Since oil and oil

products like gasoline

are highly flammable,
they need to be transported
carefully. If not, they can 45
easily start fires or large
explosions.
 Chapter 3 . Refining Oil (Downstream)

Ocean tankers
Oil tankers are large, specialized ocean-
going ships specifically built to carry unrefined
crude oil from one part of the world to another. They
usually carry oil from where it is produced to
where it is refined and consumed.

46
 47

Oil tankers are

classified by their size, which can
range from small coastal tankers to ultra-
large crude carriers (ULCC). The largest
tankers often travel from the Gulf region and West
Africa to Japan and other Asian countries. Other
tankers travel to the northeastern United
States and to countries across the
Mediterranean region.
 OPEC’S MISSION

OPEC’s mission is to coordinate oil policies in its Member Countries

and help stabilize oil markets. It also includes working together—to
make sure there is always a regular supply of oil available to consumers,
and to make sure a steady income is generated for producers. All this is
formally stated in the OPEC Statute.

48
49
 Chapter 4 . About OPEC

Finally, let’s discuss

the Organization
known as OPEC
The Organization of the Petroleum Exporting Countries (OPEC) is an
intergovernmental organization currently made up of twelve oil exporting
countries that work together to coordinate their petroleum policies.

The Organization was formed in response to the activities and practices of seven
large international oil companies (IOCs) known as the “Seven Sisters”. The activities
of these IOCs were often detrimental to the growth and development of the oil-
producing host countries, whose natural resources they exploited.

The first move towards the establishment of OPEC can be traced

50 back to 1949, when Venezuela approached four other oil-
producing developing countries—Iran, Iraq, Kuwait and
Saudi Arabia—to suggest that they explore avenues for
regular and closer cooperation on oil matters.

But the main impetus for OPEC’s birth came a decade

later, after the IOCs had decided to reduce the price of oil
without first asking the governments. In response, several
oil-producing countries decided to hold a meeting in
Cairo, Egypt, in 1959. This was the First Arab Petroleum
Congress. Iran and Venezuela were invited as observers.
ggs
Prof. Ri

The meeting adopted a resolution asking IOCs to

consult the governments of oil-producing countries
before changing the posted price of oil. But the
IOCs ignored the oil-producing countries. And in
August 1960, they once again lowered the price of oil.
 1959
150 120 90 60 30 0 30 60 90 120 150 180

ARCTIC OCEAN ARCTIC OCEAN

Laptev Sea
Baffin East Siberian Sea
Beaufort Sea
Bay
Chukchi
Sea
Arctic Circle (66°33') Arctic Circle (66°33')
Great
Bear Lake Denmark
Davis Strait

1949
Strait Lake
Ladoga Lake
Great
60
Slave Lake Hudson Onega
60
Bay
Gulf of Alaska
Labrador Bering Sea
Sea
Lake Sea of
Baikal
Okhotsk
Lake
Winnipeg

Gulf of
Lake St. Lawrence
Superior Lake Lake Balkhash
Huron
Aral
Lake Sea
Michigan
Lake Ontario

NORTH Lake Erie

Sea of
NORTH
PACIFIC NORTH Japan
PACIFIC
OCEAN ATLANTIC Yellow
Sea
OCEAN
OCEAN
30 30
East China
Sea
Persian
Gulf
Gulf of Mexico
Gulf of Oman
Tropic of Cancer (23°27') Tropic of Cancer (23°27')
Red
Sea Luzon
Gulf of
Strait Philippine
Tonkin
Sea
Bay of
Caribbean Sea Bengal
Arabian South China
Gulf of Aden
Sea
Sea Andaman
Sea Gulf of
Thailand
Laccadive
Sea

Celebes Sea
Gulf of Guinea

Equator Equator Equator

0 0

Lake
Victoria

Java Sea
Banda Sea
Lake
Tanganyika
Arafura
Lake Sea
Nyasa
Timor
Sea
Great

Lago
Titicaca SOUTH INDIAN Gulf of
Carpentaria
Coral
Sea
Barrier

ATLANTIC OCEAN Reef

Mozambique
OCEAN Channel

Tropic of Capricorn (23°27') Tropic of Capricorn (23°27')

SOUTH
PACIFIC
30 30

OCEAN

Great Australian
Bight

SOUTH Tasman Sea

PACIFIC
OCEAN

Scotia Sea

60
Drake 60
Passage

SOUTHERN OCEAN
Antarctic Circle (66°33') SOUTHERN OCEAN Antarctic Circle (66°33')
Amery Ice
Shelf

Bellingshausen Sea
Weddell Sea
Amundsen Sea

Ross Sea Ross Sea

Ronne Ice Shelf

Ross Ross Ice Shelf
Ice Shelf

150 120 90 60 30 0 30 60 90 120 150 180

51

Iraq Kuwait
Saudi Arabia
Iran
Venezuela

Baghdad
1960
 Chapter 4 . About OPEC

The birth of OPEC

I n response to this, five of the largest

oil-producing countries held another
conference on September 10–14,
After OPEC was created, the
governments of OPEC’s Member
Countries began to have more control
1960. This time the venue chosen over their own natural resources. And in
was Baghdad, the capital of Iraq. The the years that followed, OPEC became
countries that attended the conference increasingly aware of the important role
were: Iran, Iraq, Kuwait, Saudi it could play in the global oil markets.
Arabia and Venezuela. These are the
Organization’s Founder Members. That
was when OPEC was born.
Each country sent a delegate:
Fuad Rouhani from Iran, Dr. Tala’at al- THE OPEC LOGO
52 Shaibani from Iraq, Ahmed Sayed Omar
from Kuwait, Abdullah Al-Tariki from The OPEC logo
Saudi Arabia and Dr. Juan Pablo Pérez is the recogniz
symbol of the O able
Alfonzo from Venezuela. rganization. It
the result of an is
international d
competition hel esign
At this Baghdad Conference, the d in 1969. An A
designer, Gertr ustrian
delegates discussed the role of the IOCs ude Svoboda, w
competition w on the
and changes in crude oil prices. The oil- ith her design,
combined the which
producing countries saw an urgent need different letter
Organization’s s of the
to create an organization for the defence name in a roun
This logo is stil ded design
of their most important non-renewable l in use by OPE
C.
natural resource, oil.
Thus, OPEC was established as
a permanent intergovernmental
organization. Its first headquarters were
located in Geneva, Switzerland.
In April 1965, OPEC decided to move
the Secretariat to Vienna, the capital
of Austria. A Host Agreement was
signed with the Austrian government
and OPEC moved to Vienna on
September 1, 1965.
 HE Fuad Rouhani
Head of Delegation, Iran

HE Dr. Tala’at al-Shaibani

Head of Delegation, Iraq

HE Ahmed Sayed Omar

Assistant to the Secretary of State
Ministry of Finance 53
Head of Delegation, Kuwait

HE Abdullah Al-Tariki
Minister of Petroleum
Head of Delegation, Saudi Arabia

HE Dr. Juan Pablo Pérez Alfonzo

Minister of Mines and Hydrocarbons
Head of Delegation, Venezuela
 Chapter 4 . About OPEC

54 June 24, 1965, Vienna, Austria: Headquarters Agreement between the Government of Austria and OPEC,
Dr. Bruno Kreisky, Austrian Foreign Minister, and Dr. Ashraf Lutfi, OPEC Secretary General.

OPEC Headquarters, 1960. Geneva, Switzerland.

OPEC Headquarters, 1965. OPEC Headquarters, 1977.

Dr.-Karl-Lueger-Ring 10, 1010 Vienna, Austria Obere Donaustrasse 93, 1020 Vienna, Austria
 55

OPEC Headquarters, 2009.

Helferstorferstrasse 17, 1010 Vienna, Austria.
 Chapter 4 . About OPEC

Who are the members

of opec?
150 120 90 60

ARCTIC OCEAN

Beaufort Sea Baffin

Bay

Arctic Circle (66°33')

Great
Bear Lake Denmark
Davis Strait
Strait
Great
Slave Lake Hudson
60
Bay
Gulf of Alaska
Labrador
Sea

Lake
Winnipeg

Gulf of
Lake St. Lawrence
Superior Lake
Huron
Lake

OPEC is made up of NORTH

Michigan

Lake Erie
Lake Ontario

PACIFIC NORTH
twelve sovereign nations: six in OCEAN ATLANTIC
OCEAN

the Middle East, four in Africa and

30

Gulf of Mexico

two in South America. Tropic of Cancer (23°27')

Caribbean Sea

Venezuela

Equator
0

Ecuador

There are three cat-

egories of membership: Lago
Titicaca S
AT

56 Founder Members, Full Tropic of Capricorn (23°27')

O

Members and Associate

Members. 30

Founder Members of SOUTH

PACIFIC

the Organization are those OCEAN

countries which attended the Scotia Sea

Baghdad Conference in 1960, 60

and which signed the original agree- Antarctic Circle (66°33') SOUTHERN OCEAN

ment establishing OPEC.

Full Members are all Founder Mem- 150 120 90 60

bers, plus those countries whose applica-

tions for membership have been accept-
ed by the Ministerial Conference.

Associate Members are countries The oil producing capacity of each Member
which do not qualify for full membership Country is different. But when it comes to
(see p. 58 regarding Who can be a mem- making decisions as an Organization, every
ber?), but which are nevertheless admit- country is equal. Decisions must be made
ted under special conditions. unanimously with the agreement of all
Member Countries.
 30 0 30 60 90 120 150 180

ARCTIC OCEAN

Laptev Sea
East Siberian Sea

Chukchi
Sea
Arctic Circle (66°33')

Lake
Ladoga Lake
Onega
60

Bering Sea

Lake
Baikal

Lake Balkhash
Aral
Sea

Sea of
NORTH
Japan
PACIFIC
Yellow
Sea
OCEAN
Iraq Iran
30
East China
Algeria SP Libyan AJ Kuwait Sea
Quatar
Persian
Gulf
Gulf of Oman
Saudi Arabia Tropic of Cancer (23°27')
Red
United Arab
Sea
Emirates Gulf of Philippine
Tonkin
Sea
Bay of
Bengal
Arabian South China
Gulf of Aden
Sea
Sea Andaman

Nigeria Sea Gulf of

Thailand
Laccadive
Sea

Celebes Sea
Gulf of Guinea

Equator Equator
0
Gabon Lake
Victoria

Java Sea
Banda Sea
Lake
Tanganyika
Indonesia Arafura
Lake Sea

Angola Nyasa
Timor
Sea
Grea

Gulf of
t

I N D I A N Coral
SOUTH Carpentaria
Barrier

Sea
TLANTIC O C E A N Re

OPEC Member Countries

ef
Mozambique
Channel
OCEAN
Tropic of Capricorn (23°27')
57
Country Joined OPEC Location
SOUTH
PACIFIC
30

OCEAN

Algeria 1969 Africa

Great Australian

Angola 2007 Africa

Bight

Tasman Sea

Ecuador ** 1973; 2007 South America

Gabon *** 1975 Africa
Indonesia **** 1962 Asia
IR Iran* 1960 Middle East
60

SOUTHERN OCEAN
Iraq * 1960 Middle East
SOUTHERN OCEAN Antarctic Circle (66°33')
Amery Ice
Shelf

Kuwait * 1960 Middle East

SP Libyan AJ 1962 Africa
Nigeria 1971 Africa
30 0 30 60 90 120 150 180

Qatar 1961 Middle East

Saudi Arabia * 1960 Middle East
United Arab
1967 Middle East
Emirates
Venezuela * 1960 South America

* Founder Members
Prof. Ri
ggs ** Ecuador joined OPEC in 1973 and suspended its
membership from December 1992 to October 2007.
*** Gabon terminated its membership in 1995.
**** Indonesia joined OPEC in 1962 but suspended
its membership effective January 2009.
 Chapter 4 . About OPEC

58 Representatives of the five Founder Members at a Board of Governors meeting in the 1960s

Who can be a Member?

O PEC membership is open to
any country that exports crude
oil and which shares the ideals of the
may still be admitted as an Associate
Member.
An Associate Member may be invited
Organization.
to attend any of the Organization’s
A country may become a Full Member if meetings. While an Associate Member
its request to join OPEC is accepted by a may participate in these meetings, it does
three-fourths majority of Full Members not have the right to vote.
(including all Founder Members).
In addition, other oil-producing
If most of the oil a country produces is countries that are not members of
consumed internally—to meet domestic OPEC may also be invited to attend
demand—then it may not be able to Meetings as Observers.
join OPEC. Nevertheless, that country
Keeping
the market Stabilizing
supplied oil markets
T hroughout its 50-year history,
OPEC has seen periods of both
extremely high and low oil prices. Each
O ne of the most important parts of
OPEC’s mission is making sure
that the oil markets remain stable. One
time OPEC has tried to respond in an way that OPEC tries to do this is by
appropriate manner. working to avoid price extremes (when
oil prices are too low or too high).
OPEC does this by coordinating the oil
policies of its Member Countries. Avoiding price extremes—and sudden
changes in prices—is important for
If demand suddenly grows and supplies producers and consumers. When oil
fall short, OPEC can increase its oil prices are too high or too low, problems
production in order to keep the market can be generated for the global economy.
well supplied. On the other hand, if
For example, with extremely high oil 59
demand suddenly falls and supplies grow,
OPEC can slow down production in prices, it costs more to do things—like
order to help maintain a balance in the run a car, operate a machine or make
market. products like plastics.

OPEC’s actions at critical times have But extremely low oil prices also cause
demonstrated the Organization’s ability problems. If the price of crude oil is
to keep the oil market well-supplied too low, then it doesn’t make sense to
during different kinds of unexpected spend money trying to find more oil.
events, such as wars or natural disasters. Investments in projects may then fall.

157th Meeting of the OPEC Conference in session in Vienna, Austria, October 2010.
 Chapter 4 . About OPEC

Organizational Structure
Board of
Governo
OPEC’s B rs
oard of G
composed overnors
of represe is
by Memb ntatives n
er Count ominated
the Conf ries and c
erence. onfirmed
by
fer ence The Boar
The Con ’s suprem
e dm
implemen anages the Secreta
P E C ts the res riat,
e is O
h e C o nferenc ts of Heads of ntry.
Conferen
ce, prepar
olutions o
f the
T
o r i t y. I t consis M e m ber Cou annual bu
dget and
es the Sec
r e tariat’s
auth each ulation
of
l e g a t i o ns from h e f o r m Conferen
ce for app
submits it
to the
De for t s.
i s r e s p onsible g e n e r a l policie The Boar
roval.
It n’s
anizatio ear to d makes d
the Org t s t wice a y reports su
bmitted b
ecisions b
ased on
em e e are
nferenc s. These General. y the Secre
The Co rket condition own repo
The Boar
d also sub
ta r y
ma mits its
look at ings’. rts and re
i n a ry Meet s the activit commend
a tions on
‘O r d
n f e r e n ce hold ed. Conferen
ies of the
Organiza
, the Co n requir
60 t
i o n w h e ce. io n to the
d i t eetin g s
In ad
t r a o r d inary’ M
‘Ex

Economic Commission Board

The Economic Commission Board
(ECB) is a special research body within
the Secretariat. It considers current
market conditions, the situation of the
global economy and forecasts the future
direction of market fundamentals.
The ECB is composed of National
Ministers and Heads of Delegations
with Ecuador’s President, Rafael Representatives from Member
Correa (7th from the right), at Countries, a Commission Coordinator
the 158th Meeting of the OPEC (who is also the Director of the
Conference in Quito, Ecuador, Secretariat’s Research Division) and the
December 2010. Secretary General.
 Information C
enter
The Secretariat
The Secretariat
The OPEC Secretariat is responsible for has an Informat
Centre with ove ion
carrying out the executive functions of r 20,000 volum
including book es —
the Organization, according to the OPEC s, reports, map
conference pro s an d
Statute and under the direction of the ceedings—rela
petroleum, ener te d to
Board of Governors. gy and the oil m
keeps journals arket. It
in Arabic, Engl
German and S ish, French,
The Secretary General is the Chief panish. The In
Centre is open fo rmation
Executive of the Secretariat, as well as to the public an
used by research d is often
the legally authorised representative of ers and studen
ts.
the Organization. He is assisted directly
by the Office of the Secretary General,
a Legal Office and an Internal Auditor.
OPEC’s first Secretary General was HE
Dr. Fuad Rouhani of Iran.
The Secretariat consists of a Research
Division, which monitors, forecasts and
analyzes developments in the global
energy industry. The Research Division
consists of the Departments of Data 61
61
Services, Energy Studies and Petroleum
Studies.
The Secretariat is also made up of a
Support Services Division, which includes
the Departments of Administration and
Information Technology, Finance and
Human Resources, and Public Relations
and Information.
The Secretariat is a
multicultural working THE OPEC SUMMIT
f the
environment. It has employees
h o u gh n o t a formal organ o
T mit
drawn from more than 30 the OPEC Sum
Organization, of
different countries. About Heads of State
brings together iscuss
a quarter of them are from
E C M em b er Countries to d
OP d make
Prof. Rig

importance an
gs

Member Countries. Others are gl o b al

su es o f
international employees. is
co m m en d at io ns to guide the
policy re
The official language of the Organization.
Organization is English.
O P E C S u m m it has proved to
The e group
e a ve ry ef fe ct ive way to mak
b nities
rovide opportu
decisions and p
er s to re vi ew the role of the
for lead
world affairs.
Organization in
 Chapter 4 . About OPEC

Building bridges

G lobal events in recent years have

demonstrated the interconnected
nature of today’s world. It is thus more
ongoing dialogue with other energy
stakeholders under the framework of the
International Energy Forum (IEF).
important than ever to coordinate
Another issue that OPEC considers
actions and work together with others
important for all global energy
when tackling these global challenges.
stakeholders is the role that governments
This is especially true for the oil industry,
and people everywhere have in
which reaches all corners of the Earth.
environmental protection efforts.
There are several issues that OPEC
OPEC Member Countries are
considers priorities for all global
continually looking for ways to work
energy stakeholders. One of these is
with others on this. The Organization
improving communications—through
has participated in environmental
dialogue and cooperation—between oil
conferences and seminars, and has
producers and consumers.
undertaken extensive studies of the
This is especially important in order relationship between the energy sector
62 to avoid market instability. OPEC has and global warming.
always said that avoiding instability and
At the same time, OPEC also supports
preserving market stability can only be
the efforts of its individual Member
achieved by cooperating with other
Countries to do what they can at
non-OPEC oil producers. the national level—such as develop
OPEC regularly meets with these other new technologies that enhance the
major oil producers such as Russia to environmental credentials of oil and
improve the understanding of the oil reduce the environmental impact of
industry and seek appropriate policy activities in the energy sector.
actions. To emphasize their overall commitment
Since it is an organization of oil- to the environment, the leaders of
producing countries, OPEC also meets OPEC Member Countries agreed to
regularly with large oil consumers. In fact, several principles set forth in the ‘Riyadh
OPEC has an on-going dialogue with Declaration’ issued at the conclusion of
the European Union. OPEC also holds the Third OPEC Summit of Heads of
meetings and workshops with China. State held in Saudi Arabia in 2007. In it,
the Heads of State of OPEC Member
In addition, OPEC holds dialogues with Countries agreed that the themes of
other international organizations— stability, sustainable development
such as the International Energy and the environment should guide all
Agency (IEA)—and participates in Member Country initiatives.
 WHAT IS OFID?
The OPEC Fund for International
Development (OFID) is an
institution that provides funding and
How does OPEC help other countries? other support to developing countries
around the world. According to
the agreement establishing OFID,
For decades, OPEC and its Member
all developing countries (with
Countries have found different ways
the exception of OPEC Member
to help poor countries. Much of this
Countries) are eligible for OFID
has been through individual Member
assistance.
Country national funds which have
made donations and aid available to OFID is active in many regions of the
poor countries, through bilateral and world. So far, people in 122 countries
multilateral arrangements. in Africa, Asia, Latin America, the
Caribbean, the Middle East and
Another way that OPEC helps
Europe have benefited from OFID’s
is through the
programmes. These programmes
OPEC Fund for
have included clean water and energy
International
projects; building schools, hospitals
Development
and roads; and developing industry
(OFID), which 63
and expanding trade opportunities.
helps finance
projects with low- These programmes have been
interest loans. financed by low-interest loans that
OFID provides to the public sector
During the First
in recipient countries. OFID also
OPEC Summit in
provides financing for private sector
Algiers, Algeria, held
projects in developing countries,
in 1975, OPEC Member
and provides grants to social and
Countries asked the
humanitarian projects.
international community—
especially developed OFID’s financial resources come
countries—to work from its investments, loans and
together to help respond the voluntary contributions made
to the challenges facing by OPEC Member Countries. By
developing countries. the end of June 2013, OFID’s total
Following this Summit, in January approved commitments stood at US$
1976, OPEC’s Member Countries 15.7 billion (of which US$ 10.1 billion
decided to establish the OPEC Special has been disbursed).
Fund. This later became known as
the OPEC Fund for International For more information, visit
development (OFID). www.ofid.org or write to: OFID,
Parkring 8, 1010 Vienna, Austria.
 Glossary of Terms

API gravity — Developed by the American Petroleum Christmas tree — In the oil and gas industry, a Christmas
Institute (API), the API gravity scale measures how heavy tree is an assembly of valves, dials and other fittings that help
or light petroleum liquids are—its relative density—when control the level of oil, gas and/or water at an oil or gas well. It
compared to water. Although mathematically, API gravity has the very rough appearance of a green Christmas tree with
has no units, it is nevertheless referred to as being measured red decorations.
in “degrees”. When the API gravity is greater than 31, the
petroleum is considered lighter than water; when it is less than Coke / coking — Coke is the product of a refining process
31, it is heavier than water. known as ‘coking’ that uses heat and pressure to decompose (or
‘coke‘) heavy crude oil (or residual oil). It produces a mix of
Benchmark — In general, a benchmark can be anything lighter oils that can then be blended or processed into other
that serves as a point of reference or standard against which products. Petroleum ‘coke’ can even be used as a fuel or as an
other things can be compared, measured or evaluated. In the input in other industrial processes.
oil industry, benchmarks are used to establish the appropriate
price of crude oil and are needed due to the existence of so Cracking — This is a refinery process where heavier,
many different varieties and grades of crude. By referring to more complex forms of hydrocarbons are broken down (or
64 a specific crude oil as a benchmark, traders can determine ‘cracked‘) into lighter and simpler forms by breaking the bonds
the price and value of other kinds of crude. The most widely between carbon molecules. Through this process, higher value
accepted benchmarks in the industry are Brent, Dubai, West hydrocarbon products are produced. Cracking can be done
Texas Intermediate (WTI) and the OPEC Reference Basket by applying heat (thermal cracking), through the application
(ORB) of Member Country crudes. Brent is used to price most of a chemical catalyst (catalytic cracking) or with catalysts and
of the world’s crudes; Dubai is used to price regional crudes hydrogen (hydro-cracking).
from the Gulf; WTI is usually used to price oil in the US.
Crude oil — Crude oil is a mixture of hydrocarbons that
Bitumen — Bitumen is a black, viscous sticky organic liquid exist in liquid form in natural underground reservoirs and
composed primarily of condensed chemical compounds. Often which remain liquid at atmospheric pressure after passing
referred to as ‘asphalt’ or ‘asphalt cement’, bitumen is usually a through surface separating facilities. Substances reported as
by-product or residue that is left after the fractional distillation crude oil include: liquids technically defined as crude oil; small
of crude oil and is the one with the highest boiling point. amounts of hydrocarbons that exist in a gaseous form in natural
Most bitumen contain sulphur and heavy metals such as lead, underground reservoirs but which are liquid at atmospheric
chromium, mercury, nickel and vanadium, as well as other toxic pressure after being recovered from gas.
elements.
Distillate yields — In the refining process, when crude
Booster station — This is a specialized station where oil is compressed and heated, it produces (or yields) different
crude oil received from one main pipeline is pressurized so substances (distillates) at successively high temperature levels.
that it can then be sent to the next destination or terminal for
further transportation or refining. Fractions — This refers simply to the different products
that can be separated or refined from crude oil.
Catalyst — A catalyst is any chemical substance that
accelerates the rate of a reaction without being used up itself in Geoscientist — Geoscientists are experts who look at
the process. In the oil refining processes, chemical catalysts speed and study the physical aspects of the Earth in order to better
up cracking. Catalysts include bauxite, zeolite and silica-alumina. understand the composition of its rocks, underground water
and earth. They are often employed in the search for oil, as well Permeability — This is the condition of allowing
as other natural resources. substances like water to flow into or out of an object. When a
rock is porous and allows oil to accumulate in it or flow out of it
Grades — Grades refers to a way of classifying the many easily, it is considered highly permeable.
varieties of crude oil that exist around the world. The
commonly accepted grades are: Seismic — Anything that has to do with vibrations or tremors
in an object or a body. This is most often used when describing
• Light / Heavy — These terms refer to different grades vibrations in the Earth, which can be naturally occurring (as
of crude oil. Heavy crude has a low API Gravity and a high in earthquakes). In oil exploration, seismic technology sends
proportion of heavy hydrocarbon fractions; light crude has high sound waves that cause underground vibrations, bounce back
API Gravity but a low proportion of light hydrocarbon fractions. to the measuring tools and are then measured and analyzed for
Both heavy and light crudes can also be classified as sour or sweet. signs of oil deposits.

• Sour / Sweet — These are terms used to denote a Sovereign nations — A country or nation that has
given crude oil’s sulphur content. Crude oil with a high sulphur complete political authority over its own decisions and actions
content (0.5% by weight and above) is considered sour; crude is considered sovereign. 65
with a low sulphur content (less than 0.5%) is considered sweet.
Either kind of crude can also be further classified as heavy or Stakeholders — This refers to any number of individuals
light. or groups that have an interest (or a ‘stake’) in some event or
process. It is a term that is often used to refer simply to those
Hydrocarbons — Any organic compound that is made up who stand to benefit or lose from the pursuit of a particular
of only hydrogen and carbon atoms is considered a hydrocarbon. policy or action.
Crude oil is a kind of liquid hydrocarbon.
Upstream / downstream — These are the two major
Intergovernmental organization — An inter­ sectors of the oil industry. The upstream generally refers to
governmental organization is an organization set up by and the exploration and production aspects of the business, and
composed of several governments from any region of the world pertains to all the activities and equipment located in both
who share a common interest. They work collectively and the production train and above the surface by the wellhead.
collaboratively to achieve their common objective and to carry The downstream, in turn, denotes the commercialization
out projects and plans that benefit the organization. of petroleum products, referring to operations after the
production phase — that is, oil refining and retailing, and the
Non-OPEC oil producers – These are countries that distribution of refined products.
produce and export oil but which are not members of OPEC.
Sources: Barron’s Dictionary of Finance & Investment Terms, CFTC
Non-renewable energy — Energy sources which exist Glossary, Energy Information Administration, IMF Terminology
in nature in finite quantities are considered non-renewable
sources of energy. These include coal, natural gas, nuclear Database, Merriam-Webster Dictionary; NYMEX’s Glossary of
energy and petroleum. Renewable energies, on the other hand, Terms, OPEC, Oxford English Dictionary, Schlumberger’s Oilfield
are those energies that are continuously available, such as wind Glossary, The Street, The United Nations.
and solar energies.
 Bibliography & Resources

“Excerpts for Rock Talk.” Vol. 7, No. 2. Geotech. OPEC. World Oil Outlook, 2010. Vienna:
http://www.geotech.org/survey/geotech/Oil.pdf. The OPEC Secretariat, 2010.

Energy Information Administration. International Energy OPEC. OPEC Bulletin. September 2005.
Outlook, 2010. Washington, DC: US Department of Energy,
2010. OPEC. OPEC Bulletin. September 2010.

“Energy Kids.” US Energy Information Administration. OPEC. http://www.opec.org.

http://www.eia.doe.gov/kids/index.cfm. Parra, Francisco. Oil Politics: A Modern History of Petroleum.
“Energy … What Are We Talking About?” All About Energy. London: I.B. Tauris, 2004.
http://www.planete-energies.com/content/energies/ Perez Alfonzo, Juan Pablo. The Petroleum Pentagon. Trans. of El
definition.html. Pentágono Petrolero (1967).Vienna, Austria: Organization of
Ghanem, Shukri M. OPEC: The Rise and Fall of an Exclusive Club. the Petroleum Exporting Countries, 2003.
London: Routledge, 1986. Qabazard, Hasan M. Petroleum. Presentation at the Kuwait
Griffin, James A. and David J. Teece. OPEC Behavior and World Institute for Scientific Research, Petroleum Research and
Oil Prices. London: Unwin Hyman, 1982. Studies Centre and interview at the OPEC Secretariat, 2010.
66
“Heavy Oil Science Centre.” Lloydminster. Seymour, Ian. OPEC: Instrument of Change. London:
http://www.lloydminsterheavyoil.com/whatislaunch.htm. Macmillan Press Ltd., 1980.

“How Does an Oil Refinery Work?” Chevron in Canada. Smil, Vaclav. Energy: A Beginner’s Guide. Oxford:
http://www.chevron.ca/operations/refining/separation.asp. One World, 2006.

“IEA Topic Page.” International Energy Agency. Smil, Vaclav. Energy at the Crossroads: Global Perspectives and
http://www.iea.org/subjectqueries/index.asp. Uncertainties. Cambridge, Massachusetts: The MIT Press,
2005.
“Key Issues.” World Petroleum Council.
http://www.world-petroleum.org. Terzian, Pierre. OPEC, the Inside Story. Trans. Michael Pallis.
La increíble historia de la OPEP. London: Zed Books, 1985.
Mabro, Robert. “OPEC and the Price of Oil.” The Energy
Journal, 1992. “What is Crude Oil?” Chevron.
http://www.chevron.com/products/sitelets/pascagoula/
Mommer, Bernard. The New Governance of Venezuelan Oil. refiningprocess/whatiscrude.aspx.
Oxford: Oxford Institute for Energy Studies, 1998.
“What is Crude Oil and What is It Used For?”
“Oil.” Kids Net Encyclopedia. College of Earth, Ocean and Environment at the University
http://encyclopedia.kids.net.au. of Delaware.
http://www.ocean.udel.edu/oilspill/crudeoil.html.
Oil and Natural Gas. London: DK Adult, 2007.
Yeomans, Matthew. Oil: Anatomy of an Industry. New York:
“Oil Refineries.” Moorland School. The New Press, 2004.
http://www.moorlandschool.co.uk/earth/oilrefinery.htm.
Yergin, Daniel. The Prize. New York : Simon & Schuster, 1991.
OPEC. Annual Statistical Bulletin, 2009. Vienna: The OPEC
Secretariat, 2009.

OPEC World Oil Outlook, 2009. Vienna:

The OPEC Secretariat, 2009.
Contributors
Director, Research Division
Dr. Hasan M Qabazard

Head, Public Relations & Information Department

Ulunma Angela Agoawike

Public Relations Coordinator

Zoreli Figueroa

Editor
Mario Fantini

Design and Production Coordinator

Alaa Al-Saigh

Additional input by
Dr. Fuad Siala, Dr. Taher Najah, Dr. Pantelis
Christodoulides, Dr. Mohammad Taeb and
Elio Rodriguez

Additional support was provided by

Ghada Sahab, Diana Golpashin, Diana Khoury,
Andrea Birnbach, Sheila Kriz, Beatrix Mayer-Karolyi
and Yi Wen Huang
Organization of the
Petroleum Exporting Countries
Helferstorferstrasse 17,
A–1010, Austria
Second edition
www.opec.org ISBN 978-3-200-02193-8