Saudi raid wake-up call to West

By NICHOLAS PYKE in London

It is only a few days since Prince Turki al-Faisal, the Saudi Ambassador to Britain, wrote an angry letter to the Independent. Terrorism, he insisted, poses no serious threat to the peace and security of the oil-rich kingdom despite the pessimistic tone of British media commentary.

Prince Turki will no doubt be putting pen to paper once again in the next few days.

Yesterday saw the second al Qaeda-backed raid on the kingdom's oil infrastructure within a month, with 25 killed, including one Briton, and 50 oil workers taken hostage.

Nine of those dead were hostages, found with their throats cut when Saudi commandos mounted a rescue mission last night.

Despite the kingdom's repeated assurances, the episode will trouble analysts for some time to come.

Saudi Arabia is the leader of Opec (the Organisation of Petroleum Exporting Countries), it is the world's biggest producer and it is sitting on a quarter of the globe's oil reserves. It is no exaggeration to say that the health of the global economy rests on the maintenance of supplies from this one Middle Eastern state.

The previous attack, which took place four weeks ago, may account for several dollars of the current price of a barrel of crude.

The Saudi Oil Minister, Ali al-Naimi, was due to meet Western oil executives to offer reassurance.

The world oil markets are already volatile, with prices hitting US$41 ($64) a barrel in the past few weeks amid fears that a major attack could disrupt exports. The price has risen from US$30 in just five months, tracking the escalation of violence in Iraq almost exactly.

According to Professor Andrew Oswald of Warwick University, oil prices at US$50 a barrel would produce a world recession - although even this would not match the soaring prices of the 1970s.

External pressures are coming from the booming economies of China and India, which in the long term will upset global oil mathematics with the strength of their demand for crude.

But there are also domestic concerns. Dr Mai Yamani, an expert on Saudi Arabia at the Royal Institute of International Affairs, says that political tension, rising violence and divisions among the princes of the ruling House of Saud mean that the country is in "chaos".

"It is the beginning of the end [for the regime]," Yamani said.

The threat posed by rising levels of violence in the Middle East, and in Saudi Arabia in particular, are preoccupying analysts.

Yesterday's attack comes almost exactly a month after six people, including two Britons, were killed in a gun attack on a Saudi oil refinery in the Red Sea coast town of Yanbu.

Fighters linked to or inspired by al Qaeda have been accused of a succession of attacks against Government and foreign interests in the kingdom, including the suicide-bombing of a residential compound for Westerners in the capital, Riyadh, in May last year that killed 34 people.

Robert Baer, a former CIA officer, is convinced that the kingdom's vast oil infrastructure is vulnerable, and with it the Western economy.

In his recent book, Sleeping with the Devil, he writes: "Taking down Saudi Arabia's oil infrastructure is like spearing fish in a barrel".

The kingdom has five giant fields connected by 16,900km of pipe work, most of it above ground. Baer says a co-ordinated assault on five or more key junctions in the system could put the Saudis out of the oil business for two years. A successful assault on the giant Ras Tanura complex "would be enough to bring the world's oil-addicted economies to their knees, America's along with them".

Jane's Intelligence Review has reported that over the past two years the Saudi Government has allocated an extra US$750 million to enhance security at all of its oil facilities as the risk of attack has increased.

At any one time, there are up to 30,000 guards protecting the kingdom's network. Anti-aircraft installations are also based at major locations to provide added defence.

Oil has been a mainstay of the Saudi economy since it was discovered in 1938, and production began under the then US-controlled and now nationalised Saudi Aramco (the Arabian American Oil Company).

Opec has played a significant role in maintaining oil market stability over the last few years, but the part played by Saudi Arabia has been crucial; the kingdom is the only country with sufficient capacity to increase production and bring down world oil prices.

Oswald believes the West had become complacent about the role played by oil in economic booms and busts, with too many prepared to discount its impact in a modern world. This is a lesson that may well need relearning - the hard way.

FIGHTING TERRORISTS


* Saudi Arabia launched a high-profile crackdown on terrorists after attacks on Riyadh housing compounds in 2003.

* The kingdom claims to have foiled dozens of terror plots.

* The most recent attack targeted the offices of Houston-based ABB Lummus Global Inc in the western city of Yanbu on May 1, killing six Westerners and a Saudi.

* Saudi Arabia relies heavily on six million expatriate workers, including about 30,000 Americans, to run its oil industry and other sectors.

* The kingdom produces about eight million barrels of oil a day.

* Many expatriates left, at least temporarily, after the Yanbu attack.

* The Saudi crackdown on extremists has included a public-relations campaign aimed at discouraging Saudis from offering any kind of support to extremists.


- INDEPENDENT