The OPEC Countries - A New Survey.

Editor's Note: This new survey will study the diplomacy of the member countries of OPEC in the post-Sept. 11, 2001, global environment. In this new environment, none of the policy platforms that had been formulated in the cold war era - or even in the 1990s - can be taken for granted to continue in the future. Alliances based on mutual dependency between OPEC producers and non-OPEC buyers are no longer as firm as they used to be.

To be carried out on a country-by-country basis, this survey will review the way each member is responding to the challenges posed by the growing reluctance among public opinion in the West to become more dependent on oil from the organisation's producer states. It will examine how countries are responding to the technological, regulatory, environmental and other challenges that are emerging to make oil compete harder for its share of the energy mix. The survey will also carry a brief who's who of the key decision makers on oil policy in each of the countries.

Part 1 - Overview:

After the WTC/Pentagon attacks, previously strong bilateral relationships between the big Western consumers and OPEC producers - especially in the Middle East - are being re-examined. Therefore, also being re-examined are the underlying assumptions related to energy dependency that made such relationships endure. Equally important, the big oil consumers in the West are looking at the Islamic world, where most of the global oil resources are located, through a new set of lenses - coloured by the tint of radical Islam.

Think tanks and influential commentators in the US and in Europe are urging a range of measures to minimise their dependence on oil from the Middle East in particular. This is because such dependence is regarded as reducing their strategic autonomy, in light of the fact that supply disruption can be used as a pressure tactic - as it was in the 1970s by OPEC. Indeed, the basis of the Western view is that OPEC was created to function as a factor of control, which could threaten Western economies by squeezing energy lifelines.

(OPEC was founded by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela in September 1960 with the declared objective of "coordinating and unifying" the oil policies of the member countries. After the historic 1971 Tehran Conference, where the price setting initiative passed from the companies to the oil exporting governments, the buyer's market for oil was ended - eroding the broad-spectrum control which Western powers had in all aspects of the manufacturing cycle. After OPEC's success in substantially raising the oil price in 1973-74, coinciding with the Arab-Israeli war and aftermath, the organization which had previously been called a "tooth-less tiger" was criticised for price-fixing, restraint of trade, and other anti-free market practices).

A similar perspective has been revived by the WTC/Pentagon attacks. Calls for a reduction of dependence on Middle East oil are especially strident in the US. But it remains doubtful whether levels of dependence can be reduced. Most solutions, whether short- or long-term, depend to some degree on technological advancements (yet to be made), which will either improve fuel efficiency or provide alternative non-fossil fuel sources. And in any case, it does not seem likely that the sort of large-scale consumption pattern change that is required in order to have a real impact on dependency can be achieved in the foreseeable future (see following articles).

This is a reality that is acknowledged in the US, which consumes a quarter of the world's oil, but has only 3% of known reserves. According to the Energy Information Administration (EIA) of the US Energy Department, world oil demand will rise from 76m barrels/day in 2000 to 118.9m b/d by 2020. OPEC's share will rise from 40% in 2000 to 48.5% in 2020 to reach 58m b/d, when non-OPEC output will have risen to 61.1m b/d. It says oil production in the Caspian area should exceed 6.5m b/d by 2020. US oil imports will rise from 53% of its oil consumption in 2000 to 62%, hitting 16.6m b/d by 2020. Thus, the long-term prospects for OPEC appear to be bright.

What cannot be ruled out, however, is that technological advancement might prove to be a challenge to the dominance of oil faster than expected. Advances in various technological fields, are providing new insights on everything from exotic sources of energy, to increased fossil fuel efficiencies and reduced costs, as well as greater performances in traditional non-oil sources like solar and wind power among other things. It is also possible that countries may increasingly go for hybridising their energy bases with oil's share in the consumption mix declining over time.