The oil industry is vulnerable to terrorist attacks

by Ed Blanche

In February 1991, Saddam Hussein put Kuwait's oil fields to the torch as his invading army was driven out of the emirate by US-led forces. More than 700 wells were set ablaze in the worst attack on energy infrastructure since World War II. Increasingly, the energy industry is 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 hundred suicide bombers, operating in unison, could do immense damage, with billions of dollars in losses. Saddam Hussein's act of madness and revenge in Kuwait removed 2 mm bpd of oil from production. That is $ 74 mm a day at current prices. It took a year to extinguish all the fires in Kuwait and three years to rebuild the emirate's oil infrastructure.
As fate would have it,the oil industry in post-Saddam Iraq has become the target of Arab insurgents fighting the US-led occupation. They are 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 importing more and more petroleum because of the insurgency. Energy terrorism is not new to the Middle East. But unlike Latin America and Africa, where it has largely been limited to bombing pipelines, sabotage and kidnapping, the potential for major attacks in the Middle East and Islamic countries in Asia is high because of the terrorist organizations operating in these areas.
The lethal nature of the attacks carried out by Al-Qaeda and its affiliates add to the dangers facing the energy industry. This is particularly true in Saudi Arabia, which has become increasingly vulnerable to terrorist attacks. Osama bin Laden has repeatedly threatened Saudi Arabia's oil installations, and in an audio tape issued in October 2002 warned his enemies that "the youths of God are preparing for you things that would fill your hearts with terror and target your economic lifeline until you stop your oppression and aggression."

In November 2003, the Saudi Institute Press, an independent Washington-based organization, reported that Islamic militants were planning attacks on oil installations and Western personnel in the kingdom's Eastern Province. According to the report, four suspected Al-Qaeda militants arrested two months earlier had rented an apartment in Nasariyah, in the oil-rich province, to prepare their attacks.
Saudi officials declined to comment on the report, but it was given some weight when it was disclosed in October that security forces had broken up a cell of Al-Qaeda activists who had worked for state-owned Aramco. Officials said then that up to 10 people were rounded up, including a Saudi-born American citizen.

Details of what the cell had been plotting remain sketchy, but the target was believed to have been the vast Ras Tanura refinery complex in the Gulf, along with the pipeline network associated with it. Ras Tanura transfers 5 mm bpd of oil, more than 6 % of the 80 mm barrels consumed daily around the world.
One US expert said Ras Tanura "is the single most important facility in the oil industry." On April 5, Russian police discovered 73 kilograms of explosives hidden near an oil refinery pipeline in the Siberian region of Khabarovsk. The authorities suspect the cache was part of a terrorist plot to bomb the installation. A few days earlier in strife-torn Chechnya, separatist Muslim forces bombed four oil wells run by state-owned Rosneft, setting them on fire.

On March 8, 2003, separatist rebels in India blew up storage tanks at the Digboi refinery in north-eastern Assam state operated by the Indian Oil Corporation, setting ablaze 5 mm litres of fuel. The rebels also blasted a natural gas pipeline. The refinery was attacked again in June 2003.
In Indonesia, separatist rebels in Aceh province, on the northern tip of Sumatra overlooking a key tanker route, bombed ExxonMobil's Arun gas processing terminal, forcing it to shut down for five months. That cost the Jakarta government $ 100 mm a month in lost export revenue.
In Colombia, leftist rebels of the Revolutionary Armed Forces of Colombia (FARC), blew up the Cao Limon oil pipeline in January, cutting off valuable exports of 100,000 bpd for two weeks. The pipeline, which carries oil belonging to Occidental Petroleum, is arguably the most heavily attacked oil facility in the world -- hit 123 times in 2002. It has been ruptured so many times that local Indians refer to it as la flauta (the flute).

Iraq may be the oil producer worst affected by terrorist attacks right now, but pipelines in other regions are also regularly sabotaged. In the Caucasus, Nigeria, Colombia, Sudan and Yemen oil pipelines are routinely blown up and the authorities seem powerless to prevent the assaults. Other oil facilities have been attacked in Indonesia, India, Pakistan, Argentina, Ecuador, Guatemala, Georgia, Azerbaijan, Myanmar in 2002-03 as the terrorist threat expands.
But security concerns with pipelines extend to another area of great vulnerability: the software used to regulate oil and gas flows could be attacked by cyber-terrorists, a threat highlighted by a report published by the US National Petroleum Council (Security of Oil and Natural Gas Infrastructures in the New Economy, June 2001).

Pipelines may be the most vulnerable component of the global oil industry, but more and more are being built in volatile regions. One is the strategic 1,760 km, $ 3.6 bn pipeline carrying Caspian Sea crude from Baku in Azerbaijan via Tbilisi to the Ceyhan terminal in southern Turkey.
The BTC, as the pipeline is known, is scheduled for completion in 2005. A gas pipeline is scheduled to be built alongside it by 2007. These will run through the volatileCaucasus, where Islamic extremists and other militants operate, and the Kurdish region of Turkey, making them vulnerable to attack. Russia and Iran have opposed the BTC pipeline route because it bypasses their territories and shuts them off from the Caspian oil boom.

In Iraq, the 950 km pipeline from the Kirkuk oil fields in the north to the oil terminals of Ceyhan, which can pump 800,000 bpd, has been virtually out of action since April 2003 because of sabotage by insurgents opposed to the US occupation.
Sabotage to the pipeline has severed a vital economic artery, seriously impeding reconstruction efforts. The US administrator in Baghdad, Paul Bremer, a former head of the State Department's counter-terrorism division, estimates that the loss of the Kirkuk-Ceyhan pipeline, the main export route from northern Iraq, costs $ 7 mm a day in lost revenues, or around $ 200 mm a month.

Ed Blanche, a member of the International Institute for Strategic Studies in London, is a Beirut-based journalist who has covered Middle Eastern affairs for three decades. He is a regular contributor to The Daily Star.