SENIOR CORRESPONDENT, Adeola Yusuf presents, with the aid of the website of the Organisation of Petroleum Exporting Countries (OPEC), the beneath-the-surface image of the group, which controls over 60 per cent of the world's energy resources.

What is OPEC?

The Organization of Petroleum Exporting Countries (OPEC) is a permanent intergovernmental organisation, currently consisting of 12 oil producing and exporting countries, spread across three continents: America, Asia and Africa. The members are Algeria, Angola, Ecuador, the Islamic Republic of Iran, Iraq, Kuwait, the Socialist People's Libyan Arab Jamahiriya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates & Venezuela.

These countries have a population of more than 399 million and for nearly all of them, oil is the main marketable commodity and foreign exchange earner. Thus, for these countries, oil is the vital key to development - economic, social and political. Their oil revenues are used not only to expand their economic and industrial base, but also to provide their people with jobs, education, health care and a decent standard of living.

The organisation's principal objectives are:

1. To co-ordinate and unify the petroleum policies of the member countries and to determine the best means for safeguarding their individual and collective interests;

2. To seek ways and means of ensuring the stabilisation of prices in international oil markets, with a view to eliminating harmful and unnecessary fluctuations; and,

3. To provide an efficient economic and regular supply of petroleum to consuming nations and a fair return on capital to those investing in the petroleum industry.

When was OPEC formed?

OPEC was formed at a meeting held on September 14, 1960 in Baghdad, Iraq, by five founder members: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. OPEC was registered with the United Nations Secretariat on November 6, 1962 (UN Resolution No 6363).

Which are OPEC's member countries?

The OPEC 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 organisation, if accepted by a majority of three-fourths of full members, including the concurring votes of all founder members".

The Statute further distinguishes between three categories of membership: Founder Member, Full Member and Associate Member.

Founder Members of the organisation are those countries which were represented at OPEC's first conference, held in Baghdad, Iraq, in September 1960, and which signed the original agreement establishing OPEC.

Full Members are the Founder Members, plus those countries whose applications for membership have been accepted by the conference.

Associate Members are the countries which do not qualify for full membership, but which are nevertheless admitted under such special conditions as may be prescribed by the conference.

OPEC Member Countries:

Country Joined OPEC Location

Algeria 1969 Africa

Angola 2007 Africa

Ecuador ** rejoined 2007 South America

IR Iran * 1960 Middle East

Iraq * 1960 Middle East

Kuwait * 1960 Middle East

SP Libyan AJ 1962 Africa

Nigeria 1971 Africa

Qatar 1961 Middle East

Saudi Arabia * 1960 Middle East

United Arab

Emirates 1967 Middle East

Venezuela* 1960 South America

* Founder Members

** Ecuador joined OPEC in 1973, suspended its membership from Dec. 1992-Oct. 2007

How does OPEC function?

Representatives of OPEC member countries (Heads of Delegation) meet at the OPEC conference to coordinate and unify their petroleum policies in order to promote stability and harmony in the oil market. They are supported in this by the OPEC Secretariat, directed by the Board of Governors and run by the Secretary General, and by various bodies including the Economic Commission and the Ministerial Monitoring Committee.

The Member Countries consider the current situation and forecasts of market fundamentals, such as economic growth rates and petroleum demand and supply scenarios. They then consider what, if any, changes they might make in their petroleum policies. For example, in previous conferences the Member Countries have decided variously to raise or lower their collective oil production in order to maintain stable prices and steady supplies to consumers in the short, medium and long term.

What is the OPEC conference?

The conference is the supreme authority of the organization, and consists of delegations normally headed by the Ministers of Oil, Mines and Energy of member countries.

The conference generally meets twice a year, in March and September, and in extraordinary sessions whenever required. It operates on the principle of unanimity and one member, one vote. It is responsible for the formulation of the general policy of the organization and the determination of the appropriate ways and means of its implementation.

The conference also decides upon applications for membership of the organization, and on reports and recommendations submitted by the Board of Governors on the affairs of the organization. It approves the appointment of governors from each Member Country and elects the Chairman of the Board.

Moreover, the conference directs the Board to submit reports or make recommendations on any matter of interest to the organization, and considers and decides upon the organization's budget, as submitted to it by the Board.

Who are the heads of Delegation?

The Heads of Delegation to OPEC are the official representatives of each Member Country to the OPEC conference. They are normally the Ministers of Oil, Mines and Energy of member countries.

What is the Board of Governors?

The Board of Governors, or BoG, can be compared to the board of directors of a commercial organisation. The BoG is composed of Governors nominated by member countries and confirmed by the conference for two years. The Board directs the management of the organization; implements resolutions of the conference; draws up the organization's annual budget and submits it to the conference for approval. It also decides upon any reports submitted by the Secretary General and submits reports and recommendations to the conference on the affairs of the organization.

The role of the Board of Governors is described in Article 20 of the OPEC Statute.

The Board of Governors shall:

1. Direct the management of the affairs of the organization and the implementation of the decisions of the conference;

2. Consider and decide upon any reports submitted by the Secretary General;

3. Submit reports and make recommendations to the conference on the affairs of the organization;

4. Draw up the budget of the organization for each calendar year and submit it to the conference for approval;

5. Nominate the auditor of the organization for a duration of one year;

6. Consider the Statement of Accounts and the Auditor's Report and submit them to the conference for approval;

7. Approve the appointment of Directors of Divisions and Heads of Departments, upon nomination by member countries, due consideration being given to the recommendations of the Secretary General;

8. Convene an Extraordinary Meeting of the conference; and

9. Prepare the agenda for the conference.

What is the Economic Commission?

The Economic Commission is a specialized body operating within the framework of the Secretariat, with a view to assisting the organization in promoting stability in the international oil market. The commission is composed of a Commission Board, National Representatives, and Commission staff. The Commission Board consists of the Secretary General, the National Representatives appointed by the member countries, and a Commission Co-ordinator (who is ex-officio, the Director of the Research Division).

What is the Ministerial Monitoring Sub-Committee?

The Ministerial Monitoring Sub-Committee (MMSC) was established in February 1993 by the 10th meeting of the Ministerial Monitoring Committee in order to monitor oil production and exports by member countries. The MMSC comprises three Heads of Delegation and the Secretary General.

What is the OPEC Secretariat?

The OPEC Secretariat functions as the Headquarters of OPEC. It is responsible for carrying out the executive functions of the organization, in accordance with the provisions of the Statute and under the direction of the Board of Governors.

The Secretariat consists of the Secretary General, who is the Chief Executive and includes the Research and Support Services Divisions, the Legal office, the Office of the Secretary General and the Internal Audit.

The Research Division, headed by a Director, comprises the departments of Data Services, Petroleum Studies and Energy Studies. The Support Services Division, also headed by a Director, includes the departments of PR & Information, Finance & Human Resources and Administration & IT Services.

The Secretariat was originally established in Geneva, Switzerland, in 1961. It moved to Vienna, Austria, in 1965. The 8th (Extraordinary) OPEC Conference approved the Host Agreement with the Austrian Government in April 1965, prior to the opening of the Secretariat in Vienna on September 1, 1965.

Why does OPEC set oil production quotas?

The OPEC Statute requires OPEC to pursue stability and harmony in the petroleum market for the benefit of both oil producers and consumers. To this end, OPEC Member Countries respond to market fundamentals and forecast developments by co-ordinating their petroleum policies. Production regulations are simply one possible response. If demand grows, or some oil producers are producing less oil, OPEC can increase its oil production in order to prevent a sudden rise in prices. OPEC might also reduce its oil production in response to market conditions.