost, and OAPEC came to function more as a coordinator for production than as a political moderator. In 1972, all Arab oil-producing states were members.
By the early 1980’s, most Member States had nationalized their oil production or acquired majority ownership in production companies. But when it came to sales, transportation and technology, they were still lagging behind. To address this, the OAPEC states created a number of companies and institutions.
OAPEC became more and more a political organization, and the attitude of the founding states to exert pressure through oil fluctuated. In connection with the October war between Israel and the Arab countries in 1973, the organization imposed an oil embargo on mainly the United States and the Netherlands, which were considered pro-Israel. At the same time, total oil production was reduced and the price of crude oil rose sharply.
OAPEC cooperation was hampered in the 1980’s for several reasons. Egypt’s peace agreement with Israel in 1979 also affected cooperation within OAPEC and Egypt was excluded between 1979 and 1989. In addition, falling oil prices in the early 1980’s meant that member states were less willing to contribute project funds.
The creation of the Gulf Cooperation Council (GCC) in 1981 also led to a reduction in OAPEC’s resources, with some member states instead channeling large sums through the GCC. Additional problems for OAPEC came when Iraq invaded Kuwait (both members of the organization) in 1990. The organization’s headquarters were moved from Kuwait to Cairo during the occupation. Iraq was hit by an international embargo and Iraqi oil was not allowed to be sold. But neither could Kuwait sell its oil, as it was controlled by Iraq. The fifth Arab energy conference to be held under the OAPEC flag in 1992 had to be postponed for two years as a result of the Kuwait crisis.
The structure
The highest decision-making body, the Council of Ministers, draws up guidelines for its activities and approves the budget. Meetings are held twice a year and the presidency rotates annually. The Council consists of the members’ oil ministers or their representatives.
An executive committee is responsible for personnel issues and budgets, draws up action plans and determines the agenda for the Council of Ministers’ meetings. The committee, in which each member state is represented, meets three times a year.
The General Secretariat is located in Kuwait. The Secretary-General is appointed for a three-year term, which may be extended. There are departments for economics and administration, information and libraries, technical issues and economics (the latter two have been the Arab Center for Energy Studies since 1983). OAPEC staff are recruited from all over the Arab world, including from non-member countries.
Disputes must be resolved in the organization’s court. This may apply to the interpretation of agreements, oil issues that do not concern individual Member States or disputes referred to it by the Council of Ministers. The parties can be both member states and oil companies with operations in these. The court consists of seven judges from Arab countries.
The business
OAPEC has concentrated on utilizing knowledge and developing collaborative projects in the oil and gas industry. The organization works with training in technology, documentation and information.
Through collaboration with, among others, the Arab League, Arab research institutes are linked together. OAPEC organizes conferences, conducts technical studies and conducts market analyzes. The General Secretariat runs a library and provides an information database as well as a handful of publications.
A number of institutions and companies linked to oil production have been created under the auspices of OAPEC. Arab Maritime Petroleum Transport Company (AMPTC) has been handling petroleum and gas transports since 1972 and is also working to increase OAPEC’s share of this traffic.
Arab Petroleum Investments Corporation was founded in 1975 and finances projects primarily in the Arab world. Arab Petroleum Services Company was formed in 1977 and trains personnel and provides service to newly established companies in oil production.
