Extending the Cooperation:
OPEC and the Non-OPEC Producers
The previous four chapters have dealt with the oil-producer cooperation that has taken place inside the organization—OPEC. It is time to turn the focus beyond the borders of this organization. In 1998, 58 percent of world oil production took place outside OPEC. As described in section 2.5, OPEC lost control over prices in the 1980s not only because of reduced oil demand, but also due to increased oil supplies from outside the organization.
OPEC has lost another 7-8 mbd of marketable oil in favor of these new and numerous producers, who have benefited from the Organization's non-economic pricing system which enabled them to invest directly or through the oil companies in new oilfields.... OPEC helped make it easy for non-OPEC countries to invest profitably in oil. (Al-Chalabi 1989:42)
The loss of market share to non-OPEC producers became a pressing problem for OPEC in the beginning of the 1980s. This chapter will describe some of the problems of extending the oil-producer cooperation beyond the organizational borders of OPEC. Although many structural constraints and national interests are the same among producers inside and outside OPEC, the non-OPEC producers as a group are even more heterogeneous than the OPEC members. Likewise, their policies toward oil-producer cooperation vary wildly. A fuller description of a particular bargaining relationship between an OPEC and a non-OPEC producer is presented in section 9.2. Chapter 9 also provides a more thorough explanation of a non-OPEC producer's (Norway's) behavior. Chapter 9 can thus be seen as a case study of the more general issues discussed in both this and the previous chapter.