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June 02, 2004

Saudi Arabia: Officials Seek To Downplay Oil-Terror Fears

by Peyman Pejman

Recent terrorist attacks in Saudi Arabia -- like this weekend's fatal hostage-taking of foreign oil workers in Al-Khobar -- have sparked fears that oil facilities in the world's largest exporting country may become targets for Islamist militants. But Saudi officials are downplaying such concerns, saying production will remain steady.
Dubai, 1 June 2004 (RFE/RL) -- The past month has seen two terrorist attacks in Saudi Arabia that have taken place near oil installations.

The attacks have sparked concern about the security of oil-production facilities in the world's largest exporter.

That concern, in turn, has led to a sharp rise in oil prices, which yesterday saw prices jump to over $42 a barrel as traders reacted to the killings of 22 foreign workers in Al-Khobar over the weekend.

The previous attack took place on 1 May, when militants in the Red Sea city of Yanbu shot and killed five Western energy workers.


With oil prices skyrocketing, any successful attack on Saudi facilities could have a devastating ripple effect on the world market.

Officials from the Organization of Petroleum Exporting Countries (OPEC) have sought to downplay such doomsday predictions. And Saudi authorities are seeking to assure market-watchers that production at the kingdom's energy facilities remains unaffected by the recent sweep of attacks.

On 29 May, even as rescue efforts were coming to a close in the Al-Khobar hostage-taking, Saudi officials in Washington and Riyadh were making themselves available to journalists in an attempt to minimize alarm.

The state-run Saudi oil giant Aramco issued a statement as well, saying normal operations were continuing at all company facilities.

On the eve of an extraordinary OPEC meeting in Beirut, Saudi Oil Minister Ali al-Nuaimi today said Saudi Arabia and other OPEC members are working to bring oil prices back down to an acceptable range of between $22 to $28 per barrel. He stressed, however, that many pricing factors are beyond OPEC's control.

Saudi officials, meanwhile, say too much has been made of the potential danger to the country's oil installations. They say while the attacks have been near major oil installations, the facilities themselves have not been targeted.

But not everyone finds such statements reassuring.

Youssef Ibrahim, a Middle East oil and energy analyst, is one of them. He says terrorists may be embarking on a new strategy: "The question is not how safe they are now; the question is whether this is the beginning of a trend or not; are we going to see more of [these attacks] or not. But their purpose really is to shake off confidence in Saudi Arabia's ability to supply oil, and that purpose has clearly been accomplished."

Ibrahim says Saudi officials need to explore possibilities the kingdom's security apparatus has been penetrated by Al-Qaeda or other militant groups: "You have to look at the whole security structure up and down. In at least once case, in Yanbu -- although we don't know all the facts yet -- [it appears] that those [who] launched the attack may have been working in the [energy] complex. These are apparently people who are from the region, so they kind of know it well, and they seem to know where they were going."

Some Saudi officials admitted after the Yanbu incident that the attackers apparently used an official site entry card to access the facility. An official investigation into the incident is continuing.

Ibrahim says another goal of terrorists operating in the kingdom is to frighten foreign energy workers to leave Saudi Arabia en masse.

Many of Saudi's oil installations and facilities are either old or simply by design in need of near-constant maintenance or upgrade -- something that for decades has required the involvement of tens of thousands of Western energy workers.

Ibrahim says Saudi Arabia badly needs its foreign workers to run its oil facilities and installations: "[Saudis] can continue to pump oil but there is more to [the industry] than pumping oil. There is the refining industry; there is the petrochemical industry; there is the kind of upkeep that must be going on all the time. If everybody left, it would be a very serious problem."

There is no indication yet that foreigners are about to leave Saudi Arabia in large numbers, although the Yanbu and Al-Khobar attacks did prompt some energy workers to leave the country.

While the British ambassador to Saudi Arabia has warned that more attacks may be imminent, the United States has advised its citizens to avoid traveling to the kingdom, or to leave it if they are already there.
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