OPEC

Our Mission

In accordance with its Statute, the mission of the Organization of the Petroleum Exporting
Countries (OPEC) is to coordinate and unify the petroleum policies of its Member Countries
and ensure the stabilization of oil markets in order to secure an efficient, economic and
regular supply of petroleum to consumers, a steady income to producers and a fair return on
capital for those investing in the petroleum industry.

Brief History
The Organization of the Petroleum Exporting Countries (OPEC) is a permanent,
intergovernmental Organization, created at the Baghdad Conference on September 10–14,
1960, by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. The five Founding Members were
later joined by nine other Members: Qatar (1961); Indonesia (1962) – suspended its
membership from January 2009; Socialist Peoples Libyan Arab Jamahiriya (1962); United
Arab Emirates (1967); Algeria (1969); Nigeria (1971); Ecuador (1973) – suspended its
membership from December 1992-October 2007; Angola (2007) and Gabon (1975–1994).
OPEC had its headquarters in Geneva, Switzerland, in the first five years of its existence.
This was moved to Vienna, Austria, on September 1, 1965.

OPEC's objective is to co-ordinate and unify petroleum policies among Member Countries, in
order to secure fair and stable prices for petroleum producers; an efficient, economic and
regular supply of petroleum to consuming nations; and a fair return on capital to those
investing in the industry.

The 1960s

OPEC’s formation by five oil-producing developing countries in Baghdad in September 1960

occurred at a time of transition in the international economic and political landscape, with
extensive decolonisation and the birth of many new independent states in the developing
world. The international oil market was dominated by the “Seven Sisters” multinational
companies and was largely separate from that of the former Soviet Union (FSU) and other
centrally planned economies (CPEs). OPEC developed its collective vision, set up its
objectives and established its Secretariat, first in Geneva and then, in 1965, in Vienna. It
adopted a ‘Declaratory Statement of Petroleum Policy in Member Countries’ in 1968, which
emphasised the inalienable right of all countries to exercise permanent sovereignty over their
natural resources in the interest of their national development. Membership grew to ten by
1969.

The 1970s

OPEC rose to international prominence during this decade, as its Member Countries took
control of their domestic petroleum industries and acquired a major say in the pricing of
crude oil on world markets. On two occasions, oil prices rose steeply in a volatile market,
triggered by the Arab oil embargo in 1973 and the outbreak of the Iranian Revolution in
1979. OPEC broadened its mandate with the first Summit of Heads of State and Government
in Algiers in 1975, which addressed the plight of the poorer nations and called for a new era
of cooperation in international relations, in the interests of world economic development and
stability. This led to the establishment of the OPEC Fund for International Development in
1976. Member Countries embarked on ambitious socio-economic development schemes.
Membership grew to 13 by 1975.

The 1980s

After reaching record levels early in the decade, prices began to weaken, before crashing in
1986, responding to a big oil glut and consumer shift away from this hydrocarbon. OPEC’s
share of the smaller oil market fell heavily and its total petroleum revenue dropped below a
third of earlier peaks, causing severe economic hardship for many Member Countries. Prices
rallied in the final part of the decade, but to around half the levels of the early part, and
OPEC’s share of newly growing world output began to recover. This was supported by
OPEC introducing a group production ceiling divided among Member Countries and a
Reference Basket for pricing, as well as significant progress with OPEC/non-OPEC dialogue
and cooperation, seen as essential for market stability and reasonable prices. Environmental
issues emerged on the international energy agenda.

The 1990s

Prices moved less dramatically than in the 1970s and 1980s, and timely OPEC action reduced
the market impact of Middle East hostilities in 1990–91. But excessive volatility and general
price weakness dominated the decade, and the South-East Asian economic downturn and
mild Northern Hemisphere winter of 1998–99 saw prices back at 1986 levels. However, a
solid recovery followed in a more integrated oil market, which was adjusting to the post-
Soviet world, greater regionalism, globalisation, the communications revolution and other
high-tech trends. Breakthroughs in producer-consumer dialogue matched continued advances
in OPEC/non-OPEC relations. As the United Nations-sponsored climate change negotiations
gathered momentum, after the Earth Summit of 1992, OPEC sought fairness, balance and
realism in the treatment of oil supply. One country left OPEC, while another suspended its
Membership.

The 2000s

An innovative OPEC oil price band mechanism helped strengthen and stabilise crude prices
in the early years of the decade. But a combination of market forces, speculation and other
factors transformed the situation in 2004, pushing up prices and increasing volatility in a
well-supplied crude market. Oil was used increasingly as an asset class. Prices soared to
record levels in mid-2008, before collapsing in the emerging global financial turmoil and
economic recession. OPEC became prominent in supporting the oil sector, as part of global
efforts to address the economic crisis. OPEC’s second and third summits in Caracas and
Riyadh in 2000 and 2007 established stable energy markets, sustainable development and the
environment as three guiding themes, and it adopted a comprehensive long-term strategy in
2005. One country joined OPEC, another reactivated its Membership and a third suspended
it.
Member Countries

The Organization of the Petroleum Exporting Countries (OPEC) was founded in Baghdad,
Iraq, with the signing of an agreement in September 1960 by five countries namely Islamic
Republic of Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. They were to become the
Founder Members of the Organization.

These countries were later joined by Qatar (1961), Indonesia (1962), Socialist People’s
Libyan Arab Jamahiriya (1962), the United Arab Emirates (1967), Algeria (1969), Nigeria
(1971), Ecuador (1973), Gabon (1975) and Angola (2007).

From December 1992 until October 2007, Ecuador suspended its membership. Gabon
terminated its membership in 1995. Indonesia suspended its membership effective January
2009.

Currently, the Organization has a total of 12 Member Countries.

The OPEC Statute distinguishes between the Founder Members and Full Members - those
countries whose applications for membership have been accepted by the Conference.

The Statute stipulates that “any country with a substantial net export of crude petroleum,
which has fundamentally similar interests to those of Member Countries, may become a Full
Member of the Organization, if accepted by a majority of three-fourths of Full Members,
including the concurring votes of all Founder Members.”

The Statute further provides for Associate Members which are those countries that do not
qualify for full membership, but are nevertheless admitted under such special conditions as
may be prescribed by the Conference.

Secretariat
The OPEC Secretariat is the executive organ of the Organization of the Petroleum Exporting
Countries (OPEC). Located in Vienna, it also functions as the Headquarters of the
Organization, in accordance with the provisions of the OPEC Statute.

It is responsible for the implementation of all resolutions passed by the Conference and
carries out all decisions made by the Board of Governors. It also conducts research, the
findings of which constitute key inputs in decision-making.

The Secretariat consists of the Secretary General, who is the Organization’s Chief Executive
Officer, as well as such staff as may be required for the Organization’s operations. It further
consists of the Office of the Secretary General, the Legal Office, the Research Division and
the Support Services Division.

The Research Division is comprised of the Data Services, Petroleum Studies, Energy Studies
and Multilateral Relations departments. The Support Services Division includes Public
Relations & Information, Finance & Human Resources and Administration & IT Services
departments.

The Secretariat was originally established in 1961 in Geneva, Switzerland. In April 1965, the
8th (Extraordinary) OPEC Conference approved a Host Agreement with the Government of
Austria, effectively moving the Organization’s headquarters to the city of Vienna on
September 1, 1965.

OFID
OFID

Sovereigns and Heads of State of OPEC Member Countries (MCs) do not meet regularly.
However, when they do meet, the impact is felt beyond the confines of the Organization’s
MCs and for decades too. Such meetings also, have the tendency to affect lives in a positive
way.

This could be said to be the effect their first meeting in 1975 has had on the world’s poor
countries through the OPEC Fund for International Development, (OFID). Established as a
multilateral development finance institution to promote cooperation between Member States
of OPEC and other developing countries, OFID was conceived at the Summit of the
Sovereigns and Heads of State of the OPEC Member Countries (MCs) held in the Algerian
capital, Algiers, in March 1975.

The Solemn Declaration, issued by the Summit, ‘reaffirmed the natural solidarity which
unites OPEC MCs with other developing countries in their struggle to overcome under-
development, and called for measures to strengthen cooperation with these countries.’

In this spirit, OFID was established in January 1976, as a collective financial facility to
consolidate the assistance extended by its Member Countries namely Algeria, Gabon,
Indonesia, Islamic Republic of Iran, Iraq, Kuwait, SP Libyan AJ, Nigeria, Qatar, Saudi
Arabia, United Arab Emirates and Venezuela. OFID’s resources are additional to those
already made available by OPEC MCs through a number of bilateral and multilateral
channels. The resources of OFID consist mainly of voluntary contributions by OPEC MCs
and income derived from OFID’s investments and loans (interest and service charges).

OFID’s operations were launched in August 1976 with initial resources of about $800
million. This amount has since then been replenished three times. It has also been further
increased by the profits accruing to seven OPEC Member Countries through the sale of gold
held by the International Monetary Fund (IMF).

$
Resources (31
milli
December 2009) 
on
 2,46
 Contributions 1
3
 3,18
 Reserve
4
All non-OPEC developing countries are, in principle, eligible for OFID assistance. However,
the least developed and other low-income countries are accorded priority and, therefore,
receive a larger share. Over the years, OFID has spread its financing to 125 countries, of
which 51 are in Africa, 42 in Asia, 28 in Latin America and the Caribbean, and four in
Europe.

In the public sector, OFID has implemented 16 lending programs since its inception. The
17th Lending Programme, approved for a three-year duration, became effective 1 January
2008. By the end of March 2010, a cumulative amount of $8,703m had been committed for
1,264 public sector loans, of which $5,221m had been disbursed. As of 1 January 2009, 74
per cent of outstanding loans were with Low Income countries and 50 per cent of all
commitments were to Africa.

Under the Private Sector Facility established in 1998, 144 operations have been approved in
support of private entities in Africa, Asia, Latin America and Europe. By the end of March
2010, $1,190m had been committed and $525m disbursed.

In 2006, a Trade Financing program was launched. By the end of March 2010, $578m in
lines of credit and $619m in risk-sharing guarantees had been approved and $285m had been
disbursed.

In the framework of grants, assistance is extended to social and humanitarian development

operations through three regular grant programs; Technical Assistance, Research and Similar
Activities and Emergency Relief Aid. OFID has also established special grant accounts to
respond to specific global needs. These include grants for the establishment of the Common
Fund for Commodities, in addition to a Special Account for HIV/AIDS Operations and a
Special Account for Palestine. Intermittently, OFID extended special grants in support of
contemporary issues, such as the grant for the establishment of IFAD and the food crisis in
Africa. By the end of March 2010, 1,205 grants, amounting to $483m, had been extended.

In addition, OFID channeled $972m to two international institutions: it has channeled OPEC
Members’ contributions to the initial capital and first replenishment of IFAD’s resources and
made irrevocable transfers in the name of seven OPEC Members to the Trust Fund of the
IMF. OFID’s total approved commitments (including grants and contributions to other
institutions) as at the end of March 2010 stood at $11,926m.

OPEC
From Wikipedia, the free encyclopedia
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Organization of the Petroleum Exporting

Countries OPEC
Headquarters Vienna, Austria

Official languages English[1]

Type Trade bloc

12[show]
Member states

 -  Secretary General Masoud Mir Kazemi

(since January 1, 2011)

Establishment Baghdad, Iraq

September 10–14, 1960

 -  Statute
in effect January 1961 

Area

11,854,977 km2
 
 -  Total
4,577,232 sq mi 

Population

 -   estimate 372,368,429 

31.16/km2 
 -  Density
80.7/sq mi

Currency Indexed as USD-per-barrel

Website
 www.OPEC.org

The Organisation of the Petroleum Exporting Countries (OPEC, pronounced /ˈoʊpɛk/

OH-pek) is a cartel of twelve developing countries made up of Algeria, Angola, Ecuador, Iran,
Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.
OPEC has maintained its headquarters in Vienna since 1965,[2] and hosts regular meetings
among the oil ministers of its Member Countries. Indonesia withdrew in 2008 after it became
a net importer of oil, but stated it would likely return if it became a net exporter in the world
again.[3]

According to its statutes, one of the principal goals is the determination of the best means for
safeguarding the cartel's interests, individually and collectively. It also pursues ways and
means of ensuring the stabilization of prices in international oil markets with a view to
eliminating harmful and unnecessary fluctuations; giving due regard at all times to the
interests of the producing nations and to the necessity of securing a steady income to the
producing countries; an efficient and regular supply of petroleum to consuming nations, and a
fair return on their capital to those investing in the petroleum industry.[4]

OPEC's influence on the market has been widely criticized, since it became effective in
determining production and prices. Arab members of OPEC alarmed the developed world
when they used the “oil weapon” during the Yom Kippur War by implementing oil
embargoes and initiating the 1973 oil crisis. Although largely political explanations for the
timing and extent of the OPEC price increases are also valid, from OPEC’s point of view,
these changes were triggered largely by previous unilateral changes in the world financial
system and the ensuing period of high inflation in both the developed and developing world.
This explanation encompasses OPEC actions both before and after the outbreak of hostilities
in October 1973, and concludes that “OPEC countries were only 'staying even' by
dramatically raising the dollar price of oil.”[5]

OPEC's ability to control the price of oil has diminished somewhat since then, due to the
subsequent discovery and development of large oil reserves in Alaska, the North Sea,
Canada, the Gulf of Mexico, the opening up of Russia, and market modernization. As of
November 2010, OPEC members collectively hold 79% of world crude oil reserves and 44%
of the world’s crude oil production, affording them considerable control over the global
market.[6] The next largest group of producers, members of the OECD and the Post-Soviet
states produced only 23.8% and 14.8%, respectively, of the world's total oil production.[7] As
early as 2003, concerns that OPEC members had little excess pumping capacity sparked
speculation that their influence on crude oil prices would begin to slip.[8][9]
History

the new OPEC headquarters in Vienna

Venezuela and Iran were the first countries to move towards the establishment of OPEC in
the 1960s by approaching Iraq, Kuwait and Saudi Arabia in 1949, suggesting that they
exchange views and explore avenues for regular and closer communication among
petroleum-producing nations.[citation needed] The founding members are Iran, Iraq, Kuwait, Saudi
Arabia, and Venezuela. Later members include Algeria, Ecuador, Gabon, Indonesia, Libya,
Qatar, Nigeria, and the United Arab Emirates.

In 10–14 September 1960, at the initiative of the Venezuelan Energy and Mines minister Juan
Pablo Pérez Alfonzo and the Saudi Arabian Energy and Mines minister Abdullah al-Tariki,
the governments of Iraq, Iran, Kuwait, Saudi Arabia and Venezuela met in Baghdad to
discuss ways to increase the price of the crude oil produced by their respective countries.
[citation needed]
OPEC was founded in Baghdad, triggered by a 1960 law instituted by American
President Dwight Eisenhower that forced quotas on Venezuelan and Persian Gulf oil imports
in favor of the Canadian and Mexican oil industries.[citation needed] Eisenhower cited national
security, land access to energy supplies, at times of war.[citation needed] When this led to falling
prices for oil in these regions, Venezuela's president Romulo Betancourt reacted by seeking
an alliance with oil producing Arab nations as a preemptive strategy to maintain the
continued autonomy and profitability of Venezuela's oil resources.[citation needed]
Oil exports imports difference

As a result, OPEC was founded to unify and coordinate members' petroleum policies.
Original OPEC members include Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. Between
1960 and 1975, the organization expanded to include Qatar (1961), Indonesia (1962), Libya
(1962), the United Arab Emirates (1967), Algeria (1969), and Nigeria (1971). Ecuador and
Gabon were early members of OPEC, but Ecuador withdrew on December 31, 1992[10]
because it was unwilling or unable to pay a $2 million membership fee and felt that it needed
to produce more oil than it was allowed to under the OPEC quota,[11] although it rejoined in
October 2007. Similar concerns prompted Gabon to suspend membership in January 1995.[12]
Angola joined on the first day of 2007. Norway and Russia have attended OPEC meetings as
observers. Indicating that OPEC is not averse to further expansion, Mohammed Barkindo,
OPEC's Secretary General, recently asked Sudan to join.[13] Iraq remains a member of OPEC,
but Iraqi production has not been a part of any OPEC quota agreements since March 1998.

In May 2008, Indonesia announced that it would leave OPEC when its membership expired
at the end of that year, having become a net importer of oil and being unable to meet its
production quota.[14] A statement released by OPEC on 10 September 2008 confirmed
Indonesia's withdrawal, noting that it "regretfully accepted the wish of Indonesia to suspend
its full Membership in the Organization and recorded its hope that the Country would be in a
position to rejoin the Organization in the not too distant future." [15] Indonesia is still
exporting some good light crude oil with low sulphur and import heavy crude oil with higher
sulphur to get advantage of price different (import is greater than export) due to Air pollution
in Indonesia is still low as compared to China or USA.

The Organization of the Petroleum Exporting Countries(OPEC) was created in 1960 to unify and protect the interests
of oil-producing countries. OPEC allows oil-producing countries to guarantee their income by coordinating policies
and prices among them. This unified front was created primarily in response to the efforts of Western oil companies
to drive oil prices down. The original members of OPEC included Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.
OPEC has since expanded to include seven more countries (Algeria, Angola, Indonesia, Libya, Nigeria, Qatar, and
United Arab Emerates) making a total membership of 12.

OPEC represents a considerable political and economical force. Two-thirds of the oil reserves in the world belong to
OPEC members; likewise, OPEC members are responsible for half of the world's oil exports. The fact that OPEC
controls the availability of a substance so universally sought after by modern society renders the organization a force
to be reckoned with.

The first display of the effect OPEC power could have on the world's politics was in the 1970s. When the Yom Kippur
War exploded in the Middle East, the United States assisted Israel in defending itself against the Egyptian and Syrian
armies. In what may have been a response to this interference in the war, OPEC instituted an oil embargo that
targeted the United States and its European allies. The embargo lasted from October 19, 1973 to March 17, 1974.

The effects of the OPEC oil embargo were widespread. Immediate effects included inflation and economic recession
in the United States and other countries targeted by the embargo. Car owners in the United States were restricted
to specific days on which they could purchase gasoline: even dates for cars with even-numbered license plates, and
odd dates for cars with odd-numbered license plates.

A national law introducing more restrictive speed limits was instituted, as well as a year-round Daylight Savings
Time. The OPEC oil embargo also drove auto manufacturers to produce smaller and more fuel-efficient vehicles.
Even after the embargo ended, oil prices continued to rise, and the United States economy continued to suffer.
Although OPEC is often seen as a villain in the political arena, the organization serves an important purpose. OPEC
prevents its members from being taken advantage of by industrialized countries, by ensuring that oil-exporting
countries are paid a fair price for crude oil. Because oil-exporting countries are dependent on industrialized
countries for oil products, OPEC standards prevent industrialized countries from buying crude oil at rock-bottom
prices, then turning around and selling oil products back at vastly inflated prices.

Definition of Opec: an organization of countries formed in 1961 to agree on a common policy for the
production and sale of petroleum

Opec on wiseGEEK:

 Because oil-exporting countries are dependent on industrialized countries for oil products, OPEC
standards prevent industrialized countries from buying crude oil at rock-bottom prices, then turning
around and selling oil products back at vastly inflated prices.
 A sharp rise or fall, instead of more gradual movement, can have a huge impact on the world's
economy. Gas prices are largely controlled by OPEC, or the Organization of the Petroleum
Exporting Countries, including Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar,
Saudi Arabia, the United Arab Emirates and Venezuela.

Opec Oil
Opec Oil on wiseGEEK:

 The embargo lasted from October 19, 1973 to March 17, 1974. The effects of the OPEC oil
embargo were widespread. Immediate effects included inflation and economic recession in the
United States and other countries targeted by the embargo.
 Instead of BOE, the oil industry used crude oil benchmarks, which organize different types of
oil into categories of similar variants. Similarly, the Organization of Petroleum Exporting
Countries (OPEC), an alliance of oil producing countries, does not keep track of prices by
referring to the barrel of oil equivalent.
Opec Countries on wiseGEEK:

 The Organization of the Petroleum Exporting Countries (OPEC) is an international cartel that
controls a large portion of the world oil trade. OPEC includes 12 countries; Kuwait, Algeria,
Ecuador, Iran, Angola, Iraq, Libya, Saudi Arabia, Nigeria, Qatar, Venezuela and the United Arab
Emirates.
 The Organization of the Petroleum Exporting Countries(OPEC) was created in 1960 to unify and
protect the interests of oil-producing countries. OPEC allows oil-producing countries to
guarantee their income by coordinating policies and prices among them.

Opec Production on wiseGEEK:

 To protect their profits from further decreases, they may raise gas prices even more. Just the
threat of decreases in oil production can raise gas prices. The purpose of OPEC is to try
preventing any sudden, extreme changes in gas prices.
 The highest grades of crude can be quite costly, as they tend to be consistently and heavily
needed to keep up sufficient refinery production. The importer negotiates with a company that
has oil to sell and finds domestic buyers for the product to ensure that imports have a destination
once they reach the country.

Opec Nations on wiseGEEK:

 One of the most important areas of crown corporation around the world is in the oil industry. Many
Organization of the Petroleum Exporting Countries (OPEC) nations run government-owned oil
companies on their own soil.
 Major exporters of oil include Saudi Arabia, Russia, Norway, Iran, and Venezuela. Importers
typically establish branch offices in these nations or develop relationships with companies in these
nations to facilitate trade of oil.
Gas Opec on wiseGEEK:

 Gasoline is made from crude oil, so it seems only logical that the price of oil has a significant
impact on the price you pay at the pump. The Organization of Petroleum Exporting Countries,
otherwise known as OPEC, controls over 40 percent of the world’s oil production and
approximately 65 percent of the planet’s oil reserves.
 This puts OPEC in the unique position of having a lot of influence on the price of gas around the
world. OPEC controls gas prices by either increasing or decreasing the amount of oil available. If
the amount available goes down, the prices go up.

Opec Petroleum on wiseGEEK:

  The Organization of the Petroleum Exporting Countries (OPEC) is an international cartel that
controls a large portion of the world oil trade. OPEC includes 12 countries; Kuwait, Algeria,
Ecuador, Iran, Angola, Iraq, Libya, Saudi Arabia, Nigeria, Qatar, Venezuela and the United Arab
Emirates.
 The Organization of the Petroleum Exporting Countries(OPEC) was created in 1960 to unify and
protect the interests of oil-producing countries. OPEC allows oil-producing countries to guarantee
their income by coordinating policies and prices among them.
 What Does Organization of Petroleum Exporting Countries - OPEC Mean?
An organization consisting of the world's major oil-exporting nations, OPEC was founded in 1960 to coordinate the petroleum policies of its
members and to provide member states with technical and economic aid. OPEC is a cartel that aims to manage the supply of oil in an effort
to set the price of oil on the world market, in order to avoid fluctuations that might affect the economies of both producing and purchasing
countries.
 Investopedia explains Organization of Petroleum Exporting Countries - OPEC
OPEC membership is open to any country that is a substantial exporter of oil and that shares the ideals of the organization. OPEC has 11
member countries, including founder members Iran, Iraq, Kuwait and Venezuela.

OPEC member nations currently supply about 40% of the world's crude oil and 16% of its natural gas. At the end of 2003, OPEC nations
possessed about 78% of the world's total proven crude oil reserves.

NEWS ARTICLES ON OPEC

Iraq eyes OPEC top spot, seeks India pact

Iraq, vowing to become OPEC's top oil producer, has offered to boost the sale of its crude to India by
up to 60 percent in a bid to forge a strategic alliance with the Asian giant.

But Baghdad's ambitious plan to supplant Saudi Arabia as OPEC's leading producer may well run
afoul of the oil cartel, which is expected to seek to impose a production quota on Iraq as it drives to
increase its output as a key element of its national reconstruction.

Iraq's move to cement economic relations with India, the world's fifth-largest energy consumer,
through long-term contacts with Indian refiners will provide an outlet for increased Iraqi oil production.
The offer was made by Iraq's industry and minerals minister, Fawzi Hariri, during a Wednesday
meeting in New Delhi with Indian Oil Minister Murli Deora.

The state-run Indian Oil Corp., the country's second largest refiner, currently buys around 220,000-
250,000 barrels of crude per day from Iraq.

"They have the reserves and they have the plans to raise output significantly," said IOC Chairman
Sarthak Behuria, who attended the meeting.

"They told us they would be ready to offer us longer contracts after five years."

"We are desirous of a strategic partnership" with India, Hariri said. "By strategic partnership we mean
a long-term relationship."

Iraqi Oil Minister Hussain al-Shahristani wants to boost oil production from its current level of some
2.4 million bpd to 10 million-12 million within the next decade.

That's more than Saudi Arabia or Russia is currently producing, and could threaten OPEC producers
unless Baghdad accepts a quota. But Shahristani has made clear he will not accept any limitation of
production that would impede national reconstruction.

He insists too that any quota must take into account Iraq's reserves. These are currently pegged at
115 billion barrels, ranking fourth after Saudi Arabia, Canada and Iran.

But industry analysts believe that Iraq is sitting on unexplored reserves that could double that total,
eclipsing even the long-dominant Saudis.

On Jan. 29 Shahristani boasted in Baghdad: "We cannot find a reason to prevent Iraqi production
from becoming higher than any other OPEC state, or even states outside OPEC.

"We expect this to happen over the next six to seven years with coordination and agreement with
other OPEC producers."

Over the last few months Iraq has signed 20-year production contracts with major international oil
companies covering 10 of the country's largest fields.

The plan is to boost production in the war-ravaged, long-neglected fields with state-of-the-art
technology that Iraq does not have. This will involve investment in excess of $100 billion by the oil
companies.

India's refiners are raising their capacity to meet growing demand and want long-term contracts that
involve buying oil at prices lower than those on the spot market.

India, which imports 77 percent of its oil needs, is constructing terminals to stockpile crude and has
offered Baghdad some of this space to secure supplies of Iraqi oil.

India's target is crude storage capacity of 5 million tons. The first terminal, with a capacity of 1.33
million tons, is scheduled to be completed at Visakhapatnam on India's east coast by mid-2011.

Two more at Mangalore on the west coast are due to be operational in 2012 to meet the needs of the
world's second-fastest growing economy after China.

Is OPEC just plundering crude oil?

Big Oil is much smarter than people think. By Big Oil this writer means the free world’s independent oil companies. For those watching, Big Oil
has been shifting the publicly visible emphasis to natural gas and enhanced recovery investment. The Axis of Oil, the countries between free Big
Oil and the organized national oil companies most of which are in OPEC, are just plundering crude oil for maximum output at the highest price the
market can manage. It might not be such a dumb idea.

OPEC is in the midst of an argument; raise production a wee bit to keep the price in line with some worldwide economic growth, leveled against
the idea that higher oil prices won’t keep world growth suppressed or drive to more alternatives, conservation and efficiency.

With the likelihood of an oil price run up, some points deserve some thought.

Against the oil price matter is a growing list of opportunities. With both the Nissan Leaf and GM’s Chevy Volt on the streets with media acclaim
that’s deserved, the door to electrification of light personal transport is cracked open with seriously strong wedging. More auto wedges are on the
way, most auto manufacturers will have similar models out very soon. Gasoline use in the developed world has likely peaked – and for a per mile
basis, the peak is now a certainty. The question seems to be will more miles get added keeping gasoline volume up over time.

Higher efficiency models, hybrids, flex fuel engined and electric vehicles are at a new sales rate point; the chances that these vehicle’s market will
evaporate wiping out theresearch, development and factory preparations are getting smaller by the month.

Big Oil has another advantage. They fund research, they see lots of grant applications; they also get progress reports on what they fund long
before papers are published. That can be months worth of advantage. BP’s getting into biofuel processes, petroleum chemistry, and other
research shouldn’t surprise anyone. Exxon Mobil’s major foray into partnering with Craig Venter’s firm with $600 million is a sure sign – the Big Oil
companies are definitely going to market energy and fuels however the market changes. Loyalty to crude oil might not be something to count on.

Last week Khaled Al Buraik, executive director of the government-controlled company Saudi Aramco made news pointing out there are 14 trillion
barrels of crude oil now discovered, with about 1.2 trillion that can be recovered with today’s technology. The recoverable number is more than all
the oil used so far. On the surface that rather casts doubt on why alternatives have any hope of getting to market.

The foundation to change is competition. Not just between companies, but between products used. Big Oil knows this; natural gas on an energy
content basis is priced at below 25% of oil.

Meanwhile Big Oil earns on the equity less than most big industrial sectors. For all the media hype on the profits there are better investments than
stock in Big Oil. - Unless things are changing, which they are. Big Oil is very likely positioning itself beyond the monthly and quarterly stock
analysts reports. It’s a sure bet that Big Oil Management is looking years down the road.

Watching Big Oil is like reading tealeaves. The stuff that matters for the future isn’t in plain view. Nor can such information be pried out. These are
huge firms, and it’s a certainty that those who are paid to be spokespeople are not privy to deep future planning of the resources committed,
forecasts and expectations about the years out. That information may well be under armed guard.

But watch the Big Oil funding forays into the alternatives, extraction of oil and gas, processes, chemistry, biology and wherever research connects
to the future the executives have in mind. Thus we know, even as Big Oil resists ethanol, they’re not in full war mode, actually behind the scenes
they’re pretty accommodating, the corn ethanol folks don’t have all that big a fight on their hands.

Everyone has known since the Arabs organized and executed the first oil embargo 30 odd years ago that the market isn’t rationally functional.
The rules of capital and mercantile business don’t work correctly. It sets up a guessing game. To complicate things further governments world
wide love to control activities causing even more unpredictability, administrative expense, delays, liabilities and other concerns.

To any smart businessman or investor having all of ones equity at risk on one product named crude oil is a major risk in itself.

Yet almost all the capital is in oil, and one can’t just walk away. So we watch Big Oil do two things, protect the oil products market and set up to
substitute oil over time. The entertaining part is they can’t admit it even when its plainthere is no other choice.

Most values for oil on the books are a bit over $50 a barrel now. Its becoming more clear that technology, insight, innovation and creativity are
going to offer fuel and energy choices below that over time. It must be unnerving to Big Oil that natural gas is way under the $50 equivalent right
now.

At the same time, everyone in industry knows that consumers make the wealth. When the buying stops the product is nearly worthless. But the
market and all that crude oil energizes must go on. The transition to the future must be gradual.

The day this post goes up this writer will be in Washington D.C. attending the American Petroleum Institute’s release of a comprehensive report
titled ‘The State of American Energy’ at a kickoff event. API’s President and CEO Jack Gerard is hosting a luncheon, where he’ll discuss the role
of the oil and natural gas industry in economic growth, job creation and energy security. Additionally, he will offer policy recommendations on how
the United States can meet its energy goals.

The airfare, two nights of lodging and about half the food is being paid for by the API. They order up coach tickets by the way. All very business
like. The investment they’re making implies that the presentation will be of significance as far as keeping the status quo intact, the consumers
able to buy products at a sensible price and help some voices connected to listening ears on their side as the media continues to demonize the
foundation industry of the world’s modern era. The API is a creature of the combined Big Oil company members. There won’t be any future
planning exposed, grant applications discussed or other bits exposing how the R&D investments today will affect the future.

What this writer expects is that Mr. Gerard and Ms. Van Ryan have a thoroughly vetted and very carefully designed presentation to keep the
world powered up. Links, data, and text will post when ready.

On the other hand, recall how things were for the OPEC members for that brief period after oil hit the record high. The cash disappeared at
alarming rates, payments were in doubt, populations restless, with oil at under $40. Now suppose alternative products to oil were profitable at $40
per barrel – now you’re thinking what Big Oil is thinking and not saying.