In the firing line

With Dr Mustafa Alani, director of the security and terrorism department, Gulf Research Centre

MIDDLE East oil and gas companies are investing heavily in security as terrorist groups continue to threaten to attack their installations. Mustafa Alani, Director of the security and terrorism department at the Dubai-based Gulf Research Centre tells O&G what the effects of a successful attack would be and what companies should protect themselves against.

“Oil is very easy to attack. The installations are huge and they cannot be hidden. The product is highly flammable ... any attack on it brings huge results. Even a failed attack will push prices up by five or ten dollars”
-Dr Mustafa Alani, Director, GRC

The latest security bulletin of the Dubai-based Gulf Research Centre (GRC) makes alarming reading. It highlights the threats facing oil and gas installations in the GCC from both terrorist groups and state organisations and sends a clear message to these companies to put security at the top of their priority list.

According to Dr Mustafa Alani, director of the security and terrorism department at the GRC there are two main threats to oil production in the Gulf: “There are state and non state threats. The non-state threat is from terrorist activities in the region. The state threat comes mainly from Iran, which has threatened to target oil installations in the GCC if it is attacked by America. If they are attacked they want to deny oil supplies to the West,” he explains.

Dr Alani goes on to say that in recent years the extent to which oil production facilities are a target for terrorists has increased considerably. He says this is due to a shift in doctrine on the part of terrorist groups, such as al Qaeda: “We have witnessed a major shift in the philosophy and justification of al Qaeda. They declared a strategy four years ago to attack oil. before that oil was not allowed to be attacked according to Islamic Shariah law because it belonged to the nation not to the ruler or the government.” 

He uses the examples of recent attacks in Saudi Arabia and Yemen to demonstrate how serious these groups are about putting their threats into practice.

In 2006 a group of militants attempted to attack the Abqaiq oil plant by trying to ram the gates of the plant with cars carrying explosives.

The attack was linked to al Qaeda and was the first direct assault on a Saudi oil production facility. In the same year suicide bombers launched attacks on two oil facilities in Yemen. Authorities successfully foiled the attacks and four bombers and a security guard were killed. While both attacks were unsuccessful, Dr Alani warns that the consequences could have repercussions across the world should an attack succeed.

“If that attack on Abqaiq had been successfully it would have caused a fire that would have lasted for several days. This would disable the site, which produces around 7 million barrels a day. If you lost 50 percent of those barrels it would have had a huge impact on oil markets all around the world and on market psychology. Oil is very easy to attack. The installations are huge and they cannot be hidden. The product is highly flammable so it’s easy to ignite and any attack on it brings huge results. Even a failed attack will push prices up by five or ten dollars.”

The most devastating impact would be felt, he warns, if a terrorist group attacked multiple sites across the GCC: “To be really effective they would need to launch multiple attacks in a number of states at the same time. For example if they attacked two or three oil producing states, such as Kuwait and Saudi Arabia and the UAE. This would have a huge impact on the psychology of the market.”

Alani points to the example of Iraq as the greatest example of what can happen when a company’s oil installations are attacked.

Referring to the attacks on Iraqi oil installations by insurgents since the beginning of the US occupation in 2003, he says: “We must learn from the lesson of Iraq,” he cautions.

“The attacks on the installations there were terrifying. Two years ago the country was not able to export one single barrel of oil.” A report by the Gulf Research Centre into the attacks describes them as “remarkably effective”. “Within a relatively short period, operations by different insurgent groups were able to inflict huge damage, rendering many sectors partially or totally non operational. Production, refining, distribution or export of oil have all been affected or suspended for long periods of time”.

Because of these risks, companies are investing heavily in security – both to protect the perimeter and interior of their facilities.

Governments are also investing in security measures, says Alani, who explains that it is the responsibility of the state to protect the areas outside oil sites. “Companies are investing in their own security – the security of their installations, their offices and their staff. They are also relying on governments to protect the area outside the installation. So there are two levels of protection.”

He gives the example of the Saudi government which has invested in an additional 35,000 oil protection forces to protect the outside of Aramco’s facilities across the Kingdom: “The oil protection forces used to be about 10,000. Now the government has injected an extra 35,000 personnel just to protect oil installations.  Many of them will have come from security or military institutions and they will have had special training to understand the new class of protection oil. It is the biggest investment in security so far. We are talking about a cost of billions not millions.”

Companies themselves are also placing a higher priority on recruiting security staff internally with this function having become one of the most important within these organisations: “Heads of security have become some of the most important people in the company. They are equal now to the heads of safety.”

As well as investment in extra personnel to protect oil installations, companies are investing heavily in technology such as satellite monitoring systems, security cameras and sensors: “There are two kinds of investment that companies can make in security, human or technical,” says Alani. “You cannot substitute humans with technology or vice versa. You have to invest in both in order to be successful.”

He goes on to say that it is crucial for oil and gas companies to invest in security to protect oil exports from maritime threats. This is particularly the case for oil being transported on the Strait of Hormuz – which is used to transport around 20-30 tankers on average per day  - and could be the location for the Trans-Arabia oil pipeline project.

“The Iranians have been saying for the past two years that they are going to close the Strait of Hermes and prevent oil shipment from the region,” says Alani.

Alani says that while oil and gas companies are clearly placing a high priority on security – they must not become complacent because the measures have worked so far.
“We have to live with the reality that oil installations and transportation are under threat and this must be taken seriously. We are not dealing with a crisis, we are dealing with a permanent issue and it has to be dealt with as a permanent issue. The investment in it must be sustainable.”

 

About the Gulf Research Centre:

The Gulf Research Center (GRC) is an independent research institute located in Dubai , United Arab Emirates (UAE). The GRC was founded in July 2000 by Mr. Abdulaziz Sager, a Saudi businessman, who realized that in a world of rapid political, social and economic change, it is important to pursue politically neutral and academically sound research about the Gulf Cooperation Council (GCC) countries and disseminate the knowledge obtained as widely as possible. The GRC seeks to provide a better understanding of the challenges and prospects of the GCC

Activities and services:

Research: Conducting research on Gulf issues
Providing education Solutions: through Implementing the 'knowledge program', which targets higher management circles in the fields of politics, economics, business administration and security from an international perspective and within a framework of coordination with international universities and institutes. And offering training courses for students, especially post-graduate students, government and non-government employees on scientific research methods and applications of modern technologies in research.
Media: Monitoring news coverage around-the-clock of events and developments in the Gulf region as published, broadcast and/or tele-cast by local, regional and international media.
Consultancy: preparing studies and offering expert consultation to governmental and non-governmental organisations in different fields within the centre’s primary concerns.
Publishing books on topics in the field of social sciences and/or humanities.