OPEC member countries now hold over 1 trillion barrels of crude oil
reserves, having already produced 400 billion barrels since the Organization
of the Petroleum Exporting Countries was founded 50 years ago, Saudi Arabian
oil minister Ali Naimi said Tuesday.
"When it was founded, the members of the organization had around 300
billion barrels of oil reserves and in the last 50 years, has produced over
400 billion barrels," Naimi told a symposium marking the group's 50th
"It [OPEC] still has more than 1 trillion barrels, which places it in a
unique position in terms of reserves to continue supplying petroleum to the
world for several long years and to exploit these reserves for the benefit of
future generations," he added.
Saudi Arabia is the largest producer and exporter in the 12-member group.
It holds the world's largest crude oil reserves, officially estimated at 260
billion barrels, one fifth of the global total.
Naimi said the kingdom was currently producing around 8.1 million b/d out
of total production capacity of 12.5 million b/d.
Speaking at a separate session, Ibrahim al-Muhanna, the oil minister's
senior adviser, said that OPEC's history since its inception could be broken
down into four phases, which had seen the transformation of the producers'
group from a price-fixing cartel to a more streamlined organization responding
to oil market conditions.
The first phase in the 1960s saw the organization of oil exporters
focusing on cooperation among themselves and negotiating rights to oil
exploration and production on their soils from the multinational oil companies
which held the concessions in order to extract the best possible terms and
In the 1970s, OPEC held the power to set oil prices, previously the
domain of the international oil companies. "At that time, OPEC ministers used
to meet to set oil prices for member states, which became the international
price benchmark. The aim then was to secure fair returns to producing
nations," he said.
The 1980s were characterized by "conflict and major disputes" among
members and initially was limited to disagreement over OPEC ceilings and
individual quotas, Muhanna said. Political disputes and wars between some
member states had weakened OPEC during those years, he added, apparently
referring to the eight-year war between Iran and Iraq from 1980-1988.
"These disputes weakened OPEC's ability to view the market realistically
and its ability to deal with the deep changes in the production and marketing
of oil at that time," he said. OPEC had also lost its ability to be objective
and realistic in coping with the factors that impacted oil markets.
"This led to a loss of market share by the organization, where its share
of the market fell gradually from over 29 million b/d in 1979 to around 14
million b/d in 1985 and eventually led to the total collapse of oil prices in
1986," Muhanna said.
The 1990s saw the start of the fourth phase, which is likely to continue
for several more years, he said.
The organization today is more streamlined in its decision-making process
and is able to adopt consensus decisions that are in line with market
conditions and a long-term perspective, said Muhanna. OPEC had also opened up
to cooperation with other regional and international economic groups, on
energy policy to the benefit of producers and consumers.
But Muhanna, who has been involved in the Saudi energy sector for decades
in various capacities, said he saw serious challenges ahead.
"The fourth phase, that we are in now, is likely to continue into this
decade and perhaps future decades," he said. "At the same time, I believe the
organization will face other challenges that are not directly linked to the
oil market or to the production of petroleum."
Among these challenges are "the return of some major economic powers to
protectionist trade policies, the possibility of a currency war and continued
sharp volatility in the prices of basic commodities, including petroleum as
well as the unrealistic link between petroleum and the environment," he said.
"However, I believe that the organization will be able to cope with these
developments and global changes so long as it continues to operate as an
independent and realistic economic grouping whose aim is to defend the
interests of its members as well as the international oil market and the
industry as a whole now and in the future."
--Kate Dourian, firstname.lastname@example.org
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