Terror's next target

By Gal Luft and Anne Korin
The Journal of International Security Affairs, December 2003.

Terrorist organizations have always been interested in targeting oil and gas facilities. Striking pipelines, tankers, refineries and oil fields accomplishes two desired goals: undermining the internal stability of the regimes they are fighting, and economically weakening foreign powers with vested interests in their region. In the past decade alone, there have been scores of attacks against oil targets primarily in the Middle East, Africa and Latin America. These attacks have never received much attention and have been treated as part of the ‘industry’s risk.’

However, after the attacks on World Trade Center and the Pentagon, symbols of U.S.' economic and military dominance, terrorist organizations of global reach like al Qaeda have identified the world’s energy system as a major vulnerability and a certain way to deliver a blow to America's oil dependent economy as well as global economy at large. With attacks against transportation networks, military bases and government installations becoming more difficult to execute due to heightened security, terrorists looking for a big bang might find oil, to quote al Qaeda, the "umbilical cord and lifeline of the crusader community," the object of the next major assault on the west, an assault that could wreak havoc with America’s economy and way of life.

Oil supplies 96% of U.S.' transportation energy and is a crucial component in the production and distribution of every commodity from toothpaste to golf balls. Though the U.S consumes a quarter of the world's oil, it has a mere 3% of global reserves. To satisfy its growing energy needs the U.S. imports over 50% of it oil amounting to 10 million barrels per day (mbd). Over the next 20 years this dependency is projected to grow to nearly 70%.

Unfortunately, the world's leading oil producing countries and holders of the lion share of global reserves are either politically unstable and/or, in the words of President George W. Bush, "don't particularly like the U.S." Two thirds of global oil reserves are located in the world’s most volatile region, where the U.S. is most disliked: the Middle East. This tremendous oil wealth is shared primarily among six Middle Eastern regimes: Saudi Arabia, Iran, Iraq, United Arab Emirates, Kuwait, and Libya. The Department of Energy predicts that oil imports from the Middle East to the U.S. will increase from 25% today to about 50% by 2020. A quarter of the world's oil reserves are controlled by Saudi Arabia, a country considered by many analysts a powder keg waiting to explode. Some try to underestimate the power of the Kingdom, neglecting the fact that the oil market's only significant excess production capacity, an extra 2.5 mbd that can be pumped at the flick of a switch when other suppliers falter -- as was done in early 2003 to compensate for disruption of flow from Nigeria, Venezuela, and Iraq -- is in Saudi Arabia. This makes Saudi Arabia the world's only guarantor of liquidity in the oil market.

But Saudi Arabia's oil system is target rich and extremely vulnerable to terrorist acts. This is not only due to al Qaeda’s strong presence in the kingdom and its ability to carry out coordinated attacks as evidenced by last May's string of suicide bombings in Riyadh - but also because of the structure of the kingdom’s oil infrastructure.

Over half of Saudi Arabia’s oil reserves are contained in just eight fields, among them the world's largest onshore oil field -- Ghawar, which alone accounts for about half of the country's total oil production capacity -- and Safaniya, the world's largest offshore oilfield. About two-thirds of Saudi Arabia's crude oil is processed in a single enormous facility called Abqaiq, 25 miles inland from the Gulf of Bahrain. On the Persian Gulf, Saudi Arabia has just two primary oil export terminals: Ras Tanura - the world's largest offshore oil loading facility, through which a tenth of global oil supply flows daily - and Ras al-Ju'aymah. On the Red Sea, a terminal called Yanbu is connected to Abqaiq via the 750-mile East–West pipeline. A terrorist attack on each one of these hubs of the Saudi oil complex or a simultaneous attack on few of them is not a fictional scenario. A single terrorist cell hijacking an airplane in Kuwait or Dubai and crashing it into Abqaiq or Ras Tanura, could turn the complex into an inferno. This could take up to 50% of Saudi oil off the market for at least six months and with it most of the world’s spare capacity, sending oil prices through the ceiling. "Such an attack would be more economically damaging than a dirty nuclear bomb set off in midtown Manhattan or across from the White House in Lafayette Square," wrote former CIA Middle East field officer Robert Baer. This "would be enough to bring the world's oil-addicted economies to their knees, America's along with them."

Saudi Arabia is not the only major oil producer vulnerable to terror. Many non-Middle Eastern oil producers, primarily in Africa, the former Soviet Union and south Asia, face the threat of Islamist terrorists. Nigeria, half of which is under Islamic Sharia law, is home to the largest part of Africa's oil reserves, and is the fifth largest oil supplier to the U.S.: It was labeled by the Washington Post last year "The Next Hotbed of Islamic Radicalism." Osama bin Laden is known to have sent emissaries to Nigeria in an effort to unite Islamic groups under the umbrella of al Qaeda. U.S. ambassador to Nigeria Howard Jeter warned recently that Nigeria faces real threat of al Qaeda attack because of its close ties with Washington. And indeed, in February 2003, al Jazeera television aired a message allegedly from bin Laden listing Nigeria as one of six countries which needed to be "liberated" from America's "enslavement."

The former Soviet states where more than 10 percent of global oil reserves are concentrated, also face increasing threat of Islamist terror from groups operating in Central Asia and in the Caucasus among them the Islamic Party of Eastern Turkestan, the Islamic Movement of Uzbekistan (IMU), and Chechen and Uighur separatists. Perhaps the most dangerous group is Hizb ut-Tahrir al-Islami -- the Islamic Party of Liberation — a 5,000-10,000 strong group operating in Uzbekistan, Kyrgyzstan, Tajikistan and in the oil-rich Kazakhstan. Hizb seeks to seize power and supplant existing governments with a Sharia-based Caliphate which will carry on jihad against the West. The head of the Kazakh National Security Committee Nartai Dutbayev said that the Hizb has recently increased its clandestine activities in Kazakhstan and poses "a real threat to Kazakhstan's security."

Southeast Asia, the world's fastest growing energy consuming region, is becoming another target for terrorist. In fact, bin Laden's point man in Asia and the leader of the Indonesian terror group Jema'ah Islamiyah, recently arrested Riduan Isamuddin, also known as Hambali, initiated the bombing of the nightclub in Bali in which 200 were killed. Hambali is also known to have plotted to bomb oil depots in the Philippines and is suspected of planning attacks on U.S. oil companies sia. In all of these places Islamic terrorist groups have identified oil as a major vulnerability and oil terrorism as an effective way to weaken the regimes they oppose.

Another reason terrorists groups tend to focus on oil is that oil targets are ‘soft’ and hardly defensible, therefore relatively easy to hit. Oil targets are so vulnerable that in the past two years, despite intensive counter-terror measures, oil terrorism has almost become a matter of routine. In May 2002, a cell-phone detonated explosive device was attached to a tanker-truck's underside in Israel's central fuel and gas depot north of Tel Aviv. Though the truck caught fire while loading, the fuel was fortunately slow to ignite and the flames did not spread to the fuel drums. Had the attack succeed, a catastrophe of disastrous proportions would most likely have triggered a harsh Israeli response that would have, in turn, changed the landscape of the Middle East. The same summer, a group of Saudis was arrested for involvement in a plot to sabotage Ras Tanura and pipelines connected to it. A slew of other attacks have either taken place or been thwarted in many countries including India, Nigeria, Colombia, Iraq, Pakistan, Russia and Philippines.

There is growing evidence that terrorists find the unpoliced sea to be their preferred domain of operation. Today, over 60% of the world's oil is shipped on 3,500 tankers through a small number of 'chokepoints' – straits and channels narrow enough to be blocked, and vulnerable to piracy and terrorism. The most important chokepoints are the Strait of Hormuz, through which 13 million barrels of oil are moved daily, Bab el-Mandab, which connects the Red Sea to the Gulf of Aden and the Arabian Sea, and the Strait of Malacca, between Indonesia and Malaysia. Thirty percent of the world's trade and 80% of Japan's crude oil passes through the latter, including half of all sea shipments of oil bound for East Asia and two-thirds of global liquefied natural gas shipments. Most of those critical chokepoints are located in areas where Islamic fundamentalism is prevalent. The Strait of Hormuz and its three tiny islands of Abu Musa, Greater Tunb Island and Lesser Tunb Island are controlled by Iran; Bab el-Mandab is controlled by Yemen, the ancestral home of bin Laden. Part of the 500-mile long Strait of Malacca courses through Indonesia's oil rich province Aceh, inhabited by one of the world’s most radical Muslim populations.

Many terror experts have expressed concern that al Qaeda might seize a ship or a boat or even a one-man submarine and crash it into a supertanker in one of the chokepoints. Were terrorists to attack such a vessel the resulting explosion and spreading stain of burning oil could shut down the channel for weeks, with a profound impact on global markets and the maritime insurance industry. Tankers are too slow and cumbersome to maneuver away from attackers; they have no protection and they have nowhere to hide. al Qaeda terrorists have demonstrated repeatedly their intent and ability to strike them. In January 2000 al Qaeda attempted to ram a boat loaded with explosives into the USS The Sullivans in Yemen. The attack was aborted when the boat sank under the weight of the explosives. Later, in October, al Qaeda suicide bomber in high-powered speedboat packed with explosives blew a hole in the USS Cole, killing 17 sailors. In June 2002, a group of al Qaeda operatives suspected of plotting raids on British and American tankers passing through the Strait of Gibraltar was arrested by the Moroccan government; and in October that year, the organization badly holed a French supertanker off the coast of Yemen. A statement following this attack warned that it "was not an incidental strike at a passing tanker but...on the international oil-carrying line in the full sense of the word." According to FBI Director Robert Mueller "any number of [terror] attacks on ships…have been thwarted."

To make things worse, there is an increasing signs of collaboration between terrorism and piracy. According to International Maritime Bureau (IMB), pirate attacks on ships have tripled in the last decade. Each year 350-400 piracy attacks take place worldwide. In the first six months of 2003 alone, 234 attacks have been reported, in which 281 seafarers have been killed, assaulted, or kidnapped. The majority of the attacks take place in the Philippines, Indonesia, Bangladesh and Nigeria. The waters off Somalia, a collapsed state and a sanctuary for terrorists, are among the most dangerous in the world. The IMB reported "The risk of attack to vessels staying close to the coastline from Somali armed militias has now increased from one of possibility to certainty." Maritime security experts have repeatedly warned about the collusion between piracy and terror, voicing concerns that Islamist groups operating in these regions could capitalize on the disorder and target strategic chokepoints by placing a bomb on a supertanker or ramming a ship into one. This concern is not unfounded. Most pirates have no ideological tilt. They are petty criminals who would do almost anything for a handful of dollars. Those who create anarchy at sea in so many parts of the globe are the most likely to befriend the successors of Mohammad Atta and lend their hand on the next mega terror assault against the west.

Pipelines, through which about 40% of world's oil flows, are another Achilles heel. They run over thousands of miles and across some of the most volatile areas in the world. In Saudi Arabia alone there are 10,000 miles of pipeline, in Iraq 4,000, much of it above ground and easily sabotaged. A simple explosive device can puncture a pipeline and render it non-operational. Due to their length, pipelines are very difficult to protect adn thus attractive terrorist targets. Beyond the thwarted attack on the Ras Tanura pipeline, there have been numerous pipeline attacks in Nigeria, Colombia and Pakistan. In Iraq, acts of sabotage against pipelines have become the biggest obstacle in bringing Iraqi oil back online.

Pipelines in the U.S. are also vulnerable. The only route to deliver oil from Alaska is the 800-mile-long Trans-Alaska Pipeline System (TAPS). In recent years the pipeline has been sabotaged, bombed twice and shot at more than 50 times. TAPS is not only within terrorists reach but also impossible to repair in the winter. As former CIA Director James Woolsey and energy expert Amory Lovins wrote "If key pumping stations or facilities at either end were disabled, at least the above-ground half of 9 million barrels of hot oil could congeal in one winter week into the world's biggest Chapstik."

An attack on major oil installation, a chokepoint or a pipeline hub would be detrimental to America’s economy and likely to affect every aspect of our lives. During the 1973 Arab Oil Embargo, despite the fact that only 28% of U.S. oil was imported, the effect on the U.S. economy was profound. Oil price quadrupled in a matter of weeks; unemployment doubled due to the loss of 500,000 jobs; and the national product declined 6 percent. Today, with more than half of U.S. oil imported, if a chunk of global oil production is disabled, the consequences could be even more severe. While unlike in 1973, the U.S. has today a Strategic Petroleum Reserve, a stockpile created to cover for lost oil for a time, but this amount would only suffice for two months of disruption, hardly enough to offset the loss in case a mega attack takes place.

Many believe today that the U.S. can insulate itself from price spikes and supply disruptions by simply reducing its oil imports from the Middle East. This assumption is misplaced. Since oil is a fungible commodity and its prices and supply levels are determined in the international markets, the U.S. would be adversely affected by oil terrorism even if it does not import a drop of oil from the region. Nor can it remain untouched by the consequences of major disruptions on other economies with which it trades.

To deal with the risks our energy system is facing, the U.S. should assist oil-producing countries to improve security in their main oil installations, to monitor the people who operate them and to employ preventive measures designed to minimize damage in case an attack succeeds. Most importantly, the U.S. should continue to pursue terrorists and disrupt their plans with the greatest vigor.

But the war on terror is a long-term effort and might take many years to win. Throughout the world, major energy consumers and producers are involved in projects designed to ensure safe passage of oil through the chokepoints and at the same time reducing overall demand for oil.

China, the world’s fastest growing energy consumer, is currently pursuing an ambitious project to bypass the Strait of Malacca by building a Panama Canal-style passage through Thailand's narrow-necked Kra isthmus. Also in process is a pipeline from the Israeli port of Ashkelon on the Mediterranean coast through which Russian oil from the Black Sea would flow to Eilat on the Red Sea, be loaded onto tankers and shipped to Asia. The route provides a much shorter link between the Mediterranean and Asia, sparing Asian nations the need to transport oil through the dangerous waters of the Persian Gulf.

Without question, the most fundamental way to improve energy security would be through gradually reducing world demand for oil by shifting to next-generation transportation fuels. While the major energy consuming countries lack oil, most are rich in other energy resources. Coal - held in abundance by the U.S., China, and India, among others - can be used to cleanly and cheaply produce methanol (a hydrogen rich fuel used by the Indy 500 and other race tracks because it is less flammable than gasoline.) Energy rich agricultural waste can be used to produce ethanol, municipal waste can be used to produce Department of Energy approved synthetic fuel. Electricity produced from nuclear, wind, solar, hydropower and clean coal technologies can move vehicles with similar performance and less pollution. Such a transition is no pipedream. Millions of flexible fuel vehicles on the road today can run on the first three fuels mentioned. Rechargeable electric vehicles with auxiliary fuel tanks (to overcome the range limit issues of pure electric vehicles) are already in the making. Infrastructure issues can be circumvented and hurdles to getting fuel cell vehicles on the road diminished by focusing on practical solutions as opposed to ideal ones and delivering cheap to produce hydrogen rich liquid fuels such as methanol and ethanol to fueling stations rather than tangling with pure hydrogen.

Such a shift will not only increase energy independence for America and the free world but will also minimize the need to transport oil across the globe and thus reduce our vulnerability to an energy Pearl Harbor.

Gal Luft is executive director of the Institute for the Analysis of Global Security (IAGS). Anne Korin is director of policy and strategic planning at IAGS and editor of Energy Security Biweekly.
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