Organization of Petroleum Exporting Countries (OPEC) – SS3 Government Lesson Note (Second Term)

The Organization of Petroleum Exporting Countries (OPEC) is a group of petroleum-producing countries formed in 1960. It was set up to protect its members’ interests against the exploitative tendencies of multinational oil companies, to stabilise oil prices and to ensure a steady supply of oil. It has three organs: the Conference, the Board of Governors and the Secretariat.

Behavioural objectives

By the end of the lesson, students should be able to:

• describe the origin of OPEC;
• name the five founding members and some countries that joined later;
• state the aims and objectives of OPEC;
• name the three organs of OPEC;
• state the functions of the Conference, the Board of Governors and the Secretariat.

How and why was OPEC formed?

The Organization of Petroleum Exporting Countries (OPEC), composed of 13 third-world petroleum-producing countries, was formed in 1960 to promote and protect the interests of its members. OPEC was formed as a reaction to the exploitative motives of the multinational companies, which at that time were controlling oil operations in the oil-producing countries. Five oil-producing countries met in Baghdad, the capital of Iraq, to form a union that would fight against the exploitative tendencies of these companies.

The five countries that held the meeting were Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Some other countries later joined the organisation because of its effort to curtail the activities of the oil companies. These countries include Algeria (1969), Nigeria (1971), Gabon and the United Arab Emirates (1973).

What are the aims and objectives of OPEC?

1. To stabilise the price of oil in the world market.
2. To coordinate and unify: OPEC was formed to coordinate and harmonise the oil policies of member nations to bring them in line with the standard set by OPEC.
3. Steady income: it was also formed to stabilise the oil income of its member states.
4. To ensure a steady supply of oil to consuming nations.
5. Quota: to fix and allocate production quotas to member nations.
6. Protection of member states: it was formed to protect the interests of member states and to ensure that the participation of foreign multinational companies in oil exploitation does not threaten the interests of member nations.
7. To negotiate for the participation of member nations in oil exploitation and exploration.

What are the organs of OPEC?

OPEC has three organs:

1. The Conference
2. The Board of Governors
3. The Secretariat

The Conference

The Conference is the supreme organ of OPEC. Each member nation is represented by its Minister of Petroleum, who leads the delegation to OPEC meetings. It meets twice a year, but the Secretary-General can call an extraordinary meeting after due consultation with the President of the Conference and with the approval of a simple majority of member states.

The ordinary meetings of the Conference are held in Vienna, Austria, which is the headquarters of the organisation. Each member has one vote.

Functions of the Conference

1. It formulates the general policy of the organisation and determines the appropriate methods and means of its implementation.
2. It appoints the Secretary-General, the Deputy Secretary-General, the Chairman and the Alternate Chairman of the Board of Governors.
3. It approves the appointment of the members of the Board of Governors.
4. It considers applications for membership of OPEC.
5. It approves the budget of the organisation.
6. It considers and approves all reports and recommendations submitted by the Board of Governors.
7. It appoints auditors to examine the accounts of the organisation.

The Board of Governors

This organ is made up of representatives called governors. 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

1. It manages the affairs of the organisation.
2. It prepares an agenda for the meeting of the Conference.
3. It implements the decisions made by the Conference.
4. It nominates the auditor of the organisation.
5. It prepares the budget of the organisation.
6. It considers the statement of account and the auditor’s report and submits them to the Conference for approval.
7. It considers and takes decisions on any report submitted by the Secretary-General.

The Secretariat

The Secretariat of OPEC is located at the headquarters in Vienna, Austria. It carries out the executive functions of the organisation. Its head is the Secretary-General, who is assisted by a Deputy Secretary-General and other members of staff. The Secretary-General has a tenure of three years and can be re-appointed.

Functions of the Secretariat

1. It is responsible for all the correspondence of the organisation.
2. It performs the executive and administrative functions of the organisation.
3. It represents the organisation.

Departments of the Secretariat

1. Information department
2. Economic department
3. Administrative department
4. Technical department

Evaluation

1. Briefly describe the origin of OPEC.
2. List five aims and objectives of OPEC.
3. List five functions of the Conference of OPEC.
4. List five functions of the Board of Governors of OPEC.

General evaluation and revision questions

1. Explain the causes of the Kaduna State executive/legislative crisis of 1981.
2. Enumerate the immediate causes of the civil war.
3. Enumerate the positive consequences of the civil war.

Assignment

Reading assignment

• Essential Government by C.C. Dibie, pages 264-265
• Comprehensive Government by J.U. Anyaele, pages 229-230

Weekend assignment

1. OPEC was established in ____. (a) 1962 (b) 1970 (c) 1960
2. Nigeria was admitted into OPEC in the year ____. (a) 1971 (b) 1970 (c) 1981
3. The supreme organ of OPEC is ____. (a) The Secretariat (b) The Board of Governors (c) The Conference
4. The annual budget of OPEC is prepared by the ____. (a) Board of Governors (b) Conference (c) Secretariat
5. The headquarters of OPEC is located in ____. (a) London (b) New York (c) Austria

Theory

1. Highlight four functions of the Conference of OPEC.
2. State five aims and objectives of OPEC.