STATISTICAL STUDY OF CRUDE OIL PRODUCTION BY OPEC MEMBER COUNTRIES (2001-2010)
This study analyzes crude oil production by OPEC member countries between 2001 and 2010, using the method of simple regression analysis, the work is aimed at predicting the future situation in terms of crude oil production by OPEC member countries. The data for this study was collected from the internet (www.indexmund.com/energy) Minitab and Microsoft excel are used to run the complete regression analysis of the data. After the analysis, a prediction was made for about three years. It was observed that there is year to year increase in production of crude oil by OPEC member countries. A correlation analysis was also employed to know the strength of relationship between the crude oil production (quantity) and time (yearly) which indicates a very strong positive relationship between the crude oil production and time
TABLE OF CONTENT
Title page i
Approval page ii
Table of contents vi
1.1 Statement of problem 5
1.3 Research questions 7
1.4 Test of Hypothesis 7
1.5 The significance of the study 8
1.6 The scope of the study 9
1.7 Definition of terms 9
Literature review 10
Source of data 18
Method of analysis 18
Limitation of study 20
Validation of the data collected 20
Data Analysis and interpretation 22
Interpretation of result 22
5.0 Conclusion and recommendation 29
5.1 Conclusion 29
5.2 Recommendation 29
OPEC (Organization of Petroleum Exporting Countries) is an intergovernmental organization of twelve developing countries made up of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Lisbya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.
Venezuela and Iran were the first countries to move towards the establishment of OPEC in the 1960s by approaching Iraq, Kuwait and Saudi Arabia in 1949, suggesting that they exchange views and explore avenues for regular and closer communication among petroleum-producing nations. The founding members are Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. Later members include Algeria, Ecuador, Gabon, Indonesia, Libya, Qatar, Nigeria, and the United Arab Emirates.
OPEC was founded to unify and coordinate members’ petroleum policies. Original OPEC members include Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. Between 1960 and 1975, the organization expanded to include Qatar (1961), Indonesia (1962), Libya (1962), the United Arab Emirates (1967), Algeria (1969), and Nigeria (1971). Ecuador and Gabon were early members of OPEC, but Ecuador withdrew on December 31, 1992 because it was unwilling or unable to pay a $2 million (two million dollars) membership fee and felt that it needed to produce more oil than it was allowed to under the OPEC quota, although it rejoined in October 2007. Similar concerns prompted Gabon to suspend membership in January 1995. Angola joined on the first day of 2007.
OPEC has maintained its headquarters in Vienna (capital of Austria) since 1965, and hosts regular meetings among the oil ministers of its Member Countries. Indonesia withdrew in 2008 after it became a net importer of oil, but stated it would likely return if it became a net exporter again.
According to its statutes, one of the principal goals is the determination of the best means for safeguarding the organization’s interests, individually and collectively. It also pursues ways and means of ensuring the stabilization of prices in international oil markets with a view to eliminating harmful and unnecessary fluctuations; giving due regard at all times to the interests of the producing nations and to the necessity of securing a steady income to the producing countries; an efficient and regular supply of petroleum to consuming nations, and a fair return on their capital to those investing in the petroleum industry.
According to the Energy Information Administration, in 2008 roughly 43% of the world’s oil production was attributed OPEC member countries. Furthermore, OPEC member countries have
approximately 70% of the proven oil reserves in the world.
Furthermore, the International Energy Agency (IEA) and the Energy Information Administration (EIA) project an increase in global demand for oil over the next several decades which raise the question on whether this increased demand can be met by OPEC oil production.
By the early 1970s, in addition to the oil embargo, OPEC oil production was influenced by the change in the oil pricing system from multinational oil companies to OPEC with the halt on
authorizing new concessions by OPEC governments, movement towards equity participation in the existing concessions, and in some cases the nationalization of the oil industry. As a result by the late 1970s, multinational companies diversified their oil supply sources in the development of oil reserves outside of OPEC. In response to higher oil prices by the early 1980s, the discovery of oil reserves in non-OPEC countries in conjunction with advances in new technology brought forth an increase in the supply of oil to the international market resulting in downward pressure on oil prices with OPEC losing market share. With the infusion of non-OPEC oil producers and their prices more responsive to competitive market conditions, OPEC abandoned the administered oil pricing system by the mid-1980s instead moving to market-reference pricing based on the price quotes provided by oil price reporting agencies. However, the limited liquidity of the spot market gave way to the use of the futures market which provided greater liquidity and price transparency.