ORGANIZATION OF

PETROLEUM EXPORTING
COUNTRIES

MESSAGE FROM THE COUNCIL

Dear Delegates,
Welcome to the Organization of Petroleum Exporting Countries for SISMUN
Conclave 2016! As members of OPEC, you will have to discuss pressing issues
involving the international community in the context of petroleum trading policies.
This year, we have some very pertinent issues on our agenda regarding the
states policies on nuclear and oil trades, which we expect to be addressed with
great detail and comprehension throughout the committee.

The odd effects of low oil prices in Latin American economies is erratic. In some
economies, as in Central America and the Caribbean, such effects have been
heavenly. Meanwhile, in some others, the drop has set damages of various
magnitudes: industrial projects were curbed; bureaucratic apparatuses showed
their weaknesses and poverty shot up. Hence, in our sessions, we would be
creating a Special Task Force for setting a framework to regulate oil pricing in the
Latin American Region.

The next thing on our agenda is establishing a framework to regulate global civil
nuclear trade. In the current global scenario of the world, nuclear power is
becoming commonplace among nations. However, there are no set regulations
binding countries to participate in ethical trading of nuclear power. Hence, to
address this issue, our committee will discuss the potential measures and
regulations that could be set in order to achieve an organized system of nuclear
power trading while keeping in mind the goals of the United Nations.

Delegates are expected to be thoroughly researched and aware of the current

scenario in light of the aforementioned issues. Please note that this background
guide is only a fundamental tool giving you a slightly comprehensive gist of the
agenda, and further research is absolutely imperative. We hope to see you in the
committee well prepared, and ready to change the world!

Regards,
Pranay Shah and Suravi Podder

ABOUT THE COMMITTEE

INTRODUCTION TO THE COUNCIL:

This year at SISMUN, we will be simulating OPEC. The Organization of

Petroleum Exporting Countries (abbr. OPEC) is a permanent intergovernmental
organization, which strives to facilitate and bind together the petroleum policies of
its Member States and guarantee the adjustment of oil markets to secure an
effective, monetary and standard supply of petroleum to purchasers, an enduring
income to producers and a reasonable profit for capital for those putting
resources into the petroleum business.

OPECs objective is to secure fair and stable prices for petroleum producers; an
efficient, economic and regular supply of petroleum to consuming nations; and a
fair return on capital to those investing in the industry. The initialization of OPEC
signified a revolution toward the members sovereignty over resources such as
oil and gas. OPEC choices have come to assume an imperative part in the
worldwide oil market.

The impact can be especially solid when wars or rebellions lead to developed
intrusions in supply. In the 1970s, limitations in oil production prompted an
aggravated ascent in oil costs and OPEC's income and wealth, with enduring and
sweeping outcomes for the worldwide economy. In the 1980s, OPEC began
setting long-term production goals for its member countries; and by and large
when OPECs targets were met, oil costs ameliorated drastically, along with the
national economies.

In relevance to our committee sessions, you will be needed to examine the

current policies of the Latin American nations, most of which are major oilexporters. After looking at those policies, you will be expected to form a subcommittee, or a Special Task Force to regulate the massively low oil prices in
Latin America.

HISTORY OF THE COMMITTEE:

OPEC was materialized at the Baghdad Conference on September 10-14, 960,

by its founding members Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. These
member nations were joined at a later time by nine other nations: Qatar, who
joined in 1961, and Indonesia, who joined in 1962, debarred their membership
from January 2009 - December 2015. Libya (1962); United Arab Emirates (1967);
Algeria (1969); Nigeria (1971); Ecuador (1973) suspended their memberships
from December 1992-October 2007; Angola (2007) and Gabon (19751994).
OPEC had its headquarters in Geneva, Switzerland, in the first five years of its
existence. This was moved to Vienna, Austria, on September 1, 1965.

During the time of OPECs formation, the oil industry was monopolized by seven
multinational companies (Anglo-Persian Oil Company UK, Gulf Oil USA,
Royal Dutch Shell Netherlands/UK, Standard Oil of California USA, Standard
Oil of New Jersey USA, Standard Oil Co of New York USA, Texaco USA).

During the 1960s, OPEC was formed during a surge of decolonization hitting the
global economy. Throughout the 1970s, oil prices rose exorbitantly in this time
period, and the policies between countries started to strengthen prominently.
During the 1980s, prices began to decrease rapidly, causing a massive decrease
in the demand of oil, which ultimately crashed the oil revenues for major
exporting nations. This was more prominent in the Middle East. In the 1990s,
OPEC ameliorated several state policies which reduced the impact of the
aforementioned oil crisis on the global economy. From then, international oil and
natural reserves policies have strengthened by a major margin through the
efforts of OPEC.

AGENDA 1: REGULATIONS ON BUYING AND SELLING OF NUCLEAR

POWER

This committee would be working on establishing binding universal regulations

for civil nuclear trading.

Key definitions: (Quoted as per the International Atomic Energy Agencys

definitions)

"Nuclear reactor" means any structure containing nuclear fuel in such an

arrangement that a self-sustaining chain process of nuclear fission can
occur therein without an additional source of neutrons.
"Nuclear Damage" means:
o loss of life or personal injury;
o loss of or damage to property;

o and each of the following to the extent determined by the law of the
competent court:
o economic loss arising from loss or damage if incurred by a person
entitled to claim in respect of such loss or damage;
o the costs of measures of reinstatement of impaired environment,
unless such impairment is insignificant, if such measures are
actually taken or to be taken, and insofar as not included in subparagraph (ii);
o loss of income deriving from an economic interest in any use or
enjoyment of the environment, incurred as a result of a significant
impairment of that environment;
o the costs of preventive measures, and further loss or damage
caused by such measures;
o any other economic loss, other than any caused by the impairment
of the environment, if permitted by the general law on civil liability of
the competent court,
o the loss or damage arises out of or results from ionizing radiation
emitted by any source of radiation inside a nuclear installation, or
emitted from nuclear fuel or radioactive products or waste in, or of
nuclear material coming from, originating in, or sent to, a nuclear
installation, whether so arising from the radioactive properties of
such matter, or from a combination of radioactive properties with
toxic, explosive or other hazardous properties of such matter.
"Preventive measures" means any reasonable measures taken by any
person after a nuclear incident has occurred to prevent or minimize
damage
"Nuclear incident" means any occurrence or series of occurrences having
the same origin which causes nuclear damage or, but only with respect to
preventive measures, creates a grave and imminent threat of causing such
damage.

The attack on Hiroshima, Japan, by the United States in 1945 using an atom
bomb started the nuclear era. Nuclear energy promptly turned into a military
weapon of an alarming size. For the physicists who took a shot at the nuclear
bomb, the prominence of nuclear energy was not exclusively military-oriented.
They imagined nuclear force as a clean, efficient, and rich source of energy that
would end society's reliance on fossil fuels. Toward the end of World War II,
pioneers required the discreet utilization of nuclear energy.

At in the first place, nuclear energy was appealing to a great extent in light of the
fact that the interest for power developed at a tenacious rate in the 1960s. The
high cost of oil amid the mid-1970s kept on making nuclear power financially
appealing and kept nuclear energy a piece of national energy source. By the
1990s, roughly 110 nuclear plants were operational in the United States,
supplying 20 percent of the country's power, just to provide a referential idea.

Now to briefly understand how a nuclear reactor works: A nuclear reactor

produces energy through a chain reaction that parts a uranium core, discharging
energy as heat. The reactors, which utilize plutonium as fuel, create more energy
than they use. Plutonium is not a quintessential component of the reactor;
however, it must be reused from the surplus uranium created from a chain
reaction. The radioactivity of plutonium is higher and its half-life is longer than
that of whatever other component, which instead highlighted these qualities, and
general society began worrying about the security of its improvement and use.

Open trust and transparency in the nuclear force industry experienced a major
fall in 1979 when a mishap happened at the Three Mile Island Atomic Station.
Nobody was harmed amid the misfortune although radioactive gasses got away
through the plant's ventilating framework. The mishap did uncover, on the other
hand, the nuclear force industry's absence of crisis readiness. Taking after the
episode, the NRC expanded security assessments, ventured up implementation,
required the retrofitting of frameworks to improve security, and created crisis
readiness rules. These regulations deferred the opening of new nuclear plants in
the mid-1980s.

In 1986, the security of nuclear power again was tested when a nuclear reactor
exploded at Chernobyl in the Ukraine. Radiation 50 times higher than that at
Three Mile Island obliterated individuals closest the reactor, and a swell of
radioactive aftermath spread to Western Europe, bringing on the deaths of more
than 30 individuals. People all over the world scrutinized the rationale of utilizing
such an unpredictable energy source.
However, over the 21st Century, nuclear energy became one of the main energy
sources in most countries: most notably USA, India, China and the European
countries. As of June 2012, 30 nations had employed 436 reactors for energy

production, and 65 reactors were under development in 14 nations. The

Government Accountability Production company (GAO) reported that the
worldwide fare market for business nuclear materials, reactors, real segments
and gear developed from $6.2 billion in 1994 to $16.1 billion in 2008. To
exemplify, the U.S. Branch of Commerce measured that the universal nuclear
business sector, including fuel and benefits, will grow to $500 billion to $740
billion throughout the following 10 years. For each of $1 billion fares, 5,000 to
10,000 employment opened up. The civil nuclear business sector is required to
stay vigorous in expanding economies, for example, China and India. Different
countries are investigating nuclear energy as an approach to give power for their
developing financial matters. Hence, universal regulation is an immediate
requirement.

Major organizations involved in domestic and international regulation of

nuclear power:
1. Convention on Supplementary Compensation for Nuclear Damage:
In 1997, the International Atomic Energy Agency proposed a global nuclear risk
awareness organization, the Convention on Supplementary Compensation for
Nuclear Damage (CSC). The Vienna Convention on Civil Liability for Nuclear
Damage is a 1963 treaty that administers issues of risk in instances of nuclear
incidents. It was made at Vienna on 21 May 1963 and went into power on 12
November 1977. The tradition has been revised by a 1997 convention. It is under
the administration of the International Atomic Energy Agency. As of February
2014, the tradition had been sanctioned by 40 states. Colombia, Israel, Morocco,
Spain, and the United Kingdom have ratified it, however Slovenia has criticized
the terms and withdrawn from it. The treaty states that the administrator of an
energy agency is obligated for damage as an aftereffect of an accident and sets
up a joint asset to repay the casualties. For the consent to end up compelling, no
less than five nations with a joined nuclear limit of 400,000 megawatts must
sanction it. As such, four nations with a consolidated limit of 308,000
megawattsArgentina, Morocco, Romania and the United Stateshave
sanctioned the CSC. This is one of the scarce organizations providing
regulations for civil nuclear trade. The CSC however does not bind all the
countries universally.

2. World Nuclear Organization:

The World Nuclear Association (WNA) is the universal association that advances
nuclear power and bolsters the organizations involved in the worldwide nuclear
industry. Its members come from all parts of the nuclear fuel cycle, including
uranium mining, uranium transformation, uranium advancement, nuclear fuel
production, plant production, transportation, and the manner of utilized nuclear
fuel and additionally nuclear age itself. Together, WNA individuals are in charge
of 70% of the world's nuclear influence and also most by far of world uranium,
and enhancement production. The WNA aims to facilitating their connection on
specialized, business and strategy matters and advancing more extensive open
comprehension of nuclear technology, along with bolstering domestic regulations
in nations regarding the production and trading of nuclear power.

3. Atomic Energy Regulatory Board:

This organization is an Indian regulatory board that oversees Indias international
and domestic nuclear policies. Its underlying primary functions are to develop
safety policies in nuclear, radiation and industrial safety areas. (The list of the
AERBs main functions provided below is quoted from the organizations website)

Develop Safety Codes, Guides and Standards for siting, design,

construction, commissioning, operation and decommissioning of different
types of nuclear and radiation facilities.
Grant consents for siting, construction, commissioning, operation and
decommissioning, after an appropriate safety review and assessment, for
establishment of nuclear and radiation facilities.
Ensure compliance of the regulatory requirements prescribed by AERB
during all stages of consenting through a system of review and
assessment, regulatory inspection and enforcement.
Prescribe the acceptance limits of radiation exposure to occupational
workers and members of the public and approve acceptable limits of
environmental releases of radioactive substances.
Review of the emergency preparedness plans for nuclear and radiation
facilities.
Safety reviews for transport of large radioactive sources, irradiated fuel
and fissile material.

Review of the training program, qualifications and licensing policies for

personnel of nuclear and radiation facilities and prescribe the syllabi for
training of personnel in safety aspects at all levels.
Take such steps as necessary to keep the public informed on major issues
of radiological safety significance.
Promote research and development efforts in the areas of safety.
Maintain liaison with statutory bodies in the country as well as abroad
regarding safety matters.

Major nuclear power traders and international trade policies:

1. USA and India:

The United States has the world's biggest business nuclear project, with 104
working reactors giving clean, safe, reliable power for one in five homes and
organizations. The business gloats world-class safety practices, nuclear
commodities and atomic administrations. Yet without strong trading approaches,
U.S. organizations experience issues operating in the worldwide nuclear
business sector. Indeed, even as the country's business nuclear production
network keeps on developing and adding occupations, the United States remains
a net importer of the atomic innovation it initially developed. While the USA has a
private cooperation in the production of non-military personnel nuclear power
than some other country, the administration is vigorously involved through safety
and natural regulations, R&D financing, and setting national energy objectives.

Starting in the late 1990s, US government strategy and financing choices have
empowered the advancement of more significant regular civil nuclear measures.
The dedication to nuclear power as a major aspect of the USA's long-term
energy procedure advanced, yet there had been a decrease in some nuclear
projects as an aftereffect of more prominent accentuation on alternative sources
of energy. The transfer and capacity of abnormal state atomic waste remains a
significantly uncertain issue. Throughout the most recent 30 years, popular belief
has consistently developed positively towards nuclear energy.

Government strategy is vital to any discourse of nuclear power in the USA. The
improvement of nuclear power started as an administration program in 1945 after
the Manhattan Project to build up the wartime nuclear bomb. The main nuclear
reactor to deliver power did as such at the National Reactor Testing Station
(NRTS) in Idaho in December 1951, as the US government reoriented significant
assets to the improvement of regular civil utilization of nuclear power. In the mid1950s, production of power from nuclear power was opened up to private
industry. The world's first large scale nuclear power plant at Shippingport,
Pennsylvania, was possessed by the US Atomic Energy Commission, yet
fabricated and worked by the Duquesne Light and Power Company on a site
claimed by the service organization close Pittsburgh. Today, all the business
reactors in the USA are claimed by privately owned businesses, and atomic
industry overall has far more prominent private cooperation, and less fixation,
than some other nation.

Yet, the administration stays more included in business nuclear power than in
some other industry in the USA. There are long, itemized necessities for the
development and operation of all reactors, and the change, advancement, fuel
production, mining and processing companies. The assessment process before
the development of new reactors can take 3-5 years. The US government,
through its own particular national examination labs and ventures at colleges and
industrial production companies, is the primary source of subsidizing for cutting
edge reactor and fuel cycle research. It likewise guarantees to give motivations
to building new plants through advance safeguards, in spite of the fact that
proprietors need to raise their own capital. US local energy strategy is
additionally firmly connected to remote, trade and barrier approach on such
matters as relieving environmental degradation and nuclear non-proliferation (of
weapons).

Nuclear energy for general use is rooted in India. Since building the two water
reactors at Tarapur in the 1960s, its common nuclear methodology has been
coordinated towards complete autonomy in the atomic fuel cycle, important in
light of the fact that it is exempt from the 1970 Nuclear Non-Proliferation Treaty
(NPT) because of it acquiring nuclear weaponry after 1970. India's essential
energy utilization dramatically augmented somewhere around 1990 and 2011 to
almost 25,000 PJ. India's reliance on imported energy assets and the conflicting
change of the energy sector has proven to be difficult in fulfilling rising
employment of nuclear power. India, reiterating the fact that it is a non-signatory
of the NPT, signed the 123 Agreement with the US in order to freely trade with
the country. Currently, India imports reactors and parts from USA, and under the
inspection of the IAEA, the aforementioned pact has proven to be efficient due to
the various regulations imposed, most of which include peer assessment of the
reactors in each country, and transparency in operational activities.

2. China

Being the third largest economy on the planet, China has a GDP of $9 trillion. Its
2013 rate of Gross Domestic Product development was 7.7 percent. Its
unemployment rate is around 4.1 percent. Its work power, the biggest in the
world, is partitioned generally just as among farming, industry and
administrations.

China creates more power than some other nation, marginally over the U.S.
production of 4 trillion kWh. It produces this power basically from coal, trailed by
oil, hydroelectric dams and regular gas. Nuclear energy accounts for around 2
percent of China's power. China is growing its energy supply from almost every
source offshore oil and gas investigation, gas pipelines from Russia,
renewables of various types, hydroelectric dams, and a gigantic expansion in
nuclear power.
In October 2015 President Xi proctored a deal with the UK to fabricate nuclear
reactors in England. The claim has the China General Nuclear Power
Corporation (CGN) getting a 33.5 percent stake in the Hinkley Point nuclear
power plant. The GBP 18 billion plant will be the costliest ever manufactured, and
will produce seven percent of the UK's power.

Argentina is additionally looking to China to supply methods and production for

development of an nuclear reactor to be fabricated by CGN, the same stateclaimed organization that will manufacture the Hinkley Point reactor. In
November the two nations consented to an arrangement that could bring about
$4.7 billion worth of gear fares toward the South American country, and the
development of its fourth reactor. More Chinese atomic innovation exchanges
are prone to take after. The nations trade plans to trade up to eight locally
planned nuclear reactors includes the Hualong-1, by 2020. China has an edge
over its rivals in the worldwide race to assemble new nuclear energy plants since
it has a greater number of forges than any other individual. Forges are utilized
to make weight vessels, the steel round and hollow vessels that encase the
reactor center. All in all, China is a major current up and coming participant in
nuclear trading, with its own policies that have various implications on the global
economy.

3. European Union
Nuclear energy plants create just about 30% of the power delivered in the EU.
There are 130 nuclear reactors in operation in 14 EU nations. Every EU nation
chooses alone whether to incorporate nuclear power in its energy blend or not.

The tranquil utilization of atomic energy inside of the EU is represented by the

1957 Euratom Treaty which built up the European Atomic Energy Community

(Euratom). While Euratom is a different lawful committee from the EU, and it is
administered by the EU's organizations.

The European Commission manages nuclear exercises from three points:

Nuclear security is about the sheltered operation of atomic establishments.
It is supplemented by radiation insurance and radioactive waste
administration.
Atomic shields are measures to guarantee that atomic materials are
utilized just for the reasons proclaimed by the clients.
Atomic security identifies with the physical assurance of atomic material
and establishments against purposeful pernicious acts.

The absence of a global administration overseeing common nuclear

responsibility inhibits exchange on the grounds that there is no system for setting
up who is in charge of harms that could come about because of a misfortune
while trading. The establishment of regulations common for all the active traders
in the nuclear power industry is strongly exigent as it could prevent many
disastrous misfortunes or misuses whilst trading, and potentially prevent another
World War that could be instigated by any such reasons.

Important treaties/agreements/documents that would help in researching:

123 Agreement
UN Non-Proliferation of Nuclear Weapons Treaty
1957 Euratom Treaty
The Vienna Convention on Civil Liability

Questions to consider while researching:

Would it be exigent all nations to sign the NPT in order to regulate nuclear
trades better and universally?
What would be the source of security measures provided via trading?
How would it be ensured that nations do not partake in malpractices while
trading nuclear power?
How would transparency in activities be ensured?

Would it be necessary to materialize a new committee for the fabrication of

universal regulations?

Bibliography:
http://www.world-nuclear.org/info/Safety-and-Security/NonProliferation/Safeguards-to-Prevent-Nuclear-Proliferation/
http://www.nei.org/CorporateSite/media/filefolder/Trade-Policy-Brief-June2012.pdf?ext=.pdf
http://www.world-nuclear.org/info/Country-Profiles/Others/European-Union/
https://www.iaea.org/publications/documents/treaties/conventionsupplementary-compensation-nuclear-damage
http://cenaa.org/analysis/indian-nuclear-policy-a-case-of-deliberatestrategic-ambiguity/
http://www.un.org/disarmament/WMD/Nuclear/NPT.shtml
http://www.nei.org/News-Media/News/News-Archives/india-turns-tothorium-as-future-reactor-fuel
http://www.cfr.org/india/us-india-nuclear-deal/p9663
http://oilprice.com/Alternative-Energy/Nuclear-Power/Chinas-1-TrillionNuclear-Plan.html
http://www.isisonline.org/publications/southasia/India_IAEA_safeguards.pdf
http://news.bbc.co.uk/1/hi/world/south_asia/6919552.stm
http://www.america.gov/st/washfileenglish/2006/November/20061117171748idybeekcm0.2382471.html
http://www.un.org/disarmament/WMD/Nuclear/NPTtext.shtml

AGENDA 2: Establishing a Special Task Force for regulating oil prices in

Latin America

Latin American oil production is dominated by Brazil, Mexico and Venezuela,

nations that were in charge of around 75% of the area's aggregate yield in 2014.
These nations are additionally giants on the universal stage, positioning as the
world's ninth, tenth and twelfth largest oil producers, individually. Colombia
likewise makes a decent appearance on the global rankings, coming in at
nineteenth. However, over the past year, exporters have been facing major
issues as the oil prices have reduced dramatically. Moreover, as they account for
a major part of the nations GDP, they have international implications as well. In
the committee, you would be making a Special Task Force to address the issue
of depleting oil prices in the Latin American region. For that, you need to know
the basic outline of the current situation in the main traders of oil in Latin
America. To start with, one of the main reasons of the crisis in Latin America is
the devaluation of the Chinese currency Yuan, and as China is one of the major
customers of the Latin American oil traders, the price devaluation has affected a
majority of these exporters. Currently, China relies on imports for half of its oil
consumption, totaling 7.6 million barrels a day. Estimates from the International
Energy Agency suggest that this figure could rise to 75 percent of consumption
by 2030. China looks to Latin Americaespecially Venezuela and Brazilto
supplement its supplies from the Middle East, Africa, and Asia. Though Latin

America holds 13.3 percent of the worlds estimated oil reserves, the region
accounts for only 6 percent of total output because of inadequate infrastructure.
The accompanying rundown gives production figures to each of the locale's main
four oil producers, nonetheless a few important subtle elements on every nation's
oil industry, and explains the various implications of low oil prices on these
countries, ironically at a time when their production started to increase massively.

1. Brazil

Brazil represented oil production of around 2.95 million barrels for each day in
2014, proceeding with an about uninterrupted pattern of expanding annual oil
production since 1980. According to the U.S. Energy Information Administration
(EIA), more than 90% of Brazil's oil production is made from profound water oil
fields offshore. As of late, Brazil has made a portion of the world's largest new oil
disclosures in its offshore pre-salt basins. In late 2014, national production
evaluations were redesigned to reflect advancements of these new fields. The
nation anticipates that production will increase to 4 million barrels produced daily,
by 2022.

Petroleo Brasileiro S.A., otherwise called Petrobras, is the largest oil producer in
Brazil by a generous edge, representing around 2.1 million barrels produced
daily and more than 72% of Brazil's 2014 oil production. The Brazilian
government holds 50.3% of the organization's voting shares and controls another
9.9% of the organization through shares held by the Brazilian Development
Bank. Petrobras is recorded on the BM&FBOVESPA trade in So Paulo and has
American Depositary Receipt (ADR) postings on the New York Stock Exchange.
Universal oil organizations working in Brazil incorporate Chevron Corporation,
Royal Dutch Shell plc, BP plc, Repsol S.A., China Petroleum and Chemical
Corporation, otherwise called Sinopec.

The drop in oil costs is bound to affect Brazil in a multifaceted manner as Brazil is
Latin America's third biggest oil producer (2.0 million bpd). A significant part of
the oil Brazil produces is utilized for domestic purposes, with just 20% exported
(8.5% of aggregate fares). Given energy is as of now financed by state-run oil
organization Petrleo Brasileiro S.A. (Petrobras), local help for purchasers is far-

fetched. In any case, as costs deplete, the extent of the income ought to lessen
unlike the costs, facilitating expenditure by the administration.

In the short term, lower oil costs in Brazil could strain the expanded interest in
new improvement and production limit. Petrobras decided to contribute some US
$221 billion from 2014-2018 to endeavor its "Pre-Salt" oil fields off the shore of
Rio de Janeiro. Brazil's energy pastor, Eduardo Braga, expressed: "Even with the
present low cost of oil, Petrobras needs to proceed with its substantial interest in
the nation's offshore oil handle." The "Pre-Salt" fields are crucial to Brazil's
objective of turning into a Top-5 worldwide oil producer before the decade's over.

The state-run organization is gotten amidst a US $3.9 billion pay off plan. The
outrage includes different officials at the firm purportedly scheming with
development organizations to blow up the expense of agreements, skimming
cash to improve themselves and channeling kickbacks to political gatherings.
President Dilma Rousseff has felt obligated to unseat Petrobras' CEO, Maria das
Graas Foster, yet so far has remained by the CEO due to the increased costs
brought about by the oil price-drops.

Exploring declining oil costs is a troublesome obstacle for Brazil to battle with. In
spite of the fact that expenditure has taken off, production has slacked and
current oil costs are adding extra strain to the world's most obliged real oil
organization. Together, these components might keep Brazil from coming to its
2020 target objective of boosting yield to 4.0 million bpd (barrels per day).

2. Mexico

Mexico created only more than 2.8 million barrels of oil for daily in 2014,
generally in accordance with production figures from the most recent five years.
This level of production is down from earlier decades, for the most part because
of declining yield from full grown oil fields. From 1991 to 2010, Mexico kept up oil
production above 3 million barrels produced daily, including eight years
surpassing 3.5 million barrels for each day. While Mexico keeps up its position as
the third-biggest raw petroleum exporter in the Americas, it has turned into a net
merchant of refined items, fundamentally fuel and diesel.

From 1938 to 2013, Mexico's oil industry was cornered by the state-possessed
oil and gas organization Petroleos Mexicanos, otherwise called Pemex. Industry
changes were initiated in 2013 with expectations of pulling in more a remote
venture to channel and manage production depletion in the nation. Pemex stays
under state possession and starting 2015, controls improvement rights to 83% of
Mexico's demonstrated stores of oil.

Mexico has not yet been effective in its endeavors to pull in significant remote
investment. Two offshore investigation and production pieces have been
remunerated to an association including the London-recorded Premier Oil plc;
the secretly held American organization Talos Energy, LLC.; and the secretly
held Mexican organization Sierra Oil and Gas S. de R.L. de C.V. Nevertheless,
12 different squares accessible at the same closeout neglected to pull in
adequate offers. Real oil organizations including Chevron, BP and Royal Dutch
Shell have communicated enthusiasm for entering Mexico yet are not operating
in the nation as of September 2015.

While Mexico positions as the world's tenth biggest and Latin America's second
biggest oil producer (2.4 million bpd), an expanded economy and a solid
supporting system executed by Petrleos Mexicanos (Pemex) will limit the effect
of low oil costs throughout the following year. Mexico supported the greater part
of its 2015 oil trades at US $76.40 in one of the biggest sovereign projects of its
kind in the oil market.

The largest test for Mexico in the short-run is the means by which worldwide
financial specialists respond to the first arrangement of Pemex trades. Initially
expected by mid-2015, Finance Minister Luis Videgaray reported that the trades
would likely be postponed to later in the year. Pemex is depending on the
changes to turn around the declining yield. Mexican oil production in 2014 fell for
the tenth continuous year to 2.4 million bpd from 3.4 million bpd in 2004. It is
relied upon to bounce back to 3.0 million bpd by 2018 as a consequence of the
new venture programs.

To lure speculators and balance current costs, Pemex CEO Emilio Lozoya
demonstrated that Pemex is willing to offer global organizations a more

significant offer of tasks than at first imagined. A few undertakings, whereby

Pemex was arranged as the greater part proprietor, may now have the state oil
firm as a minority partner. Regardless of the new wells and investigation, Pemex
is searching for partners to create pipelines, assemble capacity terminals and
mechanical production companies.

Still, a portion of the activities, for example, the shale oil and gas fields in northfocal Mexico, might as of now be at danger because of low costs. These fields
have the initial investment in the US $40's, versus general production costs in the
low US $20's for the large majority of Mexico (and low US $10's for effortlessly
open oil in the Gulf of Mexico).

Long-term results of low oil costs could represent a test to Mexico's economy.
The effect would be felt in both monetary income and in Pemex's long-term
venture program. Luckily, Mexico has access to tools to battle such a situation: a
US $72 billion IMF credit line and the adaptability to raise prices or lessen new
government programs. While such alternatives would not be well known or
politically positive, they could be successful in countering delayed low costs.

3. Venezuela

Venezuela delivered about 2.7 million barrels of oil produced daily in 2014.
Production lately is down from the earlier two decades, when daily production
vacillated around the 3-million-barrel mark, including a record of more than 3.5
million barrels produced daily in 1997. Starting 2014, demonstrated oil saves in
Venezuela add up to about 298 billion barrels; these are the largest stores on the
planet in front of Saudi Arabia's 266 billion barrels and Canada's 173 billion
barrels. Venezuela extracts only about 973.5 million barrels of oil a year, even
though its reserves are the regions largest at 87 billion barrels. Venezuelas oil
reserves have certainly attracted Beijings attention. In the past four years, China
has signed more than 20 agreements with President Hugo Chvez and promised
Venezuela substantial long-term investments in exchange for oil. In his last trip to
China, Chvez projected that Venezuelan oil exports to China will rise from the
current 331,000 barrels per day to 1 million barrels per day by 2012. This will
further fuel Chinas growth and diversify Venezuelas export markets. To make

Chvezs vision a reality, the Venezuelan and PRC governments created a multimillion-dollar joint investment fund to finance development projectsprimarily for
oil production and infrastructure.

The Venezuelan oil industry is monopolized by the state-claimed oil and gas
organization, Petroleos de Venezuela S.A. The organization was set up in 1976
instantly after domestication of the oil business. In the 1990s, changes were
acquainted with change the business, however strategy fragility has been the
standard in the years since, particularly after President Hugo Chavez came to
control in 1999. In 2006, Chavez presented trade plans that required
renegotiation of existing joint endeavors with universal oil organizations.
Worldwide administrators were required to give a 60% minimum share of each
undertaking to Petroleos de Venezuela. More than twelve universal
organizations, including Chevron and Royal Dutch Shell, consented to the
requests. The Venezuelan operations of two organizations, Total S.A. also, Eni
S.p.A., were nationalized after renegotiations fizzled. Other universal
organizations exitted Venezuela before long, including Exxon Mobil Corporation
and ConocoPhillips Co.

Despite the fact that arrangement vulnerability stays in Venezuela even after the
demise of Hugo Chavez in 2013, numerous worldwide oil and gas organizations
keep on keeping up operations in the nation. Chevron and the Chinese oil giant
China National Petroleum Corporation both consented to investment trade plans
with Petroleos de Venezuela in 2013 to renovate and develop existing joint
endeavors. In 2015, the Russian energy combination, Rosneft OAO, agreed to a
$14 billion venture trade arrangement, the biggest reported global interest in the
Venezuelan oil industry lately.

An elongated reduction in oil costs will influence Venezuela more than some
other Latin American country given that oil incomes represent an expected 95%
of fares, 40% of financial receipts and half of GDP. Venezuela, which delivered
2.8 million bpd in 2014 and is the world's fifth biggest oil exporter at roughly 1.7
million bpd. Local people are encountering deficiencies on essential sustenance
and staple products, while global speculators are raising uncertainties about the
likelihood of a sovereign default on their bonds. Venezuela and state-run oil
organization Petrleos de Venezuela SA (PDVSA) have US $66 billion in
outstanding debt.

Subsequent to 2007 China has loaned US $47 billion to Venezuela, making it the
nation's biggest creditor. Venezuela generally reimburses the loans in oil, yet
given late improvements, was compelled to limit guaranteed shipments. Luckily
for Venezuela, after Maduro's visit to Asia amid the first week of January, China
declared another US $20 billion investment program in Venezuela. The excursion
went ahead the heels of comparable visits to Russia and Saudi Arabia. Qatar
additionally promised "a few billion dollars" in financing to Venezuela in the
second week of January. In the long-term, Venezuela's disintegrating economy
and the critical circumstance of the household population should be tended to
with an option that is other than external/foreign credit means.

4. Colombia

Colombia is Latin America's fourth biggest oil producer (988,000 bpd), third
biggest exporter (650,000 bpd), and relies on upon oil for 55% of the country's
aggregate fares and 22% of government income. Most of the nation's oil
originates from inland ordinary basins and has a portion of the least expensive
production costs in the district. Then again, low costs will cut the motivator for oil
investigation, an action imperative to the business' future development.
Production in 2014 dropped interestingly since 2005. Columbia represented
production of only more than 1 million barrels of oil produced daily in 2014. The
nation has made significant production progress lately, raising yield from under
550,000 barrels for each day in 2007. By U.S. EIA, late high rates of
development in oil, gas and coal production in Colombia can be ascribed to
energy industry changes presented in 2003. These changes principally
attempted to make interests in Colombian energy investigation and production
more appealing to universal organizations. Worldwide interest in the oil business
came to more than $4.8 billion in 2014, around 30% of aggregate outside direct
investment (FDI) in the nation. Colombia pulled in just $278 million in oil-segment
FDI in 2003.

Before the 2003 energy changes, the Colombian oil and gas industry was
dominated by Ecopetrol S.A., a state-claimed oil and gas organization and
industry monopoly. Ecopetrol stays under the control of the Colombian state,
which holds 88.5% of its exceptional shares. The organization is recorded on the

Colombian Stock Exchange and has ADR postings on the New York Stock
Exchange and the Toronto Stock Exchange.

Ecopetrol was in charge of creating around 580,000 barrels of oil for daily in
2014, roughly 57% of Colombian production. More than 100 worldwide oil and
gas organizations work in Colombia, frequently in joint endeavors with Ecopetrol
or different administrators. The largest worldwide oil and gas makers in the
nation incorporate Chevron; Repsol and its backup Talisman Energy, Inc.;
Occidental Petroleum Corporation; and Exxon Mobil.

The fall in prices will augment the Latin American country's financial and current
record deficits. Lower oil incomes, are expected to increase the monetary deficit
to 3.0% of GDP, while driving the present record shortfall to 5.1% of GDP.
President Juan Manuel Santos affirms that Colombia is prepared to handle the
assessed US $3.8 billion spending plan deficit in 2015 and expects to lessen the
nation's secondary shortfall to 1.9% of GDP by 2018.

Different alternatives for resolving this issue could include bringing down
expenditure to the price of oil and diminishing per-hectare charges to oil
organizations. This would prove to be advantageous for multiple organizations,
for example, Ecopetrol, the nation's biggest and essential petroleum
organization, Canadian oil and common gas maker Pacific Rubiales Energy
Corp., and Canacol Energy Ltd., a main production and investigation
organization centered in Colombia.

5. Ecuador

Much like Colombia, the diminishing oil cost is expected to slow down Ecuador's
economy majorly. Nevertheless, so far, the nation has been proactive in working
against the implications of oil price-drops. OPEC's smallest member creates
550,000 bpd and sends out 250,000 bpd. Ecuador depends on oil for almost 50%
of its aggregate fares and around 33% of its financial plan.

To moderate the decline in oil costs, Ecuador brought down its 2015 spending
plan in January by US $1.4 billion (3.9%), cutting US $840 million of investments
and US $580 million of costs. The legislature cut costs by reduction costs and
deferring rewards installments and pay increments, instead of specifically cutting
administrations and work. On the other hand, economists believe that most of the
investment ventures reductions and cost cuts would not significantly affect
financial development because of the nature and timing of the costs.

Ecuador is additionally setting up its accounts to battle lower financial incomes.

On the national tax aspect, the nation executed new expenses on telecom
organizations. All the more essentially, the country added to its liquidity position.
Ecuador acquired a US $300 million credit extension from the Inter-American
Development Bank in December 2014 and a US $296 million credit line from the
Development Bank of Latin America in July 2014. Moreover, the country got a
massive US $7.5 billion financing bundle from China, including a 30-year, 2.0%
US $5.3 billion credit extension from the Export-Import Bank of China. The
drawback to such a production company is, to the point that it likely has strings
connected and puts Chinese firms at the leader of the table for future exchange
with Ecuador, when they may not inevitably have the best cost or quality items.

Given its dollar-based economy, Ecuador faces challenges most nations in the
area don't need to battle with. Furthermore, despite the fact that Ecuador as of
late has differentiated its economy by growing its fishing and agricultural
businesses, a solid dollar has made imports from Peru and Colombia that are
less expensive than national items. Ecuador reacted by implementing import
restrictions, and exchange duties up to 21% on some Peruvian and Colombian
goods.

6. Argentina

Argentina, a net shipper of oil, will for the most part gain in the short-run from the
oil cost reduction. The country is in a circumstance like that of Brazil and Mexico;
the low cost of oil puts into inquiry new investment projects to expand
investigation and production. An elongated reduction in costs influences the
nation's mandate to become more efficient in the energy sector, particularly by

using the Vaca Muerta fields. The U.S. Energy Information Administration (EIA)
estimates that the Vaca Muerta locale, found southwest of Buenos Aires, might
hold 16.2 billion barrels of shale oil and 308 trillion cubic feet of shale gas.
Argentina, although not a major oil-producer, will have positive impacts that will
have to be kept in mind while creating the Special Task Force.

Taking a look at the uneven impacts of low oil costs in Latin American economies
is very educating in terms of the Latin American economic state. In a few
economies, as in Central America and the Caribbean, such impacts have been
proven to be a helping hand. In the interim, in a few others, the reduction has
damaging implications of various sizes: modern ventures were controlled; various
multinational companies demonstrated their shortcomings and neediness
developed among member states. Net oil shippers, particularly Chile and Peru,
will benefit from the cost slide. Both economies are reliant on divisions that
utilization oil as a significant cost component, for example, mining and
development. In Chile, the oil cost drop has started to limit the nation's growth.
Growth on the planet's number one copper-producer dropped by 0.4% in
December 2014. An estimate of 10% decrease in the expense of transport fuel
contributed intensely to the fall.
In Peru, the reduction in oil costs will give an ideal setting to its industrial, mining
and development areas, which combined make up 36% of the South American
country's GDP. In general, the nation imports around US $6.0 billion of oil, gas
and refined powers. Less expensive oil will cut expenses for Peru's mining and
development firms, including transport costs and the last cost of deciding items.
Lower energy expenses will likewise aid new copper ventures, for example,
Chinalco's US $3.5 billion Toromocho mine and Hudbay Minerals' US $1.7 billion
Constancia mine. Both are relied upon to venture up operations this year.
Questions to consider while researching:

To what extent would the national governments have power over this
Special Task Force?
Under whose jurisdiction would this Special Task Force be?
What are the fundamental functions of this Special Task Force?
What would be the monetary sources of this Task Force?
What would be the underlying essential regulations of this Task Force?

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