Analysis: Threats highlight oil's weakness

By KRISHNADEV CALAMUR, UPI Energy Correspondent   |   Sept. 11, 2006 at 2:16 PM
Sign up for our Energy newsletter

WASHINGTON, Sept. 11 (UPI) -- Al-Qaida No. 2 Ayman al-Zawahiri's threat against Western interests in the Persian Gulf on the eve of the fifth anniversary of the Sept. 11, 2001, attacks highlights the risk the global oil industry faces in the long run.

"We tell you not to concern yourselves with the troops in Iraq and Afghanistan -- these are doomed," he said in a 1-hour, 16-minute video message posted on Islamist Web sites. "You should worry about your presence in the Gulf and the second place they should worry about, is in Israel."

The message underscores what many experts have feared since the start of the war on terrorism -- a crippling attack on oil supplies in the Persian Gulf region that would lead to a spike in oil prices and devastate the global economy. Indeed, oil facilities in the Middle East have long been an al-Qaida target. The group has called for attacks on oil installations because, it says, oil revenues go to the enemies of Islam.

A failed February attack on Saudi Arabia's Abqaiq oil facility, the world's largest oil-processing facility, underscores those fears. It must be noted, however, that a large-scale disruption of supplies would require multiple coordinated attacks on the kingdom's oil facilities, something that is unlikely given Saudi Arabia's increasingly muscular response to al-Qaida and its affiliates.

"The fact that they've attacked several times not only infrastructure but also employees shows they're very much interested in going after ... facilities in Saudi Arabia," Gal Luft, co-director of the Institute for the Analysis of Global Security, in Washington, told United Press International. "We were very close to it (a catastrophic attack). You have people willing to sacrifice their lives to deny the world its oil. Think about a 747 crashing into one of those facilities, and you'll have major global disruptions."

But petroleum industry representatives say security has been increased both domestically and overseas since the Sept. 11, 2001, attacks and plans now include how to get operations back on their feet after a supply disruption.

"The industry has done a lot since 9/11," Kendra Martin, manager of security issues at the American Petroleum Institute, told UPI. "We were relatively safe before then, but our mindset has changed a lot since then and we've taken additional precautions."

She said there has been an increase in security at domestic facilities, where some of the measures taken have been adopted from procedures in place in overseas facilities owned by U.S. firms. Perhaps more important is the industry's focus on resilience -- how quickly the system can get back into place if there is a major supply disruption. The industry got a taste of that last fall when Hurricanes Katrina and Rita knocked out much of U.S. refining capacity along the Gulf coast.

"There was a lot to be done to get operations up and running," Martin said. "Oil shipments that were coming to the Gulf were diverted to other facilities on the west coast to ensure supply."

Still, the Persian Gulf region, the focus of Zawahiri's statements, is an attractive target for militant groups.

The region controls most of the world's oil resources -- holding 57 percent, or 715 billion barrels, of the world's crude reserves, according to the Energy Information Administration, the U.S. Energy Department's data arm. In 2003, it produced some 27 percent of the world's oil. Much of its market is among members of the Organization for Economic Co-operation and Development, the club of industrialized nations.

It is this dependence that prompts al-Qaida leader Osama Bin Laden and his allies to view energy facilities as a legitimate target in what they see as a global jihad.

"I think that the past five years have demonstrated that the jihadist movement views this war as, among other things, an economic war," Luft said. "An attack of facilities can disrupt oil prices and weaken Western economies. As a result there have been an increasing number of attacks on oil facilities worldwide, especially in Iraq."

Iraq is a case in point. The anti-U.S. insurgency regularly targets the country's oil resources causing, according to Luft, a loss of more than 1 million barrels per day on the oil market. The country's 115 billion barrels of proven oil reserves could be its passport to long-term prosperity, but while the country could be producing about 2 million bpd, it barely produces half that amount.

This is why attacks on oil installations in the Gulf may be a reality the world will have to live with, though future regimes in the region could be comprised of those very people who are now calling for attacks upon installations.

"People like bin Laden are not interested in living in palaces," Luft said. "They can reduce production, sell less and still make the same money."

--

(Comments to energy@upi.com)

Follow us on Facebook, Twitter, and Instagram for more news from UPI.com
Related UPI Stories
Trending Stories