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Last Updated: Thursday, 3 June, 2004, 13:17 GMT 14:17 UK
Is the Saudi oil industry safe?
By Richard Allen Greene
BBC News Online, London

Saudi special forces patrol outside the Oasis compound, 30 May 2004
Saudi security is meant to be extremely tight
Oil prices shot up following a militant strike on a key installation in Saudi Arabia at the weekend of 29-30 May - the fifth attack in the kingdom in just over a year.

Saudi Arabia is the world's largest oil exporter and instability in the kingdom would wreak havoc with energy supplies and the economy around the globe.

The militants, who killed at least 22 people, know that well.

The Saudis themselves explained the logic of the radicals - believed to be radical Islamists aligned with al-Qaeda - in the wake of Saturday's bloodshed.

"They are trying to target the oil industry and scare people - and in particular foreigners - into leaving the country," Saudi government adviser Adel al-Jubeir told the BBC.

"They believe that if this happens, the Saudi economy will collapse and the Saudi government will be ripe for the plucking," he said.

"The problem with this logic is that it is wrong. The oil industry is not going to be affected by this," he said.

Divided opinion

The Saudis may be determined to put a brave face on the attacks, but expert opinion is divided on what effect they will actually have.

Kyle Cooper, an energy analyst at CitiGroup Global Markets, pointed out that the militants have so far not succeeded in disrupting any oil flow.

"It is important to remember that the oil infrastructure in Saudi Arabia is heavily, heavily guarded," he told the BBC's World Today programme.

An industrial plant strips natural gas from freshly pumped crude oil at Saudi Aramco's Shaybah oil field, Shaybah, in Saudi Arabia's Rub al-Khali desert
World's biggest oil exporter - contains 25% of world supplies
Oil counts for $63bn exports (out of $67bn)
5 giant oil fields
10,000-mile pipeline network
State-run Aramco produces 95% of oil

"Attacks have not been able to affect the infrastructure," he said, adding that even if militants were able to damage a pipeline or refinery, the kingdom could continue to export oil.

"Saudi Arabia has multiple facilities - if one were damaged, it's most likely another one would be able to come on line very quickly and replace the lost production," he said.

The Saudis themselves say their security measures include cameras, motion sensors and helicopter patrols as well as background checks on employees, the BBC's Frank Gardner in Saudi Arabia reports.

He says he had to pass through six checkpoints staffed by armed guards to reach the Ras Tanura refinery.

The difficulty in bringing down infrastructure may be the reason all the targets in the past 13 months have been people rather than installations.

Thousands of foreigners from Asia and the west work in the Saudi oil industry; the militants appear to feel that if they can scare foreigners away, the industry will suffer.


Muhammad Ali-Zainy of London's Centre for Global Energy Studies is not convinced they are right.

The main Saudi oil company, Aramco, employs only a few thousand foreign workers out of a total labour force of about 40,000, he told BBC News Online.

"Over 90% are Saudi," he said. Even the departure of all the foreigners, he said, would not be likely to cripple production.

And Kevin Rosser of Control Risks Group, a security firm, said he doubted even continuing attacks would drive all foreigners from the kingdom.

Saudi police check cars at a check point in a Khobar, Saudi Arabia
Saudi Arabia is and remains one of the most tightly controlled societies in the world
Alex Standish,
Jane's Intelligence Digest
He pointed out that international business continues to operate in dangerous countries such as Colombia.

"The problem is Saudi Arabia has been a very peaceful country until only a few years ago," he told the World Today.

Companies now simply must adjust to doing business in a country that has become more dangerous, he said.

"They will make that adjustment, as they have made it elsewhere in the world," he predicted.

He underscored the fact that the level of violence in Saudi Arabia was nowhere near what it is in Iraq, where not just people but infrastructure itself has been attacked.

But intelligence analyst Alex Standish warned that even making the comparison between contemporary Saudi Arabia and post-war Iraq was a sign of how much had changed.

"Any comparison to Iraq is deeply worrying," he told BBC News Online.

Mr Standish, editor of Jane's Intelligence Digest, suggested that the attacks showed that Saudi security was on the back foot.

Role of public

"Saudi Arabia is and remains one of the most tightly controlled societies in the world. The House of Saud knows that it remains in power - as the Shah of Iran did - because of its security forces," said Mr Standish.

"Imagine a situation in the UK where you had 22 fatalities [from a militant attack]. You have to ask, 'How did it happen?'"

He raised the possibility that if the authorities do not quickly crush the militants, Saudi society may turn against the government and back the radicals.

"There is a real risk that people sensing a regime in crisis may throw in their lot with what they see as a more dynamic force, rather than an embattled monarchy."

The BBC's Frank Gardner
"The economies of the world are counting on Saudi Arabia's chief export continuing to flow"

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