Vol. 5, No. 19 March 16, 2006
Had the February 22 attack on Saudi Arabia’s largest oil complex at Abqaiq been successful, oil prices would have likely broken all records and might have caused a worldwide economic crisis.
The two car bombers who attempted to breech the Abqaiq security perimeter were senior al-Qaeda members, giving credence to the Saudi government’s claim that it has largely succeeded in breaking the back of the organization, and that only a handful of veteran activists are functioning in compartmentalized cells.
Moreover, since 2003 the authorities in the Eastern Province have been enjoying the increasing cooperation of the local population, which is largely composed of Shi’a employed by Aramco or benefiting from the oil industry.
Riyadh is expected to have $220 billion in financial reserves and a budgetary surplus of over $30 billion in 2006. The kingdom’s per capita income, which declined from $21,000 in the early 1980s to about $6,000 by the end of the 1990s, increased to $13,000 in 2005.
Properly managed, Saudi Arabia’s economy is likely to continue to prosper and help the House of Saud overcome the frequently forecast collapse of its regime. However, developments in nearby countries, especially the escalation of the Iran nuclear crisis and the possible civil war between Iraq’s Shi’a majority and its powerful Sunni minority, could have serious ramifications on the Saudi regime’s stability.
Al-Qaeda Targets Saudi Arabia’s Largest Oil Complex
President Bush’s new energy policy, announced in his State of the Union address – in which he said that America should reduce its dependence on Middle East oil by 75 percent by 2020 – was vindicated on February 22, 2006, by Saudi al-Qaeda’s failed attack on the kingdom’s largest oil complex at Abqaiq. This facility, which processes 60 percent of Riyadh’s 9.5 million bpd oil production, is located 40 km north of Dammam, Saudi Arabia’s Eastern (oil) Province capital, and only about 13 km from Ras Tanura (on the Persian Gulf), the largest oil terminal in the world and the primary outlet of Riyadh’s oil exports.
Not surprisingly, the February 22 attack on Abqaiq caused April oil futures to spike by $2.10 to $64.14 a barrel. Had the attack been successful, oil prices would have likely broken all records and might have caused a worldwide economic crisis. An Internet site used by Saudi al-Qaeda took responsibility for the attack on Abqaiq and named the two “martyrs” who carried out the daring attack. It vowed to launch similar operations against Saudi oil installations, which it believes are surrendering the kingdom energy’s wealth to “infidels” to help sustain their economy. This would be in line with bin Laden’s call last year (recently reiterated by his deputy, al-Qaeda ideologist Ayman al-Zawahiri) to target the Arab world’s oil industry.
According to the London-based (Saudi-owned) daily A-Sharq al-Awsat,1 the two “terrorists” who attempted to bomb Abqaiq were on the list of 36 most-wanted “deviants” published by Riyadh last June, 21 of whom escaped the country (probably to Iraq). Most of the remaining 15 have been killed or incarcerated. The list has since dwindled to four.
Two cars laden with explosives attempted to penetrate a side gate of one of three heavily-guarded fences surrounding the Abqaiq complex (the external one is about a mile from the complex proper, not far from Abqaiq city). In fact, the first suicide bomber rammed his car into the gate and was killed, enabling the other to drive through a hole in the fence, only to be blown up immediately by the guards’ fire. Nevertheless, two security personnel were killed and four were wounded in the exchange of fire and the explosions that ensued.
Not surprisingly, Ali al-Na’imi, the Saudi energy minister, immediately stated that the oil complex “that continues to operate normally” sustained no damage. Na’imi’s statement minimizing the scope of the Abqaiq attack was meant to reassure the world that al-Qaeda is incapable of disrupting the kingdom’s oil production and export capacity and that the Abqaiq incident demonstrated this.
Nevertheless, unconfirmed reports claim that for several hours other terrorists exchanged fire with security forces in the vicinity of Abqaiq. What is certain is that the explosion ignited a fire in a small, ruptured pipeline that was quickly extinguished. Moreover, several Asian workers were wounded by the explosions or stray bullets, indicating that the suicide bombers were somehow able to penetrate the outer perimeter of the extensively guarded Abqaiq complex (backed by sophisticated electronic devices) and that Saudi al-Qaeda remnants can still threaten the kingdom’s extensively protected oil infrastructure.
A few days later, Saudi elite forces surrounded an al-Qaeda safe house in Riyadh, and five additional “deviants” claimed to belong to the Abqaiq group were killed. Moreover, according to the Saudi authorities, the Riyadh safe house was stocked with explosives and weapons. It is alleged that these munitions were to be used against another oil target. Moreover, the Iraqi authorities announced a day later that they had arrested a Saudi al-Qaeda member who participated in the Abqaiq operation.
Nonetheless, the fact remains that the two car bombers who attempted to breech the Abqaiq security perimeter were senior al-Qaeda members, giving credence to the Saudi government’s claim that it has largely succeeded in breaking the back of the organization, and that only a handful of veteran activists are functioning in compartmentalized cells.2
Jihad Against the Oil Industry
Many of the numerous sources that reported the Abqaiq terrorist attack claimed that this was the first time that al-Qaeda mounted an operation against a Saudi oil installation (something unacceptable to the majority of the Saudi population, which depends on oil revenue), rather than assassinating infidel expatriates working for Aramco or somehow related to the Saudi oil industry (as was the case in Yanbu in the western province, in Riyadh, and in Al-Khobar in the Eastern Province).
Most reports ignored bin Laden’s calls in 2004 and again in 2005 to wage a jihad against the Saudi and Persian Gulf oil industries and against the “infidel” House of Saud, which is selling the Muslim world’s wealth cheaply to Western “crusaders.” They largely ignore the 2003 attack on the French tanker Limburg off the coast of Oman and al-Qaeda’s attempt about a year ago to use explosives-laden speed boats (possibly coming from eastern Arabia) to blow up Iraq’s Persian Gulf terminals. They also ignored the 2004 raid on Aramco’s Al-Khobar housing complex, which killed 22 people, 19 of whom were expatriate oil employees.
According to a document recently posted on the web, the guidelines for such attacks were laid out in a manifesto written by Abdul Aziz al-Enezi, a prominent al-Qaeda ideologue, who was arrested last year in Saudi Arabia and who advised mujahidin to attack oil installations and pipelines but “steer clear of oil wells because they are the lifeline of Muslim states.”
The abortive al-Qaeda Abqaiq operation was related to the September 2005 decimation of a cell of seven mujahidin (five in a safe house stocked with large quantities of explosives and weapons) by Saudi security forces in Dammam. The cell, in the heart of the Saudi oil industry, was probably connected to a planned attack on a major oil installation in the region.
Al-Qaeda Targeting Energy Facilities
Indeed, there is growing evidence that al-Qaeda is targeting energy-related facilities across the Middle East. For example, the Jordanian authorities disclosed that they had captured a group of al-Qaeda (non-Jordanian) militants who planned to blow up a major power plant feeding the whole country. According to one source, this group, which had Saudi members, among others, plotted as well to attack Red Sea oil terminals and other installations. (They were responsible for several Lebanon-based missile attacks on northern Israeli townships a few weeks ago.)
Riyadh and its American security advisors are cognizant of the vulnerability of the oil-rich Eastern Province, which is of paramount importance to the kingdom and the world. Thus, substantial sums have been allocated to modernizing and strengthening the regional security forces, backed up by U.S.-trained National Guard battalions (commanded by King Abdallah). Moreover, since 2003 the authorities in the Eastern Province (as well as in some other regions) have been enjoying the increasing cooperation of the local population, which is largely composed of Shi’a employed by Aramco or benefiting from the oil industry. Indeed, the windfall from oil in recent years has further enabled the Saudi authorities to “buy” the goodwill of the Al-Hasa population, with the exception of some extremist Wahhabi Sunnis, who resent the ascent of the Eastern Province’s traditionally despised Shi’a “citizens.”
A Growing Saudi Budget Surplus
According to the Saudi Arabia Monetary Agency (SAMA), Riyadh is expected to have $220 billion in financial reserves, with no external debt, by the end of 2006. Saudi revenue from all sources (according to Ibrahim al-Assaf, the Saudi minister of finance) amounted to $148 billion in 2005, which is expected to rise about 15 percent in 2006 due to high oil prices and 9.5 million bpd oil production. The kingdom’s revenue from SABIC and similar state-owned, oil-related industrial complexes, as well as from investment abroad, is also projected to rise meaningfully.
Not surprisingly, Minister al-Assaf estimates that the Saudi government’s income in 2006 will substantially surpass expenditures and leave Riyadh with a budgetary surplus of over $30 billion, although it has increased its 2006/2007 budget expenditure by 10 percent to nearly $100 billion. This has enabled Riyadh to allocate substantial sums