Opec

Shukri Ghanem

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781317848592
• Edition: 1
• Topic: Social Sciences
• Subtopic: Anthropology
• Index: Social Sciences

First published in 1986. This book looks at the World Oil industry before OPEC, the emergence of international oil companies, pricing, and the development of OPEC, the Organisation and Petroleum-Exporting Countries.

Part Two

The Organisation and Petroleum-Exporting Countries

Chapter Two

The Birth of the Organisation

Political motives as well as economic ones were behind the invitation initiated by General Qassem. The political motives were mainly the differences between General Qassem of Iraq and President Nasser of Egypt. While Nasser wanted an organisation dealing with petroleum matters within the Arab League which he dominated, Qassem wanted to take anything related to oil away from the Arab League. He did not attend the first Arab Petroleum Congress and wanted to frustrate the second Congress. He used the price cuts of August 1960 as an excuse to invite representatives from Kuwait, Saudi Arabia, Iran, Qatar and Venezuela. The official reason for the invitation was to discuss ‘the attitude of the host countries towards the latest rounds of cuts in posted price …’ (Economist 1960: p.10). General Qassem proposed that this meeting convene in Iraq, and he limited it to the Arab oil-producing countries, Iran and Venezuela. He also wanted it to convene before the Second Arab Petroleum Congress so as to confront the Congress with an already established organisation of the exporting countries, thus making the deliberations of the Arab Petroleum Congress charged with the drafting of the charter of the proposed organisation redundant.

General Qassem invited the three Arab oil-producing countries namely, Saudi Arabia, Kuwait and Qatar as well as the two important non-Arab oil-exporting countries Iran and Venezuela. He had a number of economic motives as well as political grievances in mind. To begin with, he wanted to alter the 50-50 profit-sharing principle to a ‘20 per cent participation in the existing IPC operation …’ (Economist 1961: p. 1278). However, the IPC did not agree, and negotiations were suspended. Qassem wanted support from other oil-producing countries so as not to face the same difficulties which Dr Mossadeq faced a decade before when he nationalised Iranian oil.

The price cuts, though important, were not the sole concern of General Qassem, who wanted to curb the influence of President Nasser over oil matters. This was growing after the first Arab Petroleum Congress and was expected to grow more if the Second Congress agreed to establish an organisation co-ordinating Arab oil policies within the Arab League. It may be worth noting that Mr Mohammed Sulleman who headed the oil section in the Arab League and organised the First Petroleum Congress was an Iraqi national. He played an important role in postponing the Second Arab Congress until after the Baghdad conference took place. Mr Sulleman left the Arab League to become General Qassem’s minister of petroleum after the Second Arab Petroleum Congress. General Qassem’s desire to participate in the oil companies operating in Iraq and his desire to curtail Nasser’s influence in oil matters, made him utilise the opportunity of the August price cuts and call an urgent meeting in Baghdad.

Saudi Arabia accepted the invitation to attend, for Sheikh Abdullah Tariki, the Saudi Arabian oil minister who was director general of petroleum affairs and the first Saudi Arabian minister of petroleum, wanted to be the leader of Arab oil elite. In order to become a star in Arab oil circles, he called for the nationalisation of Arab oil and co-operated with Perez Alfonzo, the Venezuelan Minister of Mines and Hydrocarbons. Their co-operation, according to Perez Alfonzo, went back to September 1951, when the national petroleum convention was held in Caracas and Sheikh Tariki visited Venezuela ‘endeavouring to make contacts that would create permanent ties …’ (Alfonzo 1966: p.12).

Tariki held a number of meetings before and during the First Arab Petroleum Congress in Cairo, calling for co-ordination of the petroleum policies of the oil-exporting countries. When the invitation came to Saudi Arabia, Tariki accepted it because it would ‘be a distinct success for Sheikh Abdullah al-Tariki … [and] his long-cherished hopes of uniting the oil producing countries of the Middle East behind some common policy towards the international oil companies …’ (Economist 1960: p. 1017). In doing so Tariki was acting on his own, not within a concerted policy of the government of Saudi Arabia. His views inside Saudi Arabia were considered radical: consequently, he was fired from his job and had to spend almost two decades in exile.

Kuwait accepted the invitation because it saw in it indirect recognition of its sovereignty from Iraq, which previously had claimed that Kuwait was an integral part of Iraq. By attending such a conference, the ‘Al-Sabbah family hoped to gain international recognition for their Sheikhdom, then still under British rule in foreign affairs’ (Mikdashi 1972: p.33). Venezuela welcomed the idea because it was an opportunity to implement the idea of co-ordination of its oil policies with the Middle Eastern countries which had become competitors even in the American oil market. It was also a chance to implement the ideas of Perez Alfonzo, who was proposing an international oil agreement. By attending the Baghdad conference, Venezuela and Iran were raised from the status of observers in the Arab Petroleum Congress to full membership with active participation.

Iran, on its part, welcomed the invitation, to prove that the Shah was dissatisfied because of the oil companies’ action in reducing the price without consulting him. ‘Even if the ac...

Table of contents

• Cover Page
• Half Title page
• Title Page
• Dedication
• Copyright Page
• Contents
• Acknowledgements
• Dedication
• I The Introduction
• II The Organisation and Petroleum-Exporting Countries
• III The First Decade 1960 – 1970
• IV The Second Decade 1970–1980
• V Beyond the Second Decade
• Appendix I The Statute of the Organisation of Petroleum Exporting Countries, July 1980
• Appendix II The Declaratory Statement of Petroleum Policy in Member Countries
• Appendix III The Caracas Resolution
• Appendix IV Solemn Declaration: Conference of the Sovereigns and Heads of State of the OPEC Member Countries
• Index