Protecting America’s Far-Flung Oil Supply

by JINSA Research Associate Allison Krant.

by JINSA Research Associate Allison Krant.

Every day for more than 40 years, the U.S. military has been safeguarding foreign oil sources and the sea-lanes through which that oil is carried. This policy, formulated during World War II and made explicit in 1980 to confront the Soviet Union, has served not only American security but has provided a crucial service for America’s friends and allies that do not have the resources to do it themselves. Since 9/11, transnational terrorist organizations rapidly expanded their targeting of the global petroleum extraction, refining and transport infrastructure disappointing to American policymakers expecting that in the wake of the Soviet Union’s demise, the energy mission could be scaled back.

It is necessary to add the calculated cost of stability in the Middle East, Central Asia, and elsewhere to the way Americans think of the price of energy – particularly as jihadi terrorism, both Sunni and Shiite, expands in the Middle East and Africa. While gasoline in America has remained relatively inexpensive at the pump, the cost of protecting the sources of that energy supply has increasingly risen in terms of defending resources where the domestic situation has been steadily deteriorating amidst the growing forces of criminality and religious radicalism.

Iraq’s 1990 invasion of Kuwait, a major oil exporter, and the larger concern that Saddam might use Kuwait as a jumping off point to seize Saudi oil fields, was the proximate cause of the first Gulf War. The 2003 war to oust Saddam Hussein was not itself a war for oil, as a more efficient policy to get Iraqi oil would have been to end the United Nations sanctions regime and allow Saddam access to commercial markets. The decision to invade stemmed in part, however, from the Bush Administration’s belief that conditions in the Middle East would continue to boil under pressure from despotic governments working with radical forces, putting Western access to energy sources at risk. The Administration concluded that the spread of consensual government in the region would reduce tension and increase security. As a practical matter, however, the industrialized world requires stable governments, democratic or not, willing and able to keep terrorists away from oil producing areas.

In July 2007, the National Petroleum Council (NPC), a federal advisory committee to the Secretary of Energy, released its report, “Facing the Hard Truths about Energy: A Comprehensive View to 2030 of Global Oil and Natural Gas.” The report acknowledged that while the “world is not running out of energy resources, complex challenges could keep the world’s diverse energy resources” from becoming sufficient and reliable amidst rising world energy demand. Furthermore, “these challenges are compounded by emerging uncertainties,” including “geopolitical influences on energy development, trade and security.” The study concluded that total worldwide demand for energy is projected to grow by 50 to 60 percent over the next 25 years, and that the accumulating risks to conventional sources facilitate a necessary response by policymakers, not only in the United States, but around the world as well.

Global Jihad Targets Oil

A video issued by al Qaeda deputy leader Ayman al-Zawahiri released by al Jazeera in December 2005 called “on the holy warriors to concentrate their campaigns on the stolen oil of the Muslims, most of the revenues of which go to the enemies of Islam.” Insurgent groups were urged to target Gulf oil facilities to help drive American forces out of Iraq, as well as to disrupt the current Iraqi government’s ability to provide services to its citizens, setting a precedent for other important al Qaeda deputies to adopt this new policy.

In March 2006, the Associated Press reported that an al Qaeda document posted to an Islamic militant web forum reiterated Osama bin Laden’s earlier call for armed attacks on “petroleum-related interests.” “The targeting of oil facilities is a legitimate means of economic jihad,” one of al Qaeda’s key religious voices, Abdelaziz bin Rashid al-Anzi, wrote. “Pipelines may be the front line in a long-term war of attrition on oil and its interests.”

A more recent report by the SITE (Search for International Terrorist Entities) Institute from February 8, 2007 noted the release of another Saudi al Qaeda publication, Sawt al-Jihad (Voice of Jihad), the organization’s electronic magazine, in which the main article of the magazine, “Bin Laden and the Oil Weapon,” encouraged attacks as part of a systematic effort to strangle the U.S. economy.

The steep number of attacks in Saudi Arabia, Iraq, and elsewhere suggest these calls have not fallen on deaf ears. In April 2007, Saudi police uncovered a large-scale plot aimed at disrupting the country’s oil infrastructure, which resulted in the arrest of 172 militants. Last February, al Qaeda launched an abortive attack on the Saudi petroleum complex of Abqaiq, the largest oil terminal in the world. The attack caused a slight rise in global oil prices, but the effect would have been much worse if the attack had succeeded in disrupting of oil flow and the halting of exports. Saudi Arabia represents about half of the world’s surplus production capability and supplies nearly 10 percent of the world’s oil.

There are near-daily occurrences between security personnel and armed militants intent on focusing their attacks directly on oil production facilities in the Gulf. Between 2003 and 2007, the Washington, D.C.-based Institute for the Analysis of Global Security (IAGS) has documented 461 cases of terrorist attacks on energy infrastructure through July 2007 in Iraq alone, with other attacks stretching from the African continent to the Saudi peninsula, and as far as Pakistan, India, and Indonesia. Dr. Gal Luft, IAGS executive director, warned of an “energy Pearl Harbor,” noting that the terrorists are well aware of the effects that a major strike on a facility such as Abqaiq would have. “They have identified the world energy system as the Achilles’ heel of the West and have made attacking it a central part of their plan,” he said in a March 5, 2006 op-ed in The Washington Post.

The implications for continuous attacks on Iraqi oil infrastructure are clear. Already a sectarian issue, shares from oil revenues cannot be dispersed if the pipelines and terminal facilities don’t operate. In turn, deep-seated frustration with the government ferments when Iraqi citizens cannot be provided with security or essential state services.

Oil prices, too, suffer from what traders labeled the growing “terror risk premium” in 2004, when prices per barrel hovered over the $40 mark. Today, just three years later, oil prices are that nearly twice this amount, and Goldman Sachs recently suggested the price could go to $95 by winter, a far cry from past oil prices.

Retired U.S. Navy Rear Admiral John Sigler, now a security policy professor at the National Defense University in Washington, argued that all of these incidences are not out of the ordinary for the American armed forces. Protection of the world’s oil facilities is part of United States National Security Strategy. Indeed, diffusing regional conflicts because threats to global and regional security threaten U.S. National Security and the security of her allies and friends is a part of President Bush’s doctrine, as well as the policy to enhance energy security.

In a recent interview with JINSA, Sigler, a former Central Command Plans and Policy Officer, said: “It is in our national interest to protect the sources of oil.” Any major attack that would disrupt the free flow of oil would have “a devastating impact on our interlocking economies,” for both producers and consumers. “We are protecting the global energy market,” he continued, and “are trying to defend global access to energy,” not just American access to the sources of oil.

“Attacks on individual oil rigs, however, would be a minor occurrence compared to an attack on an oil supertanker.” Sigler, a former deputy commander-in-chief of the U.S. Pacific Fleet, warned that protection has been focused too much on oil facilities and not enough on methods of transporting the oil.

Africa Takes Center Stage

American energy companies have diversified their sources of imported petroleum by increasing imports from Africa – particularly from Nigeria, Angola, Algeria, and Gabon. Twenty-two percent of America’s crude imports came from Africa in 2006, whereas gross oil imports from the Persian Gulf during 2006 accounted for 17 percent of America’s total net oil imports. The National Intelligence Council predicted that by 2015, American imports of African oil are forecast to increase to 25 percent.

Despite the fact – or perhaps because of the fact – that Western Africa is quickly gaining on the Persian Gulf as an important source of petroleum for the United States, analysts caution that America’s national security may not be enhanced by the shift. Terrorism and political violence expert Peter Pham noted in his February 15, 2007 column for World Defense Review, “Over the long term, a terrorist foothold in Africa – whether among the Islamists in the Horn of Africa or in West Africa or both – may well prove to be an even greater threat to the interests of the United States and its allies than those in the current arenas of conflict.”

Insurgent attacks in Africa have indeed increased. In July, al Qaeda was linked to another attack on Algeria’s Hassi al Ramel oil pipeline, the ninth attack on the country’s oil facility, located near Algiers. Two security guards were killed when they discovered the remote control devices used to set off the explosives.

Swapping One Unstable Region for Another?

Nigeria has also become a hotbed for insurgents eager to attack and disrupt oil production as well as sophisticated criminal gangs that continue to steal significant amounts of Nigerian oil straight from the pipelines. Widespread poverty, ethnic fighting, and official corruption have led to a deep-seated frustration in many villages of the Niger Delta. Well-armed militants have been involved in frequent attacks on pipelines, killing dozens of security personnel and kidnapping oil workers’ family members. These attacks have led to a 20 to 25 percent decrease in the country’s oil production, causing prices to rise considerably in the world market.

The implications of continuing violence are significant as Nigeria itself accounts for eight percent of total U.S. oil imports (exporting more than one million barrels per day to the United States) and remains America’s fifth-biggest source overall, according to April 2007 Department of Energy statistics. Nigerian exports to the United States in 2006 totaled almost $28 billion, according to the Foreign Trade Division of the U.S. Census Bureau. In 2002, Nigerian exports to the United States were worth but $8 billion.

While ethnic strife and other internal problems beset Nigeria, including frequent outbreaks of violence between its Muslim and non-Muslim citizenry, al Qaeda too is making itself increasingly felt in the Maghreb, and in some parts of sub-Saharan Africa. The United States has been battling al Qaeda in the region since it bombed the American embassies in Kenya and Tanzania in 1998, killing at least 225 people. More recent reports indicate the emergence of al Qaeda cells in several African countries, including Algeria, Egypt, Kenya, Mali, Mauritania, Morocco, Somalia, and Tunisia, and the establishment of jihadi groups like al Qaeda in the Islamic Maghreb (AQIM) and the Black Taliban of Nigeria.

All-New AFRICOM

Recognizing the strategic significance of Africa, President George W. Bush announced in 2007 that a new regional combatant command would be stood up for the African continent to “strengthen our security cooperation with Africa and create new opportunities to bolster the capabilities of our partners in Africa.” The mission of the United States Africa Command, to be known as U.S. AFRICOM, is “to oversee security cooperation, building partnership capability, defense support to non-military missions, and if directed, military operations on the African continent,” Defense Secretary Robert Gates told lawmakers at the time.

The perception among some, however, is that the United States is seeking to protect its oil interests on the continent, as well as to counteract the expanding influence of China in the region. John C.K. Daly, a consultant and adjunct scholar at the Washington-based Middle East Institute, reported for ISN Watch, a Zurich-based internet news site sponsored by the Center for Security Studies at ETH Zurich (Swiss Federal Institute of Technology Zurich), in February 2007, that “one of the greatest fears among Africans is that AFRICOM will suffer from mission creep, moving steadily away from its humanitarian aspirations towards a more distinctly interventionist role.” Editorials and commentators in African newspapers have echoed these concerns.

The energy security component was clearly part of the motivation for the establishment of AFRICOM, a former senior House of Representatives Africa Subcommittee staff member who requested anonymity said in a recent interview with JINSA. “The U.S. is paying increased attention to Africa, and the oil situation is a major factor in this,” he commented. Instability in the region adversely affects United States interests, and Nigeria is a reliable ally in combating terrorists and protecting the oil supply, he added.

Efforts to increase the U.S. naval presence off the coast of Africa are also underway, further recognizing the growing strategic importance of the continent, especially as oil imports to the U.S. steadily grow. The African Oil Journal reported on June 15 that senior U.S. Naval and Coast Guard officials announced plans to send ships to patrol the West African coast. “So we are interested in this (region) from a security perspective from our own homeland, and … in commerce and quite frankly, oil is one part of it,” Vice Admiral John Stufflebeem, commander of the U.S. Sixth Fleet based in the Mediterranean said. A U.S. Navy vessel was deployed to the area in October for a yearlong trial in a joint Naval and Coast Guard initiative.

This is not the first time that the U.S. Navy has entered African waters. As part of Operation Summer Pulse ’04, heavily armed U.S. naval vessels were to make a “show of force” to show the full range of American combat capabilities in June 2004 in the oil-rich Gulf of Guinea. An Abuja-based U.S. diplomat described the operation to Agence France Presse at the time: “to demonstrate to the world that, even with all its current responsibilities, it can still position half-a-dozen aircraft carriers with all the necessary support ships in the four corners of the world, at the same time.”

Even before this, Washington had supplied Nigeria with a small fleet of refurbished World War II-vintage patrol ships in an effort to help secure its important offshore oil interests and the waterways in the turbulent and oil-rich region of the Niger Delta.

As far back as 2002, America had its eyes on Africa when it located a naval base off the small island nation of Sao Tome and Principe, located in the oil-rich Gulf of Guinea. From the base, American naval personnel were able to monitor the movement of oil tankers and guard the oil platforms, which was beneficial to both U.S. oil interests and the economy of Sao Tome.

The Real Cost of Energy Security

In a January 2005 report, “Gasoline Cost Externalities: Security and Protection,” the International Center for Technology Assessment (CTA) postulated that the cost of providing security and protective services to United States oil interests around the world is somewhere between $78 billion and $158 billion, which includes the filling and administering of the Strategic Petroleum Reserve (SPR). The report is an update to CTA’s “Real Price of Gasoline” report originally published in 1997.

Amy Myers Jaffe, oil geopolitics analyst for the James A. Baker III Institute and Associate Director of the Rice University Energy Program, estimated that “the U.S. taxpayer is spending roughly an extra hidden $4 to $5 a barrel for the crude oil beyond its market price” when the cost of military intervention and diplomatic challenges that are associated with the protection of the oil supply are put into quantifiable measures.

In addition, Jaffe argued, the United States has pledged to intervene militarily should many of the Gulf countries, including Saudi Arabia, be threatened by another state and the fear of disruption to the oil supply become heightened. This, in turn, led to the pre-positioning of U.S. Navy vessels and equipment in and around the Persian Gulf and Indian Ocean from the late 1970s through today, and at times led to the direct intervention of American forces, most notably during the 1991 Gulf War. According to the GAO at the time, the war cost the American taxpayer nearly $7 billion.

Today’s costs to the United States include American military service in Iraq as well as other places like Saudi Arabia, the nations of Africa’s Sahel, and Central Asia. The U.S. Navy is on patrol in the Persian Gulf, the Arabian Sea, the South China Sea, and the Caspian Sea in part to keep the sea-lanes of oil transportation open and flowing to America and her allies (and in effect, to her adversaries and competitors).

Observers have expressed concern that the U.S. military may be utilized as a global oil-protection service. This military role, whether it reflects today’s reality or not, may become a reality as America increases petroleum imports from unstable and conflict-prone regions. As terrorist groups focus their energies on attacking Western oil supplies the Global War on Terror may lead to the attempt to guard the global petroleum extraction, distribution and refining infrastructure serving the West. Al Qaeda’s move into Africa and that continent’s rising position as a key supplier of oil to the United States bring the issue sharply into focus.

Indeed, protecting the Persian Gulf’s oil installations has been an active mission of the U.S. Central Command naval forces as well as coalition forces maritime security operations (MSO) in the region. In a September 19 interview with the Washington Times, Vice Admiral Kevin J. Cosgriff, the commander of the U.S. Fifth Fleet, said, “Security in that region writ large, but especially maritime security, is the foundation for regional stability, regional prosperity, and arguably a larger global economic stability, if you think in terms of just safeguarding the free flow of oil and other energy.”

The U.S. Coast Guard, too, is patrolling the seas that are home to vital oil installations. “We have very young officers commanding patrol boats in the Persian Gulf right now defending the offshore oil rigs,” Admiral Thad Allen, Commandant of the U.S. Coast Guard, told the Journal of Homeland Security in an October 16, 2006 interview. One Coastguardsman was killed, along with two sailors, while attempting to board and search an explosives-laden fishing dhow headed for the Khor al Amaya Oil Terminal (KAOOT) and al Basra Oil Terminal (ABOT) on April 24, 2004. The Coastguardsman was the service’s first combat fatality since Vietnam.

The incident was an attempt by insurgents to penetrate the “ring of steel” that surrounds the oil terminals in the North Arabian Gulf, as Royal Navy Cmdr. Steve Dainton, the captain of HMS St. Albans, described the coalition maritime security forces to the American Forces Press Service in May 2006. The St. Albans is part of Coalition Task Force 158 (CTF-158), whose primary mission is to provide around-the-clock protection for Iraq’s oil platforms, which were first secured by U.S. Navy SEALS and Polish Special Forces in 2003. CTF-158 now includes ships from Great Britain, Australia, and the United States. Iraqi marines and U.S. sailors are on constant patrol on the platforms themselves, in addition to ships and helicopters that patrol the perimeter, roving patrols, and being able to call on other U.S. Navy assets, including land-based personnel, Marine Brig. Gen. Carl B. Jensen told the American Forces Press Service in May 2006.

Maintaining the security of these installations remains one of the most crucial missions for the U.S.-led coalition forces, top naval commanders reiterated to India eNews on August 30. “The country needs revenue and it could only come at the moment through these oil platforms so we have to protect them,” Captain Ian Middleton said. Middleton is commanding officer of the Royal Australian Navy frigate HMAS Anzac, whose country will assume the next command of the task group.

Iraqi Oil – Resuming the Flow

The Iraqi Oil Ministry has set up their own Oil Protection Forces (OPF), which guards the country’s petroleum infrastructure, and the United States works to ensure the OPF can carry out their duties as efficiently as possible, in an effort to stabilize Iraq’s economy. When American soldiers toured two plants in Janbar earlier this year, Staff Sgt. Cedric Stevenson remarked, “Anything we can offer to help these guys, anything to help them get better at what they do, we’re willing to do that.”

Dr. Michael Makovsky, foreign policy director of the Washington, D.C.-based Bipartisan Policy Center, argued, however, that the military has to do more. Makovsky was a special assistant for Iraqi oil policy in the office of the Secretary of Defense from 2002-2006 and is the author of the new book, Churchill’s Promised Land (Yale University Press). In a recent interview with JINSA, Makovsky said, “Nearly 80 percent of Iraq’s oil is produced in the south and over 98 percent is exported in the south through the offshore oil terminals. It is not only al Qaeda that has an interest in disrupting the oil supply here, but also insurgents, rival militias, and tribes want to harm these facilities, too.” These key land facilities in the south are extremely vulnerable to outside attack, and U.S. and Iraqi security forces have done little thus far to prevent this.

Although Iraq’s oil is relatively inexpensive to produce, the precarious security situation in the country has caused its production capability and export capacity to decrease sharply. Average monthly production has hovered just above two million barrels per day for the last two years, according to the Iraqi Ministry of Oil, against a production target of three million barrels per day. The GAO said in a report released on May 16 that even this barrel per day production number could be exaggerated by between 100,000 barrels per day to 300,000 barrels per day, derived from Energy Information Administration (EIA) statistics.

Damaging Iraq’s oil infrastructure is relatively cheap from the insurgents’ point of view. Explosives are an easy and low-cost way to disrupt the multi-billion dollar enterprise, vital to the stability of the nation and its economy. Nearly $9 billion has been invested in rebuilding the country’s oil sector since 2003, with “as much as between $50-$75 billion” to be spent in the future, said Thamir Ghadhban, energy advisor to Iraq’s prime minister, at an energy conference on June 29.

Western oil companies are unlikely to inject financial investment and manpower into Iraq unless domestic safety measures are significantly enhanced, as many subcontractors have been killed or kidnapped since the insurgency began. Dutch oil-giant Shell was especially candid: “We would welcome the opportunity to help Iraq rebuild its energy industry, but will only enter the country once security, living and working conditions are improved.” The lack of a hydrocarbon law, hotly debated in Iraq’s parliament and a cause of sectarian tensions, also remains an issue.

The Saudis Respond to the Threat

The Saudis, too, have begun to set up their own security forces to protect their vast oil empire. With al-Qaeda attacks on Saudi oil facilities numbering near 180 since 2003, according to Saudi officials, the kingdom has begun to build a 35,000-strong security force for protecting vital oil installations. Lockheed Martin has been training and equipping some 5,000 recruits in the use of state of the art defense technology including satellite imaging surveillance equipment, countermeasures and crisis management, with the hopes of increasing that number to between 8,000 and 10,000 over the next two years, the Cyprus-based Middle East Economic Survey reported in late August.

The plan to set up the Facilities Security Force was announced in late July by Saudi Arabia’s interior minister, Prince Nayef bin Abdul Aziz. Cooperation between Saudi and American security experts began in November 2006, after a failed al-Qaeda attack on the Saudi Abqaiq oil facility, amid rising fears in the Saudi establishment. “It’s a strategic project that ensures Lockheed Martin a major stake in the Saudi security market,” an industry source told The World Tribune, August 28.

Alternative Fuels for the Military

If civilian America has done little to quench its thirst for oil, the U.S. Air Force is taking a step in the right direction. The Air Force completed its first successful test flight with a B-52 bomber using alternative fuel in September 2006. The test involved running two of the bomber’s engines on a synthetic fuel, made from a 50-50 blend of traditional crude oil-based fuel and fuel derived from natural gas. The jet’s other six engines ran on traditional JP-8 jet fuel. “This test fits into this overall vision and is the first step in a long process for looking at the viability of alternative fuels,” Undersecretary of the Air Force Dr. Ronald M. Sega told Air Force Print News on September 19, the day of the successful test flight.

In addition to testing the synthetic fuel on combat aircraft, the Air Force has been working to develop it for ground support vehicles. The Air Force Advanced Power Technology Office at Robins Air Force Base in Georgia has been spearheading the effort. “If oil is cut off for any reason, we need a source of fuel to run military aircraft and vehicles,” Mike Mead, head of the office, told Air Force Print News on October 5, 2006. Both S8 FT fuel, a substitute for JP-8, and S2 FT fuel, a substitute for diesel fuel number 2, has been used in tests at Air Force bases in the United States.

If the Air Force is to have any effect on mass production of such alternative fuels, however, stronger demand by the American public is critical. The Air Force has pledged to have all USAF aircraft certified to run on synfuels by 2010, and actually fly them on 50 percent synthetics by 2016. Certification would be faster if the commercial side would begin testing and approving synthetics because many defense aircraft use commercially derived engines, said William Anderson, Assistant Secretary of the Air Force for Installations, Environment and Logistics, in an article in Defense News on July 16, 2007. Civilian businesses, he added, need to contribute so the entire burden doesn’t fall on defense dollars.

The U.S. Army, too, is getting on the “green” game. On August 15, the Army unveiled its first hybrid-electric engine to be used in the replacement of the Humvee. The new drive-system combines internal-combustion engines with battery power into a combat vehicle, much like other hybrid cars on the market at the moment, such as the popular Toyota Prius.

The Marine Corps has also released their version of a new multi-purpose replacement for the Humvee, the Shadow RST-V, a diesel-electric vehicle used for reconnaissance, surveillance, and targeting. It uses less than 50 percent of the normal fuel weight of a Humvee, and was designed to be more versatile and efficient on the battlefield. The vehicles are equipped with electric motors at each wheel hub, which means that the vehicle could move even if one wheel is destroyed, and can operate on battery alone in the event of a fuel shortage.

Future Options

Oil prices continue to hit new records – after an attack on an oil pipeline in Yemen on November 6, the price of oil rose to a record $98 per barrel. Growing demand as well as unabated terrorist attacks causing disruptions to the pipeline lend to the prediction that the tight oil market will continue this way in the years to come.

The National Petroleum Council (NPC) report came two years after Defense Secretary Robert Gates, then president of Texas A&M University, led a team of former White House officials in an exercise to simulate a presidential cabinet that would deal with the expected economic and security consequences of an energy crisis. The event was called “Oil Shockwave” and in the report’s introduction, Gates wrote: “First, the economic and national security risks of our dependence on oil – and especially on foreign oil – have reached unprecedented levels. The threat is real and urgent, requiring immediate and sustained attention at the highest levels of government. Second, if we wait until a crisis occurs to act, the nation will have access to few, if any, effective short-term remedies.”

In his July 17 Washington Times op-ed “U.S. energy options; New report doesn’t face some facts,” Maj. Daniel L. Davis, a U.S. Army officer who fought in Afghanistan in 2005, referenced Gates’ exhortation: “Despite these stark warnings regarding our country’s vulnerability to oil-supply reductions and [Gates’] clarion call to action, the government did nothing. Already two years have passed since his warning, resulting in no meaningful government or industry action. This may be our last chance.”