The Organisation of Arab Petroleum Exporting Countries (OAPEC) finished its year-end Ministerial Council meeting in Cairo on December 22. It approved the budget and gave instructions for many administrative measures including the extension of term of service of the secretary-general in addition to reviewing oil market development and the Secretariat’s activities.
OAPEC is a regional inter-governmental organisation established by an agreement signed in Beirut on January 9, 1968 by Kuwait, Libya and Saudi Arabia. By 1982 it was joined by a further eight Arab countries and the secretariat has been hosted by Kuwait ever since.
While the organisation is “concerned with the development and prosperity of the world petroleum industry by fostering close and fruitful cooperation among its members”, it does not decide on issues of price and the level of production as this function is left to Opec.
The aim of economic integration among Arab countries was promoted by OAPEC in the most practical way. Even in the formative years, it promoted the establishment of joint ventures among members in a number of important functions.
In 1973, the Arab Maritime Petroleum Transport Company was established to participate in all activities related to marine transportation of petroleum and its products. Eight member countries share in the $400 million (Dh14.68 billion) capital and the company owns LPG carriers and tankers in addition to chartering others.
In 1974 came the Arab Shipbuilding and Repair Yard Company (ASRY) in Bahrain with seven countries as shareholders with a capital of $100 million, which was eventually increased to $340 million in 1977. ASRY was to be engaged in ship building and repairs at its dry dock that was completed in 1977 and later added two floating docks. The company also ventured into all kinds of steel fabrication of boilers and pressure vessels.
In 1977, the Arab Petroleum Services Company (APSCO) was established in Tripoli, Libya and this time with all OAPEC members as shareholders to perform petroleum services through three subsidiaries for drilling and workover, well logging and geophysical exploration.
The Arab Petroleum Training Institute (APTI) was established in Baghdad in 1978, “to prepare instructors qualified to provide training in the many technical aspects of the oil industry”. APTI was also charged with doing some studies and research.
Notwithstanding its initial success, APTI was adversely affected by the war on Iraq in 1991, which prevented it discharging its mission and many countries were either reluctant to participate or refused outright. The ministerial council of OAPEC “decided to entrust Iraq with the administration and sponsoring of the Institute for a renewable period of two years commencing January 1995”.
Unfortunately, this has been the case to this day. Those who know the Institute can attest to the lost opportunity of creating connectivity between Arab specialists in the oil industry through a wonderful building full of facilities which could have become a specialised petroleum university in due time.
The jewel in the crown is the Arab Petroleum Investments Corporation (Apicorp), which was established in Al Khobar, Saudi Arabia, with all OAPEC members as shareholders. APICORP is the investment bank of the organisation with an initial authorised capital of $1.2 billion to “assist in the financing of projects related to the petroleum industry”.
It has participated in twelve joint projects in Bahrain, Egypt, Iraq, Jordan, Libya, Saudi Arabia and Tunisia. It is also a shareholder in a number of companies as well as providing project financing for others.
In 1980, Apicorp promoted a project to produce chemicals for detergents. It favoured Iraq with the project due to generous discounts it received on its feedstock and the Arab Company for Detergent Chemicals was established in 1981 as a joint venture between Iraq, Saudi Arabia, Kuwait and other Arab companies with an authorised capital of 72 million Iraqi dinars and headquarters in Baghdad.
The company successfully produced linear alkyl benzene in its complex in Baiji for Iraq’s domestic consumption and exports. Its second project to produce phosphate chemicals failed to go ahead because of the embargo on Iraq. The ending of this story is sad as the Baiji complex was severely damaged by the occupation of Daesh and the subsequent battle to dislodge them.
The fate of the plant and the company is now in limbo.
There were other failures too as the Arab Engineering Company (AREC) which was founded in the early 1980s folded after only a few years in operation.
It is unfortunate that the momentum of 30 years ago is no longer there. The success of the joint ventures should have prompted many others to avoid undue competition among members and to gather the added value of scale.
