Iraq Shells Saudi Oil Installation, Setting It Aflame; No Casualties : Combat: Allied forces knock out the Iraqi guns. The facility was not a big producer.

In the first offensive military action launched by Iraq after the outbreak of fighting early Thursday, Iraqi artillery shelled an oil installation on the coast of northeastern Saudi Arabia, setting crude oil stocks aflame. Allied forces then knocked out the Iraqi guns.

The shelling hit the oil facility at Khafji, about 11 miles south of the Kuwait border, for about two hours Thursday morning as U.S. warplanes streaked overhead to hit targets in Iraqi-occupied Kuwait.

The oil installation, which belongs to the Arabian Oil Co. Ltd., is jointly owned by Japan, Saudi Arabia and Kuwait and handles oil from the so-called neutral zone oil fields that lie offshore on the border of the two countries. Officials said the facility did not produce a significant amount of oil.

There were no casualties reported in the shelling, but there were conflicting accounts about the extent of damage. An oil company official said one small holding tank was set ablaze, while the Saudi government said the shelling ignited a number of tanks.

A Saudi government statement said two tanks were still burning late Thursday. Television pictures from the area showed an immense black cloud of smoke pouring over the northern Persian Gulf.

The Saudi statement said the civilian population of the town, which had been 20,000 before Iraq’s invasion of Kuwait Aug. 2 but had dwindled to 1,500 in recent days, was evacuated before the shelling began. It said Saudi military forces that had manned gun emplacements around the town had been ordered to withdraw beyond the range of Iraqi gunners.

The Saudi statement said the Iraqi guns were finally “spontaneously destroyed” by air and ground forces. One report said that U.S. Army Cobra helicopters had gone into action against the Iraqi artillery.

A U.S. military spokesman said only that the Iraqi guns had been “basically neutralized,” but it was unclear which unit had gone into action.

The artillery was presumably fired from the extreme south of Kuwait, where a similar pumping facility belonging to the U.S. Getty Oil Co. was seized by the Iraqis after the invasion of the emirate.

U.S. Army units sent a motorized patrol to Khafji after reports that figures were seen on rooftops of Khafji’s buildings, but withdrew after the reports proved unfounded.

Nobuo Atsumi, a liaison official for the oil company, said in a telephone interview that none of the personnel working at the installation had been injured by the barrage because everyone had sought refuge in a bomb shelter earlier in the day.

Atsumi said three shells landed within the facility, with one hitting a storage tank. After the bombardment, the company evacuated its personnel from the facility and shut down pumping operations from the offshore fields.

The official said there were no ships taking on fuel at the time of the attack. Oil is pumped from offshore wells to onshore tanker farms by underwater pipelines.

In normal times, before Iraq’s invasion of Kuwait, the Khafji operation produced between 300,000 and 350,000 barrels a day of oil. But Atsumi said the facility was pumping only “minimum quantities” of crude oil from the offshore fields in the last month.

In recent weeks, Khafji had been home to hundreds of interned Kuwaiti refugees who had crossed the border and were awaiting official clearance to enter Saudi Arabia.

The neutral zone was established more than 30 years ago to share oil profits from fields lying under both Saudi Arabia and Kuwait. But the combined output of the operations accounted for only a tiny percentage of Persian Gulf oil supplies.

The loss of the tank was not considered significant, British Defense Secretary Tom King told a news conference in London.

The artillery fire aimed against Khafji proved to be the first offensive military action generated by Iraq after allied forces launched Operation Desert Storm. Later, Iraq fired missiles at Israel.

Iraqi forces directed antiaircraft missiles and cannon fire against attacking allied warplanes over Iraq and Kuwait but did not launch any attacks against the American-led ground forces massed in northern Saudi Arabia.

There were initial reports that Iraq had launched a Scud-B missile, apparently stemming from a civil defense alarm in the eastern Saudi city of Dhahran, which sent residents scurrying into air-raid shelters before dawn.

Britain’s air chief marshal, David Craig, said that as far as he knew, there were no confirmed reports of Scud missile attacks on Saudi Arabia. “But I know there have been some false alarms,” he added.

Wallace reported from Manama and Murphy from Dhahran, Saudi Arabia.