Saudi Shoot Out; Oil Jitters
20 May 2004
Earlier today Saudi security forces killed four terror suspects in a firefight in the Al-Qassim region, north of Riyadh. [Somewhat grisly picture on the link.] A new pipeline carries 285,000 barrels of oil per day from Dahran to Al-Qassim.
Informed sources said two booby-trapped pickup trucks found and defused by security forces last month in the Al-Shmassiya region on the road between Riyadh and Al-Qassim were registered to one of the four killed in the shootout.
There have been prior fatal clashes between Saudi security and terrorists in the region during the past few years.
The potential for terrorism directed at the Saudi oil industry adds to the market unease over supply stability -- and hence adds a risk factor onto the price. From USA Today:
“Taking down Saudi Arabia’s oil infrastructure is like spearing fish in a barrel,” former CIA officer Robert Baer writes in his recent book, Sleeping with the Devil.
The kingdom has five giant fields that are connected by 10,500 miles of pipe, much of it above ground. A coordinated assault on five or more key junctions in the system could put the Saudis out of the oil business for two years, Baer writes.
Nail Al-Jubeir, spokesman for the Saudi embassy in Washington, says the kingdom has spent decades beefing up security. “Our oil can come out of the (Persian) Gulf, or ... from the Red Sea. We’ve built in redundancies to make sure there’s enough oil for the world and for our income for the future.”
Those assurances do little for Matthew Simmons, a Houston-based investment banker who specializes in oil and gas ventures. He says he was alarmed by the light security at Saudi Arabia's massive Abqaiq oil processing plant.
To cripple the Saudi oil network, “All you’d need to do would be to get a big fire raging at Abqaiq,” Simmons says. “It’s got a chain-link fence around it. Chain-link fences aren’t exactly the Maginot Line.”
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