Threats to the Mideast energy industry (page 1 of 3)

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.