CRISIS IN THE PERSIAN GULF : Gulf War May Threaten Oil--for a While

A major military confrontation in the Persian Gulf amid the world’s richest concentration of oil fields would threaten the ports, pipelines and other facilities needed to move that oil to market.

The greatest danger to oil supplies would come if Iraq successfully invaded Saudi Arabia and seized its oil fields. “That would (disrupt) the flow of oil far more certainly than aerial strikes or missiles or whatever,” said Henry Schuler, director of the energy security program at the Center for Strategic and International Studies in Washington.

But analysts were quick to argue that it was unlikely the Iraqis would prevail in such a move, and short of that, it is unlikely they would be able to inflict major damage on pipelines, oil fields, refineries or tankers. The analysts noted that the eight-year Iran-Iraq war did not cause major disruptions to oil movements in the Gulf.

“The Gulf War was really the ultimate horror scenario American planners could have thought of,” said Graham E. Fuller, a Middle East specialist with the Rand Corp. in Santa Monica. “And yet things went on fairly comfortably for Western oil supplies.”

Nonetheless, the threat is clear: The bulk of Saudi Arabia’s vast oil fields, which produce between 9% and 10% of the world’s total crude oil output, lies in the northeastern part of the country, within 300 miles of the Kuwaiti border.

“If (the Iraqis) dominate Saudi airspace, they could convulse oil production in the area,” said Robin West, president of Petroleum Finance Co. in Washington.

“If you have war in Saudi Arabia, you have a big, big problem,” said John Redpath, an oil analyst with Energy Security Analysis Inc. in Washington.

Earlier this year, crude oil production from Saudi Arabia, the United Arab Emirates, Iran, Iraq, Kuwait and Qatar averaged about 16.4 million barrels per day, or about 27% of the world’s total oil production, according to the Central Intelligence Agency.

A worldwide embargo of Iraqi and Kuwaiti oil has effectively removed as much as 4 million barrels of that from the world supply; most of the rest moves through the Persian Gulf.

Also within range of Iraq:

* A major refinery and port facility at Ras Tanura, the main Saudi loading point for oil tankers on the Persian Gulf. A second port lies close by at Ju’aymah.

* A petrochemical complex jointly owned by Shell Oil Co. and the Saudis at Al Jubail.

* The Petroline east-west pipeline, which carries oil from Saudi oil fields in the east to Yanbu, the major port city on the Red Sea. It is the main alternative transportation mode for Saudi oil if Persian Gulf ports are damaged or closed.

* The city of Dhahran, headquarters of the Saudi Arabian Oil Co., or Saudi Aramco.

In addition, oil from the United Arab Emirates, Bahrain and Qatar moves from nearby ports--and there are few alternatives to Persian Gulf shipping routes.

But analysts played down the chances of major military action, particularly now that the United States and other nations are sending troops into Saudi Arabia.

“I think the chances of any sort of attack like this are pretty slim,” said Joseph Story, a Middle East analyst and president of Gulf Consulting Services in Washington. “The retaliatory capabilities are enough that it makes it hard for them to do and punishing if they did.”

Economists point to the Iran-Iraq war as a precedent. Even though combatants regularly targeted each other’s oil facilities, oil movements were not significantly disrupted, they said. Even Iraq’s repeated bombing of Iran’s main oil loading terminal on Kharg Island failed to shut the facility down permanently.

In Saudi Arabia, short of a full-fledged occupation, it is unlikely that Iraq would be able to disrupt production from oil fields for long, some analysts said.

“When you hit a production facility, usually the repair can be made very fast,” said Fereidun Fesharaki, pre-revolutionary adviser to the Iranian oil ministry who now runs the energy studies program at the U.S.-funded East-West Center in Honolulu. “You may have a short term (physical) interruption and a much more psychological interruption.”

Not everyone agreed with that assessment. “There are choke points that can be destroyed, and the problem is that most of these facilities are huge, purposely built installations” designed especially to process vast amounts of Saudi oil, said Schuler.

“It’s not as if you can get replacement parts off the shelf. There are no other oil fields in the world like the Saudi oil fields, and therefore the facilities are very special and would not be easily replaced,” he said.

Such facilities--including ones that gather oil and others that separate natural gas, water and natural gas liquids from crude oil--are vulnerable because they tend to be concentrated in the oil fields, Schuler said.

Most analysts agreed, however, that damage to main pipelines could be fixed in a matter of days, as could most damage to refineries.

“It’s not easy to permanently destroy refinery facilities, as everyone learned during the Gulf War,” said Fuller. “It takes repeated attacks over and over again, pinpointing certain parts of a refinery, to be effective, and that would be difficult with American air power in the equation.”

A war with Iraq could threaten tanker traffic moving through the Persian Gulf. During the Iran-Iraq war, both sides hit well over 300 tankers, estimated Arthur McKenzie of the Tanker Advisory Center in New York. On a typical day, he estimated, nine or 10 tankers may make the trip into the Persian Gulf, and an equal number may steam out.

But the threat to tanker traffic is relatively small, given past experience. “It didn’t prove to be very successful in the Iran-Iraq war,” Schuler said. “It was not especially fruitful . . . (because) it didn’t disrupt the flow of oil enough.”