The cost is rising fast

Middle East oil companies are spending billions of dollars on security every year and the cost is rising fast.

Middle East oil companies are spending billions of dollars on security every year and the cost is rising fast, according to a report. Saudi Arabia alone is expected to spend $14 billion over the next six years to improve oil security, while other energy producers are investing heavily in protecting pipelines, refineries, rigs, tankers and other assets, the weekly business magazine said.

An attack by Al Qaeda militants on the Abqaiq oil facility in Saudi Arabia in 2006 focused the minds of local energy producers on the threat posed by terrorism, senior security officials said.

Yet many governments outside the Middle East still do not appreciate the dangers posed to their energy supplies, or the cost to producers of protecting the supply chain.

"As much as a fifth of the UK's energy needs could soon be supplied by Qatar in the form of liquefied natural gas (LNG). These LNG cargoes are highly vulnerable," said The Gulf editor Digby Lidstone.

"Naval forces are beginning to respond to the threat of piracy in the Gulf of Aden, but this is just one area of potential risk. So long as the burden of security continues to fall on oil and gas producers, the world's energy supplies are not secure," he said.

Despite the billions being pumped into protecting oil installations, the centralised nature of the Gulf's state-controlled oil sector leaves many parts of the supply chain exposed - as does the sprawling nature of the industry.

The conflict in Iraq showed just how vulnerable this oil and gas infrastructure can be.

According to Iraqi officials, 80 per cent of Iraq's 7,081km of pipelines have suffered 'between 50 to 100 per cent total destruction' since the 2003 invasion.

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