Secretary General's Message
Supporting stability, fuelling prosperity. OPEC Secretary General marks 50th anniversary
This year, the Organization of the Petroleum Exporting Countries celebrates its 50th anniversary. As Secretary General of OPEC, I would like to take the opportunity to mark this milestone, which is indeed an extraordinary accomplishment and epitomizes the will, determination and lasting success of an Organization that has worked tirelessly towards protecting the sovereign interests of its Member Countries in securing a steady income for their peoples, as well as ensuring efficient and regular supplies of petroleum to the consumers at prices that are fair and acceptable.
As we all know, the last few years have been particularly difficult for all attached to the oil industry and the global community at large. Every country, indeed every facet of society, has been affected to varying degrees by the worst global economic downturn in 70 years. The recession saw OPEC at the centre of one of the most turbulent boom-bust periods of its long and eventful history.
Thankfully, the worst appears to be over. The world economy is clawing itself back up from the depths of the precipice it occupied over the past two years which means that oil demand is once again entering the growth curve it held for so many years before the financial crisis erupted.
This spells good news for our Organization, which has been doing all in its power to maintain order and calm during what has been a very uncertain period. In their concerted response, OPEC Member Countries have shown great camaraderie, purpose and responsibility. Their policy decisions and actions have not only rescued oil prices and restored stability to a very volatile market they have been instrumental in bringing about conditions that have supported the global economic recovery.
This all confirms OPEC’s standing as one of the most influential and respected institutions in the world today. Its undeniable commitment to the welfare of both its Members and the global community is matched by a level of experience, knowledge and awareness that stands it in good stead to tackle any eventuality. It certainly has come a long way since its inception almost a half century ago.
OPEC was founded on September 14, 1960, in Baghdad, Iraq by five oil-exporting countries that decided to join forces to safeguard their legitimate rights and exercise control over their petroleum resources after years of manipulation.
Few could have imagined at that time that this small group of developing states – Iran, Iraq, Kuwait, Saudi Arabia and Venezuela – could evolve into an organization that today has such influence and recognized acclaim within the global energy community. Over the years, other oil exporters became aware of the benefits of joining this intergovernmental institution and today the Organization’s membership numbers twelve.
Since its formation, OPEC has been committed to three main objectives. These comprise securing a steady income for the producing countries; ensuring an efficient, economic and regular supply of petroleum to the consuming nations; and bringing about a fair return on capital for those investing in the petroleum industry.
The objectives are enshrined in the Organization’s statute. And even today, almost five decades after their initial endorsement, they form the basis of all OPEC’s decisions.
But much has changed on the global landscape since the Organization’s inception. The North-South divide has given way to globalization, where the benefits of interdependency continue to break down barriers and open trading channels to previously closed-door economies.
This opening up of borders is serving to enhance OPEC’s reach and development, which has already been substantial. Over the years, its unity and strength have enabled it to overcome a series of formidable challenges associated with an international oil market that has continued to evolve with the changing global economic environment.
Throughout, Member Countries have endeavored to adhere to OPEC’s defining principles and objectives, which has periodically proved to be difficult, what with the oil shocks of the 1970s and 1980s, the Asian economic crisis in the 1990s, and, most recently, the global financial meltdown.
OPEC takes its role in the marketplace very seriously and its commitment to the Organization’s guiding principles is unwavering. In fact, this stance has been endorsed by the Heads of State of Member Countries at a series of OPEC Summits, the last of which was held in Saudi Arabia in November 2007.
OPEC is fully cognizant of the fact that the need to ensure a stable and harmonious oil market is of great benefit, not only to the oil-producing nations, who rely heavily on hydrocarbon revenues for their economic development, but also to the consumers, who can be secure in the knowledge that crude oil supplies will be available at fair and reasonable prices.
Unfortunately, it is the case that OPEC has had to contend with misguided accusations that, in conducting its affairs, it attempts to manipulate the market for its own ends. The truth is that the Organization, in making its carefully calculated decisions, tries to bring about a win-win situation for all associated with the oil market.
Now approaching 50- (14 September 2010), OPEC has gained the maturity, respect and responsibility that comes with age. It stands as a unified and well-meaning organization that has at its heart the interests of all the stakeholders in the oil industry. It has gleaned extensive experience of petroleum issues and has an acute awareness of the realities and sensitivities of performing on the world stage.
With today’s increased global economic interdependence, coupled with the pressing need to maintain oil prices at reasonable and sustainable levels, OPEC is faced with a new set of challenges as it steers a path towards lasting market stability and plentiful and affordable oil.
One of those challenges is ensuring security of supply. Despite the recent setbacks, demand for oil and gas will increase markedly in the years ahead and OPEC’s Member Countries will be called upon to meet the lion’s share of incremental oil demand in the next 25 years, when global energy use is expected to expand by some 50 per cent. This will require huge levels of investment to make sure the oil is readily available when it is required.
However, with this commitment comes the added responsibility of supplying higher quality fuels. Environmental concerns have become paramount and OPEC fully accepts that as demand for petroleum increases, cleaner and more efficient technologies will need to be developed, utilized and deployed.
The Organization also realizes that it needs to be at the forefront of the advancements that are taking place if it wants to remain an effective and enabling force. It is already involved in numerous activities that are designed to do just that. Member Countries have invested billions of US dollars in refinery modifications to meet the ever-stringent product specifications now in place. And OPEC’s involvement in the various climate change negotiations, as well as carbon management initiatives, is strong and growing.
Above all, the Organization is fully cognizant of the fact that in this new and challenging environment, it is more important than ever that the global petroleum industry remains sound and effective. OPEC’s premise, as it always has been, is that oil supplies should be secure and readily available, markets stable, with prices predictable, fair and reasonable, which means neither too low nor too high.
In support of its often elusive goals, one common attribute has featured throughout OPEC’s existence to date – cooperation. The Organization realized from day one that forming a common understanding with the other important oil industry stakeholders, especially the consumers, is the best way forward for establishing a market that is orderly, predictable and with prices that are fair and reasonable.
It has taken some considerable time and a lot of groundwork for this approach to hit home, but today there is little doubt that the concept of cooperation within the world oil industry is well-established and expanding to encompass the major issues, such as security of supply and demand and pricing.
Of course, with something as complex and unpredictable as the international oil market and the underlying forces and pressures that affect its direction, there is still plenty of scope for improvement. OPEC, for one, will continue to pursue the path of cooperation and stability in the challenging years ahead.
As OPEC ‘s slogan ‘Supporting Stability, Fuelling Prosperity’ for its 50th anniversary suggests, the Organization’s policy decisions in the years ahead will continue to be aimed at creating harmony and stability in the international oil market for the benefit of the producers, the consumers, the investors and the global economy at large – whatever the challenge, whatever the obstacle.