Saudi Arabia: Sitting Duck

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Unprecedented attacks on two oil facilities in Saudi Arabia, which in the blink of an eye wiped out half of the Opec kingpin's production, are by far the most critical threats ever faced by Saudi oil giant Saudi Aramco. They also exposed the extreme vulnerability of the kingdom's vast hydrocarbon assets in the new era of drone warfare in the Mideast, and the inability of existing air defenses to protect them from attack (EC Aug.30'19). Observers were shocked to see the kingdom's Western-bought defense systems fail so badly, and the myth surrounding expectations of US troops being deployed in the event of any major attack on Saudi oil was put to rest: None appeared, despite a combination of 25 drones and cruise missiles that together knocked out 5.7 million barrels per day of production from the critical 7 million b/d Abqaiq plant and 1.5 million b/d Khurais oil field (related). Yemen's Iran-aligned Houthi rebels, at war with a Saudi-led coalition, claimed the attack and warned of more to come, but the US and Saudi Arabia instead pointed the finger more directly at Iran. Saudi Defense Ministry Spokesman Turki al-Maliki in a press conference on Wednesday laid out an array of evidence, including satellite imagery and debris from the two sites that he said indicates that Iran supplied the drones and cruise missiles used in the attack. He also ruled out the possibility of Yemen being the launching point of the strikes -- saying the attacks were beyond the range of Houthi rebels and that the trajectory came from the north. "Right now we are working to determine the exact position of the launch point," al-Maliki told reporters. This assessment is disputed by some, who note that missile and drone systems can change the direction of their approach, while others point to Houthi advances in drone technology. "The capability exists due to Iranian material support. Saudi air defenses have been quite patchy in the south and are ill-trained to deal with this particular threat," said Andreas Krieg of the UK's King's College. Al-Maliki had no answer as to why Saudi air defenses did not appear to detect or stop the drones or missiles. Likewise, at a press conference in Jeddah on Tuesday, the country's top oil officials emphasized Aramco's readiness and ability to recover -- not the kingdom's ability to secure its oil assets. Asked by Energy Intelligence if another attack of this scale could happen again, Aramco CEO Amin Nasser said: "Nobody can predict what can happen, but what we need to do as Aramco is conduct a lot of drills. Our readiness is one of the best in the world and ... when there is a crisis Aramco delivers." Production was quick to partially recover. Security Gaps So why are Saudi oil assets so vulnerable, and its air defense systems so seemingly ineffective? The picture is a complicated one. The evolving -- and ever-advancing -- nature of drone warfare, for which Saudi air defenses were not designed, is one reason. The multidirectional threats Saudi Arabia faces -- from Houthis to the south and Iran-backed militias in Iraq to the north, to Iran itself -- is another (EC Aug.23'19). So, too, is the vast expanse of territory that needs protecting. Two examples of significant integrated air defense systems are those protecting Israel, and the Russian air base at Khmeimim in Syria. With both of those systems, it is possible to stop waves of unmanned aerial systems and rockets. "But," says Jack Watling at the Royal United Services Institute, "you need several things: 1) a limited area to defend; 2) a good idea of the kind of threat and where it is coming from; and 3) very well-trained, attentive operators." In Saudi Arabia, none of those requirements exist. There is a huge amount of infrastructure to protect, and attacks could come from all sorts of angles. "So unlike defending a specific target, where they know the point of origin of possible strikes, which the Russians have in Khmeimim, the Saudis have a huge number of threat vectors," says Watling. "The reality is that they’re not going to be able to defend everywhere." In his view, a launch from Iran is the most plausible explanation. Further, a lot of the Saudi air defense budget has been focused on things like US Patriot missiles, which are designed to intercept enemy aircraft, fast-moving targets, and for ballistic missile defense. "That’s very different to a low-flying drone or cruise missile that is using terrain to obscure itself from the radar," Watling adds. As for the operators, "if there is something very obvious about the Saudi military, it is that they are systematically inattentive and lack competence at using their equipment." Meanwhile, contractors say the damage was extensive, some of the worst they have seen. Energy Intelligence understands that temporary patchwork of the nine of 12 spheroids used for gas-oil separation damaged at Abqaiq will help get the plant up and running as fast as possible, but more permanent repairs might take months to be completed. In some ways, the magnitude of the attacks mirrors the massive changes the kingdom is going through (related). Saudi Crown Prince Mohammed bin Salman came on the scene in 2015 with a big agenda -- to drive domestic reforms that would reorient the Saudi economy away from oil, and to launch a more assertive regional foreign policy directed against Iran, in part through Saudi support for tightening US sanctions but also playing out on a horrific scale in Yemen. Events at the weekend reveal those policies to have created the conditions that placed the kingdom's most prized asset -- state oil giant Aramco, whose partial privatization is to be the launchpad for reforms -- at the front line of conflict. Staff reports Compass Points • SIGNIFICANCE: Absent sanctions relief for Iran and war relief for Yemen, the kingdom and its oil assets will remain vulnerable. • CONNECTION: Saudi isolation within the region could increase, with its Mideast Gulf neighbors wary of suffering similar fates. • NEXT: Watch for an overhaul of Saudi security top brass and a massive air defense upgrade -- but to what effect is unclear.

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