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Terrorists pick oil operations as easy targets
Sunday, October 03, 2004

Terrorists and insurgents are stepping up attacks on oil and gas operations overseas in an effort to disrupt jittery energy markets, destabilize governments and scare off foreign workers, analysts say.

The attacks have been most intense in Iraq but also have occurred in recent months in Indonesia, Pakistan, India, Russia and Nigeria. In many cases, the attacks are orchestrated by terrorists or rebels, often Islamic extremists, seeking to cause economic disruption or to steal oil to finance their operations, analysts say. Their targets are sometimes pipelines, tankers and workers in areas with varying levels of security.

"You have motive and opportunity, so you're seeing more of this," said Anne Korin, director of policy and strategic planning for the Institute for the Analysis of Global Security, a Maryland-based group that tracks attacks on oil targets. "It's a very effective strategy on their part. ... Oil is really a very target-rich area."

Korin said terrorists find it easier to go after energy, which she called "our soft underbelly," because the targets often are convenient and attacks have a high impact. Potential targets can be found near terrorists' home bases and in areas with less security than in the United States.

Al-Qaida has repeatedly noted the appeal of oil targets, intelligence analysts say. Documents from the terrorist organization, obtained and translated earlier this year by IntelCenter, a Virginia company that provides risk assessment and terrorism information to government and businesses, calls for "hitting wells and pipelines that will scare foreign companies from working there and stealing Muslim treasures."

Those documents also highlighted as a "practical example" a 2002 suicide bombing attack on a French-chartered oil tanker off the Yemeni coast, killing a crew member and spilling 90,000 barrels of oil into the Gulf of Aden. Last month, several militants were convicted in Yemen for their roles in the tanker attack.

The attacks come as the world's oil production is stretched close to its limit. Analysts view the persistence of the attacks as a factor that adds pressure on oil prices. High prices have been cited by the Federal Reserve Board as contributing to slow U.S. economic growth.

No complete statistics exist on the number of oil and gas targets hit worldwide. In Iraq, the attacks have steadily increased this year from two in January to 18 in September, as of last week, according to the Institute for the Analysis of Global Security in Washington, D.C. In a recent high-profile incident, gunmen killed a top Iraqi oil official in Mosul and attacked a pipeline in the south and a well near Baghdad. The Iraq attacks have caused huge disruptions in the country's oil production and have resulted in millions in losses to the government.

Outside Iraq, armed men stormed a gas tanker anchored in Indonesia in July. The same month, attackers blew up oil and gas pipelines in India. Oil and gas pipelines were blown up in Russia in June and August.

"Oil is just very much in the cross hairs around the world," said John Kilduff, senior vice president for energy risk management at Fimat USA in New York, a brokerage unit of Societe Generale. "There's no country, there's no production that can come to the rescue of any kind of terrorist attack."

Kilduff said oil markets are most concerned about attacks in Saudi Arabia, the world's largest oil exporter. Those fears have heightened since May when a group associated with al-Qaida claimed responsibility for an attack on foreign oil workers that left 22 dead in the Persian Gulf city of Khobar. In the first day of trading on the New York Mercantile Exchange after the attack, U.S. benchmark crude futures jumped $2.45, or 6 percent.

First published on October 3, 2004 at 12:00 am
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