Chemical Controls Watch
OPEC
November 2010
Wealthier Nations Should Handle Environmental Safety
Issues, Says the Group
Executive Summary
Watch List
• Ecuador, a member nation of the Organization
of the Petroleum Exporting Countries (OPEC), is
working to implement the GHS rules regarding
transporting hazardous materials.
• In 2009, the nation revised its National Technical
Standard NTE INEN 2-266:2000 rules to include
graphic icons for packages and labels (UNECE,
2010). UNITAR noted in its 2009 report, Global
Partnership for GHS Capacity Building, that this
“standard was approved in November 2009 by
the Board of the Ecuadorian Institute of Standardization. The next step will be its publication
in the official register, in order to be enforceable
in the country” (UNITAR, 2009).
• Since 2006, OPEC member nation Nigeria has
been working towards creating a Hazardous Chemicals Management Bill. A draft was
reviewed by a number of stakeholders in early
2007, and the nation moved toward creating
a strategy for executing this bill and the GHS
nationally in 2008 (UNECE, 2010; UNITAR, 2009).
• When in 2010 the European Union (EU) announced
plans to implement new rules for oil platform
operators in European waters as a result of the
massive BP oil rig explosion in the Gulf of Mexico,
OPEC’s Secretary General Abdalla Salem El-Badri of
Libya asserted that there was no need for immediate action.
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The Organization of the Petroleum Exporting Countries (OPEC) was founded in September 1960 by
developing nations Iran, Iraq, Kuwait, the Kingdom
of Saudi Arabia, and Venezuela. Later, membership
grew to include Algeria, Angola, Ecuador, Libya, Nigeria, Qatar, and the United Arab Emirates.
OPEC’s mission is to represent and safeguard their
member nations’ national interests and to maintain a
stable global oil market. Using the economic principle
of supply and demand, OPEC establishes oil production
quotas in order to affect global oil prices. A finite oil
supply means that importers are not in a good position
to protest prices since OPEC could then sell their product to other buyers. This situation gives rise to OPEC’s
label as a cartel, though some experts argue that costs
outside of OPEC’s control, including expenses related to
transportation and strategic oil reserves lessen OPEC’s
power (El-Badri, 2010; Lugar, 2010; OPEC, 2010).
As an organization, OPEC does not appear to participate in developing or implementing Registration,
Evaluation and Authorization of Chemicals (REACH)
or Globally Harmonized System of Classification and
Labeling of Chemicals (GHS) regulations (European
Commission on the Environment, 2010).
When in 2010 the EU announced plans to implement
new rules for oil platform operators in European
waters as a result of the massive BP oil rig explosion in the Gulf of Mexico, OPEC’s Secretary General
Abdalla Salem El-Badri of Libya asserted there was no
need for panic or immediate action. He called instead
for studies and also expressed the hope that the US
Chemical Controls Watch
Background
would lift its moratorium on offshore drilling in US
waters (“Oettinger’s call…,” 2010).
The Organization of the Petroleum Exporting Countries (OPEC) was founded in September 1960 in
Baghdad, Iraq by the nations of Iran, Iraq, Kuwait,
the Kingdom of Saudi Arabia, and Venezuela. Later,
membership grew to include Algeria, Angola,
Ecuador, Libya, Nigeria, Qatar, and the United Arab
Emirates.
OPEC member nation Ecuador plans to implement
the Globally Harmonized System of Classification and
Labeling of Chemicals (GHS) regarding transporting
hazardous materials. Toward this end, Ecuador is
engaged in the following activities:
• Collaborating with its neighbors in the Andean
Community (Bolivia, Columbia, Ecuador, and Peru)
in drafting rules using 2005 UN Model Regulations:
The European Agreement on the International
Carriage of Dangerous Goods by Road (ADR) and
the European Agreement concerning the International Carriage of Dangerous Goods by Rail (RID).
In the UN 2009 update regarding these international regulations, Ecuador was not yet listed as a
member nation (United Nations, 2009).
The inspiration to create OPEC occurred by 1959, when
multinational oil companies then called the Seven Sisters – BP, Chevron, Exxon, Gulf, Mobil, Shell, and Texaco
– unilaterally lowered the prices of the unrefined oil
they supplied. The Seven Sisters dominated the oil
industry in all its aspects, from exploration to final
product disbursements. They managed the amount
of oil that could be drilled and sold, and controlled
the price as well. They did not collaborate with the
governments of oil-producing nations in making their
decisions.
• In 2009, the nation revised its National Technical Standard NTE INEN 2-266:2000 rules
(Transport, storage and handling of hazardous
materials-Specifications) to include graphic icons
for packages and labels (UNECE, 2010). UNITAR
noted in its 2009 report, Global Partnership for
GHS Capacity Building, that this “standard was
approved in November 2009 by the Board of the
Ecuadorian Institute of Standardization. The next
step will be its publication in the official register,
in order to be enforceable in the country” (UNITAR,
2009).
OPEC’s mission is to represent and safeguard theirmembers’ national interests and to maintain a stable global
oil market. In its founding document, the OPEC Statute
of 1961, the group states that its primary focus is “the
coordination and unification of the petroleum policies
of Member Countries and the determination of the best
means for safeguarding their interests, individually and
collectively.” The Statute also notes that “Due regard
shall be given 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, economic and regular supply of petroleum to
consuming nations; and a fair return on their capital
to those investing in the petroleum industry.” Further, “The Organization shall devise ways and means
of ensuring the stabilization of prices in international
oil markets with a view to eliminating harmful and
unnecessary fluctuations” (OPEC, 1961).
Since 2006, OPEC member nation Nigeria has been
working toward creating a Hazardous Chemicals
Management Bill. A draft was reviewed by a number
of stakeholders in early 2007, and the nation moved
toward creating a strategy for executing this bill and
the GHS nationally in 2008. No further announcements have been made by the Nigerian government,
the United Nations Economic Commission for Europe
(UNECE) or the United Nations Institute for Training
and Research (UNITAR) (UNECE, 2010; UNITAR, 2009).
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OPEC
Using the economic principle of supply and demand,
OPEC establishes oil production quotas in order to
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Chemical Controls Watch
OPEC
regarding these international regulations,
Ecuador was not yet listed as a member nation
(United Nations, 2009).
affect global oil prices. A finite oil supply means that
importers are not in a good position to protest prices
since OPEC could then sell their product to other
buyers. This situation gives rise to OPEC’s label as a
cartel, though some experts argue that costs outside of OPEC’s control, including expenses related
to transportation and strategic oil reserves, lessen
OPEC’s power (El-Badri, 2010; Lugar, 2010; OPEC,
2010).
• In 2009, the nation revised its National Technical
Standard NTE INEN 2-266:2000 rules (Transport,
storage and handling of hazardous materialsSpecifications) to include graphic icons for
packages and labels (UNECE, 2010). UNITAR
noted in its 2009 report, Global Partnership for
GHS Capacity Building, that this “standard was
approved in November 2009 by the Board of
the Ecuadorian Institute of Standardization. The
next step will be its publication in the official
register, in order to be enforceable in the country” (UNITAR, 2009).
OPEC & Chemical Regulations
GHS Not Yet Enacted by OPEC
The Globally Harmonized System of Classification
and Labeling of Chemicals (GHS), developed by the
United Nations, classifies chemicals by the kinds of
hazards they pose to humans and the environment.
The GHS offers universal hazard communication
tools, such as labels and material safety data sheets
(MSDS), so that clear information regarding dangers
from chemicals can be communicated to protect
human and environmental health while these substances are handled, transported, and used (UNECE,
2010).
Nigeria: Overview of Chemical
Regulations Development
From 2005 to 2007, Nigeria took part in the UNITAR/
ILO Global GHS Capacity Building Programme. In the
early stages, infrastructure issues were discussed.
Nigeria’s Federal Ministry of the Environment oversees the GHS Implementation Committee, which
also includes representation by other government
agencies as well as industry, public interest organizations, and labor groups (UNECE, 2010).
OPEC has not adopted the GHS. Of the group’s 12
member nations only two - Ecuador and Nigeria have moved toward adopting the standards.
Since 2006 Nigeria has been working toward creating
a Hazardous Chemicals Management Bill. A draft was
reviewed by a number of stakeholders in early
2007, and the nation moved toward creating a
strategy for executing this bill and the GHS nationally in 2008. No further announcements have been
made by the Nigerian government, UNECE or
UNITAR (UNECE, 2010; UNITAR, 2009).
Ecuador: Overview of Chemical
Regulations Development
Ecuador is working to implement the GHS rules regarding transporting hazardous materials. Toward this end,
Ecuador is engaged in the following activities:
• Collaborating with its neighbors in the Andean
Community (Bolivia, Columbia, Ecuador, and
Peru) in drafting rules using 2005 UN Model
Regulations: The European Agreement on the
International Carriage of Dangerous Goods by
Road (ADR) and the European Agreement concerning the International Carriage of Dangerous
Goods by Rail (RID). In the UN 2009 update
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REACH & General Environmental Issues
The Registration, Evaluation and Authorization of
Chemicals (REACH) lays out the chemical safety rules
developed by the EU to protect human and environmental health through enhanced identification of
chemical characteristics. REACH, which is continually
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Chemical Controls Watch
OPEC
being updated with more chemicals, went into effect
in June, 2007 (European Commission on the Environment, 2010).
a more equitable tax scheme that covers energy from
all sources, depending on the source’s carbon content.
OPEC also points out that green taxes do not necessarily help to reduce global warming, since they are
sometimes used to subsidize coal production (OPEC,
2010).
As an organization, OPEC does not appear to participate either in developing or implementing REACH
regulations. Regarding regulations addressing
energy use and carbon consumption reduction,
OPEC is concerned that such rules add to uncertainties about how to forecast demand for oil.
Business Intelligence
The types of regulations with which OPEC concerns
itself deal with financial matters in the oil industry.
For example in 2008, OPEC requested stricter rules to
lessen the effect of speculative investment in the oil
sector, which cause volatility in unrefined oil prices.
These comments were made at an International
Monetary Fund gathering in Washington, DC. OPEC
pointed out that oil prices skyrocketed by 46 percent
in the first 6 months of 2008, then plummeted by
the end of the year. In response, OPEC was forced
to make its largest supply reductions in its history
(“OPEC bid…,” 2008; “AME Info, Abu Dhabi, United
Arab Emirates, energy, oil and gas briefs,” 2009).
OPEC claims a commitment to sustainable development, including protecting the environment. The
organization says it recognizes the importance of
developing renewable energy as part of the energy
mix, boosting efficient use of energy, and developing
more environmentally friendly fossil fuel technologies, especially carbon capture and storage (CCS). At
the same time, OPEC wishes to protect the interests of
its developing nation members, ensuring that these
nations are not made to pay more than their fair share
in any global warming prevention rules. OPEC also
argues that other fossil fuels, notably coal, are responsible for more carbon emissions than oil (Europa,
2009; OPEC, 2010).
A major focus of recent EU-OPEC meetings has been
the global financial crisis and its effect on OPEC and
EU member countries. Both sides wish to cooperate
to reestablish oil and overall market stability (Europa,
2009).
OPEC states that it is in favor of more rigorous oil
product quality benchmarks that will help lessen
greenhouse gas emissions. The group mentions limiting gasoline’s sulphur content, and points out that
several OPEC member nations have begun to use
better product quality rules. But the organization
notes that approximately $30 billion will be needed in
the next decade to expand these types of regulations
and develop less polluting oil products, and that the
world’s developed nations should take on this expense
since they have been the biggest polluters over the
years (OPEC, 2010).
OPEC declares that it is interested in collaborating
with other international groups to deal with major
global issues, both those that apply directly to the
oil sector and those that address related topics such
as environmental protection and environmental
sustainability (El-Badri, 2010). But when in 2010 the
EU announced plans to implement new rules for oil
platform operators in European waters as a result of
the massive BP oil rig explosion in the Gulf of Mexico,
OPEC’s Secretary General Abdalla Salem El-Badri of
Libya asserted there was no need for immediate
action. He called instead for exploratory studies and
also expressed the hope that the US would lift is
moratorium on offshore drilling in US waters (“Oettinger’s call…,” 2010).
Also, OPEC sees the use of “green” taxes in wealthy
nations as unfair to oil products, since they are often
applied only to oil products and are responsible for an
estimated 70 percent of the retail price of commodities such as gasoline. OPEC would prefer what it calls
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The EU’s new rules would include compensation
guidelines in the case of an oil spill from a drilling
rig. The EU also called for all oil exporting companies
that wish to operate drilling platforms to present evidence of a strong enough credit rating and enough
financial reserves to cover all damages in case of an
accident. In addition, the EU may require comprehensive liability insurance, possibly modeled after
monetary reserves that nuclear power plants must
set aside for potential incidents. Those policies allow
for tax waivers that the EU would provide to oil
exporters.
ILO: International Labor Organization
MSDS: material safety data sheets
OPEC: Organization of Petroleum Exporting Countries
REACH: Registration, Evaluation and Authorization
of Chemicals
RID: European Agreement concerning the International Carriage of Dangerous Goods by Rail
UNECE: United Nations
UNITAR: United Nations Institute for Training
and Research
In addition, the EU would seek new rules regarding offshore drilling. These would take the form of
monitoring mechanisms to prevent accidents. It was
pointed out by EU officials that the tragic accident in
the Gulf of Mexico raises grave and urgent questions
about the safety of offshore drilling and could limit
the EU’s access to needed oil resources.
References
AME Info, Abu Dhabi, United Arab Emirates,
energy, oil and gas briefs. (2009, January 28).
AME Info (AE). Retrieved November 8, 2010,
from EBSCO Online Database Newspaper Source
Plus. http://search.ebscohost.com/login.aspx?direc
t=true&db=n5h&AN=2W62W63117274790&site
=ehost-live
El-Badri, A.S. (2010, October 20). The relationship
between OPEC and other international organizations: Speech by OPEC Secretary General, HE
Abdalla S. El-Badri, to the International Energy
Symposium, on the occasion of OPEC’s 50th Anniversary - Riyadh, Kingdom of Saudi Arabia, 18-20
October 2010. Retrieved November 8, 2010, from
OPEC website. http://www.opec.org/opec_web/
en/1911.htm
Europa. (2009, June 23). EU-OPEC energy dialogue.
Retrieved November 8, 2010, from http://europa.
eu/rapid/pressReleasesAction.do?reference=MEM
O/09/288&format=HTML&aged=0&language=E
N&guiLanguage=en
European Commission on the Environment. (2010,
February 5). REACH. Retrieved November 8,
2010, from http://ec.europa.eu/environment/chemicals/reach/reach_intro.htm
Lugar, D. (2010). The Story of Oil: Top 10 questions
about the history, development, and problems of
oil. Retrieved November 8, 2010, from http://lugar.
senate.gov/energy/security/questions.cfm
Oettinger’s call for offshore drilling regulation draws lukewarm OPEC response. (2010,
July 4). New Europe. Retrieved November 8,
2010, from http://www.neurope.eu/articles/
Perhaps in response to OPEC’s stance, the EU commissioner intimated that the EU had not yet decided
what kinds of new regulations and other actions
would be needed, and that studies would be required
(“Oettinger’s call…,” 2010).
Links to Laws & Regulations
UN information and chart: Instruments through which
the GHS regulations related to the transport of dangerous goods are implemented http://www.unece.
org/trans/danger/publi/ghs/implementation_e.
html#transport
Acronyms
ADR: European Agreement on the International
Carriage of Dangerous Goods by Road
CCS: carbon capture and storage
EU: European Union
GHS: Globally Harmonized System of Classification
and Labeling of Chemicals
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Oettingers-call-for-offshore-drilling-regulationdraws-lukewarm-OPEC-response/101763.php
OPEC bid to balance oil market. (2008, October
13). Daily Telegraph, The (Sydney). Retrieved
November 8, 2010, from EBSCO Online Database Newspaper Source Plus. http://search.
ebscohost.com/login.aspx?direct=true&db=n5h&
AN=200810131029939309&site=ehost-live
OPEC. (2008). OPEC Statute. Retrieved November
8, 2010, from http://www.opec.org/opec_web/
static_files_project/media/downloads/publications/OS.pdf
OPEC. (2010). Member Countries. Retrieved
November 8, 2010, from http://www.opec.org/
opec_web/en/about_us/25.htm
OPEC. (2010). OPEC and the Environment.
Retrieved November 8, 2010, from http://www.
opec.org/opec_web/static_files_project/media/
downloads/press_room/OPEC_Environmental_position.pdf
UNECE. (2010). Globally Harmonized System of
Classification and Labelling of Chemicals (GHS):
Status of implementation. Retrieved November 8,
2010, from http://www.unece.org/trans/danger/
publi/ghs/implementation_e.html
UNITAR. (2009). Global Partnership for GHS
Capacity Building – Annual Report 2009.
Retrieved November 10, 2010, from http://
www2.unitar.org/cwm/publications/cw/ghs/
WSSD_GHS_AR2009_Final.pdf
United Nations. (2009). United Nations Report:
Economic Commission for Europe 2009.
Retrieved November 10, 2010, from http://
www.unece.org/publications/Annual%20
Reports/topics/annual_report_2009_with_
Bookmark_6May.pdf
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