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Attack adds to oil security focus

Supply disruption could send price soaring

Smoke rises in Jeddah, Saudi Arabia, on Monday.
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Attack on U.S. consulate in Saudi Arabia leaves several dead.
Saudi Arabia

RAS TANURA, Saudi Arabia (CNN) -- Monday's attack on the U.S. Consulate in the port city of Jeddah has again put the spotlight on the security of Saudi Arabian oil supplies.

While oil prices have retreated from their record highs of October, a terrorist attack on oil installations in Saudi Arabia could send them soaring to new heights, according to a leading industry analyst.

Such attacks now take place on a regular basis in neighboring Iraq, where insurgents have targeted oil pipelines and even staged a suicide attack on an offshore oil facility.

CNN has been investigating security at Saudi Arabia's main oil facilities and found that while the installations have impressive and elaborate protective measures, they are not completely secure.

"I could sit down now with my training in the CIA and people I know and do a concerted military attack on Saudi facilities, standoff attacks with rockets, and take 5-6 million barrels off the market," said former CIA officer Bob Baer.

That would represent more than half of Saudi Arabia's daily output. Saudi Arabia is the largest exporter of oil in the world and has one-quarter of the world's oil reserves.

Baer also points to the possibility of a suicide air attack, similar to the September 2001 coordinated attacks on New York and Washington, D.C., which could wipe out a key facility such as Ras Tanura, the world's largest oil refinery. Ras Tanura, like most Saudi facilities, is located in eastern Saudi Arabia, near the Persian Gulf.

Baer said he is not the author of this so-called doomsday scenario, but that it was first studied many years ago by engineers at Aramco, the state-owned oil company that operates Saudi Arabia's facilities.

"If a major facility was knocked out, such as Ras Tanura export facility, and it looked like it would be out for many months then the market would be absolutely frenzied and prices would rise through the sky almost," said Adrian Binks, publisher of the Petroleum Argus newsletter.

Aramco's boss told CNN he was confident that the oil would keep flowing even in the event of an attack.

"We always have drills about 'what-ifs' and therefore a terrorist incident, if it were to happen, it's not going to be worse than an industrial accident in a volatile industry like ours," said Abdallah S. Jum'ah, Aramco CEO.

Jum'ah invited CNN to tour Ras Tanura and the nearby shipping facility of Sea Island, where Saudi oil is pumped into tankers for export.

CNN saw double fencing around all facilities, some of it electrified, and security patrols guarding an area in which millions of gallons of oil were stored in above-ground tanks.

CNN was also advised that many of the more elaborate security precautions were hidden from view and that Saudi oil facilities had the same level of protection as military bases.

Jum'ah and others at Aramco said that the Saudi oil infrastructure is protected by the sheer vastness of its facilities, which are spread out over thousands of square miles. Terrorists would have to succeed in multiple attacks in order to take the system off-line.

Baer agrees but says that doesn't make Aramco invulnerable.

"At the end of the day, you can put trillions of dollars into security but these facilities are mostly above ground. A concerted attack, like they've attacked some of these compounds in Saudi Arabia, a military attack, you can't protect against it," said Baer.

Baer said it would be easy to use rocket-propelled grenades against the thousands of miles of pipelines that snake across Saudi Arabia.

Aramco officials said pipeline attacks, even if successful, could be easily and quickly repaired. Less easily repaired would be the damage to already volatile oil markets, even if an attack is on a small-scale.

"The most likely scenario in Saudi Arabia is an attack on pipelines ... then prices would spike for a very short time," Binks told CNN.

Members of the group known as al Qaeda in Saudi Arabia have killed and then mutilated western oil workers on at least two occasions. Oil installations have not yet been targeted, but that could change.

Baer said what is happening in Iraq should serve as a warning.

"These people are perfectly capable of, if they got some sort of victory in Iraq, of turning south and going against the Saudi Royal Family and after the facilities. I've got no doubt about that."

Al Qaeda has increasingly launched attacks within Saudi Arabia, including two suicide bomb attacks that struck Riyadh housing compounds in May and July of 2003, killing 40 people, most of them Muslims.

Al Qaeda's Saudi wing has claimed responsibility for Monday's attack on the U.S. Consulate in the port city of Jeddah that left five consulate workers dead.

"This operation comes as part of several operations that are organized and planned by al Qaeda as part of the battle against the crusaders and the Jews, as well as part of the plan to force the unbelievers to leave the Arabian Peninsula," the group said in its claim of responsibility.

-- From CNN Senior Investigative Producer Henry Schuster and Senior International Correspondent Nic Robertson

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