Mon, Jun 07, 2004 - Page 9 News List

Shadow of terror falls over oil industry

Once seen as an alarmist fear, now an attack on a key Saudi oil base or a change to a fundamentalist regime could cripple the global economy

By Terry Macalister  /  THE GUARDIAN

YUSHA

When Fadel Gheit first warned of his "nightmare scenario" that Saudi Arabia's main oil export terminal at Ras Tanura could be wiped out by terrorists, he was dismissed as an alarmist.

It was the week after the Sept. 11 attacks in New York, where he is based. But the oil analyst began to think there was another target that would have an even more devastating impact if hit.

As fears of upheaval in Saudi Arabia helped set world crude oil prices to 21-year highs of US$42.45 per barrel ahead of an OPEC ministerial meeting last week, there were fewer willing to scoff at Gheit.

"I cannot think of any more logical target for terrorists. It [Ras Tanura] is the nerve center for the Saudi oil trade, but also for global exports. If you can blow up the Pentagon in broad daylight, then it cannot be impossible to fly a plane into Ras Tanura -- and then you are talking US$100 [per barrel] oil," he says.

Saudi Arabia is the linchpin for world crude supplies, a key to setting prices and yet sitting on a political tinderbox due to internal dissent and having trouble securing itself against terrorism.

The repressive desert kingdom is the birthplace of Osama bin Laden, provided 15 out of the 19 attackers on 9/11 and its future problems could ultimately make petrol too expensive for us to take our cars out of the garage.

Not only is Ras Tanura or the refining center of Abqaiq dangerously exposed to being knocked out of action by militants, but Gheit also believes regime change in Saudi Arabia to a more hostile Islamic government is as inevitable as it was in Iran a quarter of a century ago. "Its only a matter of time," he claims.

But this is no headline-grabbing polemicist. The Egyptian-born American is employed by investment house Oppenheimer & Co to provide sober assessments of future oil supply and demand to investors sitting on billions of dollars worth of Wall Street financial funds.

Nor is he an armchair theorist. The 58-year-old worked in Saudi Arabia as a chemical engineer for Mobil [now ExxonMobil] while it was building facilities at Yanbu in the 1980s.

Yanbu, on the Red Sea, was attacked barely a month ago and six Western expatriate oil workers were killed; in a further attack in Khobar last weekend 22 civilians were killed. Last week shots were fired at US military personnel outside the capital Riyadh, adding to the tension and forcing a Saudi foreign affairs spokesman, Adel Al-Jubeir, to admit the oil industry was being targeted.

An assault on Ras Tanura, however, would be vastly more serious. As much as 80 percent of the near 9 million barrels of oil a day pumped out by Saudi Arabia is believed to end up being piped from fields such as Ghawar to Ras Tanura in the Gulf to be loaded on to supertankers bound for the US and the west.

Ras Tanura and other terminals are heavily patrolled and protected, the energy ministry is ringed by concrete and the streets outside patrolled by tanks and armored vehicles. But that seems to have done little to reduce a growing number of attacks on key installations.

Saudi Arabia is vital because it sits on the world's largest oil reserves, exports much more than anyone else and even more importantly has consistently acted as "swing producer" inside OPEC to try to iron out supply-and-demand blips.

The Saudi royal family -- traditionally supportive allies of the US and the UK -- promised ahead of the Western assault on Saddam Hussein that it would pump out more crude to make up any temporary shortfall should Iraqi oilfields be knocked out of action.

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