Pressure from Producers
O ne of the first acts of the Organization of Petroleum Exporting Countries after it set up headquarters in Geneva in 1961 was to commission three Western economic intelligence agencies to look into the economic behaviour of the Western oil companies. These agencies reported, in the first place, in time for the OPEC meeting of spring 1962: their remits included studies of the rate of return on oil investment in production and other operations, of the pricing of crude oil and products, and of the financial arrangements between companies and host governments. These subjects, as patient readers of this book may appreciate, offer plenty of meat for study -- and argument. The arguments, from interested personalities in the host countries, had never been lacking: what was new in OPEC's better organized approach was the determination that from now on such arguments need never again lack any documentation and briefing that the best impartial consultancy available anywhere can make available.
The subjects of these first commissioned studies were wide enough to comprise very large areas of delicacy and probable controversy between the companies operating internationally and the OPEC governments. It is no secret that they were contemplated within the major companies, which were most directly concerned, with somewhat mixed feelings. But the precedent set by these studies may turn out to have been more important than their immediate content. It served notice on the international oil industry that within a very short time they would have to expect countries negotiating with them that have access to OPEC to be as well briefed as they are themselves.
These companies needed no notice that the petroleum exporting countries were dissatisfied with their existing financial arrangements with the industry, and bent on changing them. Since the late fifties, many ideas had been in the air about the revision of the basic financial