Threats to the Mideast energy industry

In February 1991, Saddam Hussein put Kuwait's oil fields to the torch as his invading army was being driven out of the emirate by US-led forces in Operation Desert Storm. More than 700 wells were set ablaze in the worst attack on energy infrastructure since World War II.

Increasingly, the energy industry is again under threat from global terrorism, with the focus largely on the turbulent Middle East. The possibility that terrorists could ravage oil fields the way that Saddam did in Kuwait is probably extremely remote, if only because of the sheer scale of that kind of undertaking.

But it should not be discounted altogether. A couple of dozen suicide bombers, operating in unison, could do immense damage against such targets, inflicting destruction costing billions of dollars. Saddam's act of madness and revenge in Kuwait removed 2 million barrels of oil a day from production.

That's $74 million a day at current prices. It took a whole year to extinguish all the fires in Kuwait, and three years to rebuild the emirate's oil infrastructure.

As fate would have it, these days post-Saddam Iraq's oil industry is the target of insurgents fighting the US-led occupation. They are regularly blowing up vital oil pipelines in a sustained campaign that security experts are worried could inspire terrorist attacks on key energy facilities in other countries and tankers carrying oil and gas around the world.

Iraq, which has oil reserves second only to Saudi Arabia, is having to import more and more petroleum products because of the insurgency. Until recently, the attacks were largely against Iraq's northern pipelines that run to Turkey's Mediterranean terminal at Ceyhan. Now the southern network is being hit as well.

On April 24th, suicide bombers in a dhow and two speedboats perished in attacks on two Iraqi oil terminals in the northern Gulf. Three US sailors were killed in the operation, but only minor damage was caused to the offshore platforms. Still, it set a dangerous precedent in the region. On May 1st, six Westerners were killed by militants who stormed an oil company office in the Red Sea port of Yanbu - the first such attack in Saudi Arabia.

Four weeks later, militants attacked oil company offices in Khobar, killing 22 people. Energy terrorism is not new in the Middle East, but the prospect of a major disruption in supplies from the region by Al-Qaeda and its affiliates is the primary reason why oil prices have spiked recently to 20-year highs.

Unlike Latin America and Africa, where attacks on oil installations have largely been limited to bombing pipelines, sabotage and kidnapping to inflict localized economic disruption or secure political concessions, the potential for major attacks in the Middle East and the Islamic regions of Asia is high because of the terrorist organizations that operate in these areas.

More attacks like those in Saudi Arabia will push oil prices even higher, threatening global economic disruption. A major exodus by the thousands of skilled expatriates working in the Saudi oil industry could also cause problems. A purported Al-Qaeda statement after the Khobar attack vowed to "cleanse the Arabian Peninsula of infidels."

The US military is increasingly moving toward intervention in Africa and Asia, as well as deployments under way in the Middle East, Central Asia and Latin America, to protect its oil supplies, one of the key components of US policy. The danger is that, as in Iraq, protecting the flow of oil could intensify rather than diminish regional upheavals and violence.

The prime target, of course, is Saudi Arabia, the world's largest oil producer and, probably more important, the only one with spare capacity to counter any serious disruption in supply. And while terrorist attacks there have raised fears among Westerners in the kingdom - and among industry analysts - Iraq remains the oil producer worst affected by terrorist attacks.

However, pipelines in other regions are also regularly sabotaged. Expanding threats. In the Caucasus, Nigeria, Colombia, Sudan and Yemen, oil pipelines are constantly being blown up and authorities in these countries seem powerless to prevent such sustained assaults. Other oil facilities, including refineries, have been attacked in Indonesia, India, Pakistan, Argentina, Ecuador, Guatemala, Georgia, Azerbaijan and Myanmar in 2002-03 as the terrorist threat has expanded.

But security concerns with pipelines extend to another area of great vulnerability: the computerized software that is used to regulate oil and gas flows could be attacked by cyberterrorists, a threat highlighted by the US National Petroleum Council's report, Security of Oil and Natural Gas Infrastructures in the New Economy, in June 2001.

Pipelines may be the most vulnerable component of the global oil industry, but more and more are being built, many in regions that are exposed to political upheaval. One is the strategic 1,760 kilometer, $3.6 billion line now under construction to carry Caspian Sea crude from Baku in Azerbaijan through Tbilisi, Georgia, to Turkey's Ceyhan terminal.

The BTC, as the pipeline is known, is scheduled for completion in 2005. A gas pipeline is due to be built alongside it by 2007. These will run through the volatile Caucasus, where extremists operate, and the Kurdish region of Turkey, making them potentially vulnerable to attack. Russia and Iran oppose these pipeline routes, chosen by the Americans to keep out Russia and Iran from the Caspian oil boom.

In Iraq, the 950 kilometer pipeline from the Kirkuk oil fields in the north to Turkey, which can pump 800,000 barrels a day, has been out of action because of constant sabotage since soon after the collapse of Saddam Hussein's regime in April 2003. That severed a vital economic artery that has seriously impeded reconstruction. It reopened on April 3rd - and was promptly bombed again.

The former US viceroy in Baghdad, Paul Bremer, estimated the loss of the pipeline cost Iraq $7 million a day in lost revenue, or $200 million a month. The April 24th attacks against Iraq's two offshore terminals in the south caused minimal damage.

But if they had been seriously damaged, or even destroyed, the economic consequences for Iraq - and the US occupation - could have been disastrous. Indeed, attacks on offshore platforms - though several have been stormed off southern Nigeria - and tankers have been rare, although attacks on land-based energy installations have increased in recent years, and more should certainly be expected.

Washington recently offered to deploy US Marines and Special Forces troops on high-speed vessels to protect the strategic oil tanker route through the Straits of Malacca, which links the Indian Ocean and the South China Sea and is considered highly vulnerable to attack. Malaysia turned that down as an infringement of its sovereignty, but has been tightening maritime security with its neighbors.

Still, US Defense Secretary Donald Rumsfeld declared in Singapore on June 4th that he hopes US forces would "pretty soon" be hunting terrorists in Southeast Asia: "We simply cannot wait for another attack and expect to defend against it."

Located between the Malay Peninsula and the Indonesian island of Sumatra, the Malacca Strait is the fastest route around the southernmost tip of continental Asia and a vital energy artery from the Middle East to Asia. More than one-quarter of the world's trade and oil, including 80 percent of Japan's oil imports, pass through the narrow, 900 kilometer waterway. It is already plagued by pirates, but security chiefs fear it is also a potential magnet for terrorists.

The maritime choke points in the Middle East - the Suez Canal and the Bab el-Mandeb Straits at either end of the Red Sea, another region infested with pirates; the Strait of Hormuz, the only way in and out of the Gulf, or the Bosphorus and the Dardanelles in Turkey - are also high-risk zones.

Al-Qaeda's suicide bombing of the French supertanker Limburg in the Gulf of Aden on October 6, 2002, as it headed for Asia with 400,000 barrels of Saudi crude, was a wake-up call. The bombers rammed a small boat loaded with explosives into the tanker, a tactic first used by Tamil Tiger rebels against the Sri Lankan Navy in the 1980s. Al-Qaeda had holed the US destroyer Cole in Aden on October 2000 in the same manner. On November 7, 2000, a Hamas suicide bomber tried unsuccessfully to ram an Israeli patrol craft in the Mediterranean of the Gaza coast, a rare maritime attack by the Palestinians.

There have been no known attacks on tankers since the Limburg, although extremists in Morocco were planning attacks on ships traversing the narrow Gibraltar Strait, the western gateway to the Mediterranean, in 2002 before they were arrested. But the Al-Qaeda and Hamas operations underline the threat of maritime terrorism. In that regard, a US Navy battle group is scheduled to make a "show of force" in the oil-rich waters of the Gulf of Guinea, off West Africa.

Offshore oil production there, in the deep waters of the Atlantic, is an increasingly important source of energy for the United States. But there is growing unrest, brought on in part by the oil strikes, and Al-Qaeda is reported to be moving into the region.

Oil fields in Nigeria, Africa's biggest producer, are increasingly under attack by tribal groups and others. Two Americans working for ChevronTexaco were killed by river pirates on April 23rd, the latest in a growing line of fatalities. Sooner rather than later, it may turn out that West Africa's oil may be no safer than the Middle East's.

Meanwhile, the London-based International Maritime Bureau, which monitors security on the world's oceans, reported in 2003 that a suspiciously high number of tugboats were being hijacked in the Malacca Strait. The agency warned shipping authorities that these could be packed with explosives and rammed into tankers carrying gas or petroleum products, or into port facilities, particularly those close to high-density population centers.

The burgeoning trade in liquefied natural gas because of the ever-rising demand for energy in Asia and the United States, much of which goes through the Straits of Malacca, heightens both the threat and the potential devastation such terrorist forays could produce. The bureau's Piracy Reporting Center also noted another disturbing change in the pattern of pirate attacks.

In the past, the marauders tended to board ships to steal money or valuable cargo. Now they often try to steal ships to order, pointing to an emerging collaboration between criminal gangs and invisible paymasters who may well be transnational terrorists. Largely Muslim Southeast Asia has become a hornet's nest of expanding activity by extremists in the last couple of years.

Some militant groups like the Tamil Tigers have successfully waged anti-shipping campaigns, developing dedicated maritime commandos with underwater capabilities, including demolition. Those kind of operations put coastal refineries and oil loading terminals at risk, and the Gulf states are seeking to develop underwater surveillance systems to protect their facilities.

Indonesia, the most populous Muslim country in the world, the Philippines, Malaysia and, more recently, Thailand are all plagued by Islamic violence - and all are considered high-risk piracy zones as well.

That could be a deadly combination. Indeed, militants of the avowedly Islamic Abu Sayyaf group in the Philippines have a history of maritime marauding and claim to have blown up at least two ferries with considerable loss of life.