Organization of Arab Petroleum Exporting Countries

The Organization of Arab Petroleum Exporting Countries or OAPEC is

a multi-governmental organization headquartered in Kuwait which
coordinates energy policies in Arab nations, and whose main stated
purpose is developmental.

History
On 9 January 1968 three of the (then) most conservative Arab oil
states Kuwait, Libya and Saudi Arabia agreed in Beirut to found
OAPEC, aiming to separate oil production and sale from politics in the
wake of the halfhearted 1967 oil embargo related to the Six Day War.
Such use of the oil weapon in the struggle against Israel had been
regularly proposed at Arab Petroleum Congresses, but it took this war
for it to happen. However, Saudi Arabia's oil production was up 9% for
that year, and the main embargo lasted only ten days and was completely
ended by the Khartoum Conference.
OAPEC was originally intended to be a conservative Arab political
organization which by its restriction in membership to countries whose
main export was oil would exclude governments seen as radical,
like Egypt and Algeria, and had the additional rule that the three
founders' approval was necessary for new members to join. The original
aim was to control the oil weapon and prevent its use from being swayed
by popular emotion.Iraq initially declined to join, preferring to work
under the umbrella of the Arab League, as it considered OAPEC too
conservative.[1] Equally, the three founders considered Iraq too radical
and did not want it as a member. [2] However, by early 1972, the criterion
for admission changed to oil being an important, rather than principal
source of revenue, Algeria, Iraq, Syria and Egypt had been admitted, and
the organization became much more activist, contrary to the original
intention.
1973 was a turning point for the organization. In October that year, the
forces of Egypt and Syria attempted to overwhelm the state of Israel in
what would be known as the Yom Kippur War. Ten days after the war
started, on October 16, 1973, Kuwait hosted separate meetings of both
OAPEC and the Persian Gulf members of OPEC (including Iran).
OAPEC resolved to cut oil production 5% monthly "until the Israeli
forces are completely evacuated from all the Arab territories occupied in
the June 1967 war..." The embargo would last for some five months
before it was lifted in March 1974 after negotiations at the Washington
Oil Summit. Its aftereffects, though, would linger throughout the rest of
the decade. For the oil exporting countries, the embargo was the first
sign of their ability to leverage their production for political gains. A
number of them would now use this sense of control to renegotiate the
contracts they had made with the companies that had discovered and
exploited their resources. Ironically, though, the vastly increased
revenues would prove addictive, and a unified OAPEC oil embargo was
never again possible.
In 1979, Egypt was expelled from OAPEC for signing the Camp David
Accords, although it was readmitted a decade later.
OAPEC is currently regarded as a regional specialized international
organization and focuses on organizing cooperation on oil development,
collective projects and regional integration.
Members

  Algeria
  Bahrain
  Egypt
  Iraq
  Kuwait
  Libya
  Qatar
  Saudi Arabia
  Syria
  Tunisia
  United Arab Emirates

Established by an agreement amongst Arab countries which rely on

the export of petroleum, the Organization of Arab Petroleum
Exporting Countries (OAPEC) is a regional inter-governmental
organization concerned with the development of the petroleum
industry by fostering cooperation among its members.  OAPEC
contributes to the effective use of the resources of member countries
through sponsoring joint ventures.  The Organization is guided by
the belief in the importance of building an integrated petroleum
industry as a cornerstone for future economic integration amongst
Arab countries. 

On January 9, 1968, Kuwait, Libya and Saudi Arabia signed in

Beirut an agreement establishing OAPEC.  The three founding
members agreed that the Organization would be located in the State
of Kuwait.

By 1982 the membership of the Organization has risen to eleven

Arab oil exporting countries:  Algeria (1970), Bahrain (1970),
Egypt (1973), Iraq (1972), Kuwait (1968), Libya (1968), Qatar
(1970), Saudi Arabia (1968), Syria (1972), Tunisia (1982) and
United Arab Emirates (1970).  In 1986, Tunisia submitted a request
for withdrawal.  The Ministerial Council deliberated the request and
it was agreed to suspend Tunisia’s rights and obligations in
OAPEC, until such a time that Tunisia chooses to reactivate its
membership. 

OAPEC’s activities in the various areas of the petroleum industry

are guided by its Agreement, which makes continued close
cooperation amongst member countries the principal objective of
the Organization. This is realized through the following:     

I. Coordinating the Activities of Member Countries     

The Organization carries out this objective by promoting the

exchange of information, and by holding seminars in which Arab
and international experts participate.  These seminars serve as a
forum for reviewing the latest technological developments, and
possible solutions to technical problems encountered in member
countries.  This field also encompasses, Arab Energy Conference
(AEC) and other activities.     

II. OAPEC-Sponsored Ventures    

In pursuit of its objectives, OAPEC has sponsored the creation of

four companies and a training institute to form a solid foundation
for joint Arab action and Arab economic integration in the
petroleum industry.  These ventures operated independently through
their own boards of directors.  A brief summary of the four
companies and the institute is given below:    

1.  Arab Maritime Petroleum Transport Company (AMPTC)

The agreement establishing AMPTC was signed on May 6,

1972.  The Company was formally established in Kuwait in January
1973 with an authorized and subscribed capital of $500
million.  The activities of the company were defined as covering all
operations related to the marine transportation of hydrocarbons. 

Shareholder countries in AMPTC are Algeria, Bahrain, Egypt, Iraq,

Kuwait, Libya, Qatar, Saudi Arabia, and the United Arab
Emirates.  As a result of the decline in tanker demand, the Company
was forced to reduce shareholders’ equity to absorb
losses.  Authorized capital was reduced to $200 million and
subscribed capital to $150 million.

2.  Arab Shipbuilding and Repair Yard Company (ASRY)   

The agreement establishing ASRY was signed in Kuwait on

December 8,1973. The company was officially set up in Bahrain
with the following countries as shareholders: Bahrain, Iraq, Kuwait,
Libya, Qatar, Saudi Arabic, and the United Arab
Emirates.  ASRY’s incorporation was announced in December 1974
with an authorized capital of $100 million, which was increases to
$300 million in 1976 and the $340 million 1977.

The objectives of ASRY cover the building, repair and maintenance

of all types of ships including tankers and other marine transport
vessels that are related to the shipping of hydrocarbons. In 1977, the
Company established a dry dock in Bahrain primarily to service and
repair oil tankers.  One of ASRY’s more significant
accomplishments was the adding two large floating docks and their
related facilities. The availability of the three docks has provided
ASRY with the flexibility to service large and medium-sized
tankers and ships.   

3.  Arab Petroleum Investments Corporation (APICORP)    

The agreement establishing APICORP  was signed on September

14,1974. APICORP was officially formed in Dammam, Saudi
Arabia in November 1975, with all OAPEC member countries as
shareholders.  The authorized capital of the Corporation was $1.2
billion, with $400 million subscribed.  In May 2003 the General
Assembly of the Corporation approved raising its subscribed capital
to $550 million.  The capital increase was financed from
APICORP’s general reserve. 

The primary purpose of APICORP is to assist in the financing

of  projects related to the petroleum industry.  The rationale for its
formation is the substantial financial requirements of petroleum
projects.  The Corporation participated in twelve joint projects in
Bahrain, Egypt, Iraq, Jordan, Libya, Saudi Arabia and Tunsia.

APICORP is a partner in two of the subsidiaries of the Arab

Petroleum Services Company (also an OAPEC- sponsored venture)
namely: The Arab Drilling and Workover Company (ADWOC),
and the Arab Geophysical Exploration Services Company
(AGESCO).  APICORP’s equity stakes in the two companies are
20% and 10% respectively. 

APICORP has 32% equity stake in the Arab Company for

Detergent Chemicals (ARADET), which was established March 12,
1981, as a joint venture among several Arab interests with an
authorized capital of ID 72 million, and headquarters in Baghdad,
Iraq.  The Company has three production trains in its Linear Alkyl
Benzene Complex.  The Company’s overall activity has been
severely affected by the UN economic sanctions against which were
imposed against Iraq, and the instability which Iraq witnessed in
recent years.
4.  Arab Petroleum Services Company (APSCO)   

The agreement establishing this company was signed on November

23,1975. APSCO was formally founded in Tripoli, Libya, in
January 1977 with all OAPEC member countries as
shareholders.  The company’s authorized capital was 100 million
Libyan dinars.  The task of APSCO was to provide petroleum
services by creating subsidiaries, which specialize in one or more
branches of petroleum services. 

APSCO has thus far established three subsidiaries:

a. The  Arab Drilling and workover Company (ADWOC)    

ADWOC was established in Tripoli, Libya, in February 1980.  The

Company is the main subsidiary of the Arab Petroleum Services
Company, which owns 40% of its equity.  The other shareholders
are APICORP (20%), and the Kuwaiti owned Santa Fe International
Company (40%).  The mission of ADWOC involves onshore and
offshore drilling operations, well maintenance, drilling water wells,
and performing other technical operations associated with drilling in
member countries, as well as other countries.

The Company owns fourteen drilling rigs operating in Libya, Syria

and Jordan. It has also established workshops, storage facilities, and
a division for the maintenance and testing of equipment, supply of
rigs, and the production of oxygen and nitrogen.

b. The  Arab Well Logging Company (AWLCO)  

AWLCO is a wholly owned subsidiary of the Arab Petroleum

Services Company that was established in Baghdad, Iraq, in March
1983.  The company specializes in performing well logging and
perforation operations, and other well-related technical operations
necessary for the discovery and development of oil fields.
c. The Arab Geophysical Exploration Services Company
(AGESCO)    

AGESCO was established in Tripoli, Libya, in 1984.  The Arab

Petroleum Services Company has a 40% stake in the
company.  Other shareholders include APICORP (10%), the Libyan
National Oil Corporation (10%), and Halliburton Geophysical
Services Company (40%).  AGESCO performs geophysical surveys
using the latest technology.

5.   Arab Petroleum Training Institute (APTI)

APTI was established in Baghdad, Iraq, in May 1978, to prepare

instructors qualified to provide training in the many technical
aspects of the oil industry, and to augment the administrative and
technical personnel responsible for the different fields of the
industry.  The other objectives of APTI include performing research
and conducting studies related to the modern techniques of
industrial organization, and the methodology and techniques of
training and education, as well as the creation of a central
information and documentation system.

However, due to the repercussions of the 1990-1991 Gulf Crisis

APTI faced difficulties in performing its mission.  In December
1994, the Ministerial Council of the Organization decided to entrust
Iraq with the administration and sponsoring of the Institute for a
renewable period of two years commencing January 1995.

Introspective

At the end of 1987, the Council of Ministers of the Organization

probed the ways and means through which the General Secretariat
can strike a balance efficiency and at the need to rationalize
expenditure, as well as maximum benefits from OAPEC-
Sponsored-ventures. Since the main objective of the Arab
Petroleum Investment Corporation (APICORP) was the participate
in the financing of petroleum industries and projects that are related
to all its different facts, the Council of Ministers decided  that all
projects, which were evaluated or followed-up by the General
Secretariat, would henceforth be transferred to APICORP for
evaluation and follow-up. The effectiveness of this decision was
further assured, by APICORP’s now well- established technical,
executive and managerial structures, and its complement of
professional staff who are experienced in performing economic and
technical studies. 

The Council also stipulated that for any future projects to be

studied, at least member should express their desire that it be carried
out, with each country absorbing 10% of the cost.
The Organization carries out its functions and responsibilities
through the following four organs:     

1.The Council of Ministers

The Council is the supreme authority of the Organization,

responsible for drawing up its general policy, directing its activity,
and laying down the rules governing it.

The Council is concerned with the following:

-       Deciding on applications for membership and approving

invitations to petroleum exporting countries to attend its meetings.
-       Adopting resolutions, making recommendations, and advising
on matters related to the Organization’s general policy or its
position or the position of a particular member or members vis-à-vis
specific issues.   
-       Approving draft agreements reached by the Organization.
-       Issuing the necessary regulations and amendments thereto.
-       Approving the draft annual budgets of the General Secretariat
and the Judicial Tribunal, and ratifying the end-of-year accounts.
-       Appointing the Secretary General and Assistant Secretaries.

The Council is composed of petroleum ministers or comparable

officials from each of the member countries.  The chairmanship of
the Council rotates annually among the representatives in the
alphabetical order of their countries. 

The Council convenes at least twice a year.  Extraordinary sessions

may be convened at the request of a member country or the
Secretary General.    

 
2.The Executive Bureau
The Executive Bureau assists the Ministerial Council in supervising
the Organization’s affairs and has the following competencies:    

-       Preparing the Council’s agenda. 

-       Approving and when necessary amending the regulations
applicable to the staff of the General Secretariat.
-       Reviewing the Organization’s draft annual budget as prepared
by the Secretary General and submitting it to the Council for
approval.
-       Submitting suggestions and recommendations to the Council
on matters related to articles of the Agreement and the execution of
the Organization’s activities.    

               The Executive Bureau is composed of one representative

from each of the member countries.  The chairmanship rotates
annually in the order followed by the Ministerial Council.  

 
3.General Secretariat 

The General Secretariat plans, administers and executes the

organization’s activities in accordance with the objectives stated in
the Agreement establishing OAPEC and with the resolutions and
directives of the Ministerial Council.  The Secretariat is headed by
the Secretary General who is also the official spokesman and legal
representative of the Organization and is accountable to the
Council.  The Secretary General, as stipulated in the Agreement,
may be aided by a number of Assistant Secretaries. The Secretary
General directs the Secretariat and supervises all aspects of its
activities.  

The General Secretariat is composed of the following:  

The Secretary General’s Office

A Legal Expert is attached to the Office of the Secretary
General.  His duties include providing legal opinions on matters
referred to him by the Secretary General, preparing and drafting the
organizational and administrative orders issued by the Ministers,
preparing draft recommendations and decisions for their approval;
as well as minuting the proceedings of their meetings.

The Arab Center for Energy Studies:

The Technical and the Economics Departments, together, comprise

the Arab Center for Energy Studies, whose formation eas called for
by the Council of Ministers in 1982.

 The Technical Affairs Department   

The Technical Affairs Department monitors and prepares studies on

developments in the petroleum industry both on the Arab and
international levels, as well as those affecting other sources of
energy.  It also organizes and participates in the relevant
conferences, seminars, and workshops.  It manages OAPEC’s Data
Bank and provides it with data.  In addition, the department carries
out the organizational tasks related to the OAPEC Award for
Scientific Research.    

The Economics Department

The Economics Department conducts research and presents studies

related to energy affairs in the member countries and worldwide, as
well as contributing sections to periodicals published by OAPEC,
and providing the Data Bank with data.  The department is
entrusted to foster economic relations with the regional and
international institutions and participates in the preparations for the
Arab Energy Conference (AEC), and various seminars. 

The Information and Library Department

The Information and Library Department carries out the
organization’s media activity by publishing books and periodicals,
monitoring the energy affairs in the Arab and international press; as
well as providing OAPEC staff and visiting researchers with
bibliographical services.     

OAPEC Library holdings comprise 26,513 books, 5277 documents,

556 periodicals, in addition to the Judicial Tribunal library, the
depository library (containing OAPEC publications), and several
reports and departmental studies. The Library collections’ are
dealing mainly with subjects related to energy and its renewable
sources, particularly oil and gas, and their upstream and
downstream industries, including exploration, production, refining,
and petrochemical industries; besides the economic aspects of
energy and petroleum, such as prices, supply and demand,
marketing, etc. The Library collections also cover the areas of
economics and development, the world economy, commerce &
international economic relations, finance & public finance,
technology transfer, environmental studies, international law, as
well as petroleum, economic, financial, and commercial legislation.

The Library provides regular services mainly to OAPEC researchers

and to researchers of the Arab Fund for Economic and Social
Development (AFESD), and the Inter-Arab Investment Guarantee
Corporation (both at the same headquarters). Visitors from several
academic and private institutions in Kuwait are also welcomed to
utilize the Library, particularly the Kuwait University, Kuwait
Foundation for the Advancement of Sciences (KFAS), Kuwait
Institute for Scientific Research (KISR), in addition to oil
companies, embassies, and other Arab corporations. The Library
provides services as follows:

-       Information: The Library performs the work of data entry,

collected from recent Arabic and English publications, using the
CDS/ISIS system. Retrieval of information, responding to inquiries,
as well as provision of reference services, are also offered to
OAPEC and non-OAPEC researchers.

-       Documentation: Documentation services are provided,

containing the bibliography of OAPEC quarterly journal Oil and
Arab Cooperation, and the bibliographical list entitled New Books
in OAPEC Library, published in the OAPEC Monthly Bulletin.

-       Indexing and Classification: The Library provides indexing

and classification services using UDC system.

-       Current Awareness: The Library issues a fortnightly file

containing copies of the content pages of the latest books and
periodicals acquired.

-       Lending: Lending services to OAPEC and other researchers

from the Arab Organizations Headquarters are provided by the
Library.

Finance and Administrative Affairs Department 

The Department consists of the following three sections:  The

Accounting and financial Affairs Section monitors the compliance
of actual expenditure with the amount approved in the OAPEC
budget, for both the General Secretariat and the Judicial Tribunal,
and prepares the year-end accounts to be approved by the Executive
Bureau and the Council of Ministers. The Personnel Section
supervises implementation of OAPEC’s by-laws concerning staff
affairs.  The Public Relations Section is entrusted with providing for
proper working conditions in the Organization.    

 
4.Judicial Tribunal   

The Judicial Tribunal is the fourth OAPEC organ created under the
Agreement.  It was established by a special Protocol that was signed
in Kuwait on May 9, 1978.  The Protocol was attached to the
Organization’s Agreement and came into effect on April 20,
1980.  Judges of the Tribunal were first elected on May 6, 1981.

The protocol stipulated that “the Tribunal shall consist of an uneven

number of judges of Arab citizenship, who shall not be less than
seven and not more than eleven.

1.  The Tribunal has jurisdiction to hear the following disputes:

-       Disputes relating to the interpretation and application of the

Agreement and settlement of the liabilities arising therefrom.    

-       Disputes arising between two or more member countries

concerning petroleum operations, so long as they do not infringe on
the sovereignty of any of the countries concerned.    

-       Disputes which, The Ministerial Council decides, are within

the competence of the Tribunal.

2. Upon consent of the disputing parties, the Tribunal may rule on

the following:

-       Disputes arising between a member country and a petroleum

company operating in its territory.

-       Disputes arising between one member country and the national

oil company of another member.

-       Disputes arising between two or more member countries, apart

from the provision of (1) above.

The Judicial Tribunal also has an advisory jurisdiction enabling it to

give its opinion on issues referred to it by the Ministerial
Council.  The rulings of the Tribunal are considered final and
binding on the disputing parties and in themselves carry the
authority of the executive power in territories of member
countries.   

I. ARAB RELATIONS

1- Specialized Conferences and Seminars

OAPEC participates in various meetings sponsored by the League

of Arab States, and regional conferences, meetings, and seminars on
a wide range of oil industry-related topics.  For its part the General
Secretariat organizes annually several specialized seminars on the
various issues of the oil and gas industry, where it brings together
experts from member countries and from non-Arab countries.  The
General Secretariat also organizes every two years a seminar aimed
at providing middle management with an overview of the
fundamentals of the oil and gas industry.

2- Arab Energy Conference (AEC) 

The Council of Ministers of the Organization stressed the need for
continued cooperation with non-member Arab Countries,
particularly within the framework of the Arab Energy Conference
(AEC). 

The idea of instituting and Arab Energy Conference began with a

decision adopted by the Ministerial Council in May
1977.  Consultations with the Arab Fund for Economic and Social
Development led to an agreement that the two organizations jointly
sponsor the Conference, thereby ensuring the representation of all
Arab countries and highlighting the nexus between energy and
development.

The objectives of the AEC are the following:    

-                 To establish an Arab institutional framework for oil and

energy issues in order to develop a pan-Arab perspective.
-                 To coordinate relations among Arab institutions
concerned with energy and development..
-                 To study present and future Arab energy requirements
and the means of satisfying them.
-                 To identify and assess existing Arab resources, and the
efforts exerted to develop energy sources, as well as the
coordination and developments of such efforts. 
-                 To identify and evaluate the impact of international
energy policies on the Arab Countries. 

To date seven meetings the Conference have been convened as

follows:

-                 The First AEC meeting was held in Abu Dhabi, UAE, in

March 1979, under the theme “The Arabs and Energy
Issues”.  After the meeting, contacts were carried out between the
League of Arab States and OAPEC to incorporate the activities of
the Arab Petroleum Conference, which had been sponsored by the
Arab League since 1959, into those of the AEC.  The Arab League
thus became a sponsor of AEC.  The Arab Industrial Development
Organization was also included as a sponsor of AEC, due to its
interest in the petrochemical and electricity industries.
-                 The Second AEC meeting was held in Doha, Qatar, in
March 1982, under the sponsorship of the four aforementioned
organizations.  The theme of the meeting was “Energy for
Development and Arab Economic Integration”. Pursuant to the
recommendation of the Conference, the Arab Organization for
Mineral Resources became the fifth sponsor of the conference.
-                 The Third AEC was held in Algiers, Algeria, in May
1985, under the theme “Energy and Arab Cooperation”, which was
adopted as the theme for subsequent meetings.
-                 The Fourth AEC meeting was held in Baghdad, Iraq, in
March 1988 under the sponsorship of the five aforementioned
organizations. 
-                 The Fifth AEC meeting was held in Cairo, Egypt, in
May 1994.  This latter AEC was sponsored by four organizations
due to the merging of the Arab Organization for Mineral Resources
and the Arab Industrial Development Organization into the Arab
Industrial Development and Mining Organization.
-                 The Sixth AEC meeting was convened in Damascus,
Syria in May 1998 under the sponsorship of the four organizations. 
-                 The Seventh AEC meeting will be held in Cairo , Egypt
in May, 2002, under the sponsorship of the organization.
It was agreed at that Conference that the Eighth AEC meeting will
be held in Amman, Jordan in May 2006.

3- Joint Arab Economic Report 

OAPEC participates in the preparation of “The joint Arab
Economic Report”, with the General Secretariat of the Arab
League,  Arab Fund for Economic and Social Development, and the
Arab Monetary Fund.  The latter undertakes the publication of the
Report.

  
II. INTERNATIONAL RELATIONS

OAPEC endeavors to strengthen its contacts and ties with

institutions outside the Arab world so as to present an Arab
perspective on energy and development problems.  It explores
possibilities of cooperation among its members, and net oil
importing industrialized and developing countries. The
Organization also fosters contacts that facilitate access to new
scientific and technological developments in the field of energy.

OAPEC maintains its international contacts through the following

channels: Specialized scientific seminars organized in conjunction
with similar institutions, particularly those concerned with regional
and international energy affairs, as well as universities. These
activities include:

a.                Participation in the international conferences that tackle

energy and development issues such as the World Energy Congress,
the World petroleum Conference and the World Conference.

b.                Cooperation  with several international institutions

operating in the field of energy, including the Institut Francais du
Petrole (IFP), Institute of Applied Geoscience of the Netherlands
(TNO),the Energy Directorate of European Commission, and World
Energy Council (WEC).

c.                 The Organization’s relation past and present with

universities include:
-       Conducting a Seminar on the policies affecting resources and
development, jointly with the University of Wisconsin-Madison,
during the 1977-78 academic year. 
-       Sponsored the annual Oxford Energy Seminar in conjunction
with OPEC and st. Catherine’s College of Oxford University. The
seminar provides a forum for the discussion of energy issues with
the goal of fostering closer ties between the participants
representing oil exporting and those representing oil importing
countries. Participants from OAPEC have regularly attended the
seminar starting with the first in September 1979.
-       OAPEC is a founding member of the Oxford Institute for
Energy Studies (OIES), established in December 1982 and affiliated
with Oxford University. The Institute focus is on the study of
economic, social, and political aspects of energy issues,, with
particular emphasis on the needs of developing countries including
oil exporters. The Institute was interested with the Organization of
the annual Oxford Energy Seminar starting with the 5th in 1983.