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Oil Firms Tighten Security After U.S. Strike on Iranian Commander

03/01/2020 7:01pm

Dow Jones News


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By Benoit Faucon, Summer Said and Sarah McFarlane 

Oil companies in the Middle East are tightening security as U.S. officials say American energy infrastructure in the region is a likely target for Iranian retaliation following the killing by the U.S. of Islamic Revolutionary Guard Corps commander Qassem Soleimani.

A call by the U.S. Embassy in Baghdad for all U.S. citizens to leave Iraq is expected to affect staffing at Exxon Mobil Corp., which operates facilities in the country's volatile southern region. The company should be able to maintain production with local workers, analysts said.

Exxon Mobil is closely monitoring the situation and has programs and measures in place to provide security to protect its people, a spokeswoman said.

The company produces around 400,000 barrels of oil a day at the West Qurna 1 field in Iraq. Amid rising tensions in the country, talks between Iraq and Exxon Mobil to build a roughly $50 billion oil operation have been stalled for months, according to people familiar with the matter.

BP PLC declined to comment on security or staffing. The company is a partner in the development of Rumaila, the world's third-largest producing field, in southern Iraq. Chevron Corp., which operates in Iraqi Kurdistan, an area so far unaffected by the unrest, said the safety of its people and facilities is a priority.

Iran's oil infrastructure is also vulnerable to attack. Washington considered striking Iran's offshore platforms following an attack on Saudi oil facilities in September, which the U.S. blames on Tehran, said another U.S. official. For now, the Trump administration has so far favored operations outside Iran, in part to avoid alienating the Iranian people, U.S. officials said.

Iranian officials have cited the need to preserve an oil industry built over decades as a reason to avoid an armed confrontation. War with the U.S. "is not our goal," Bahram Ghasemi, Iran's ambassador to France, said in an October interview. "Everything will be destroyed if there is a conflict."

Even before the U.S. strike that killed Maj. Gen. Soleimani in Iraq, American companies had been taking steps to secure facilities and protect workers in Iraq amid a steady escalation of tensions.

U.S. oil-services contractor Baker Hughes this week asked its U.S. staff to limit trips to Iraq after officials in Washington advised companies of heightened security risks, according to a person familiar with the matter.

Baker Hughes didn't respond to a request for comment.

Officials in Saudi Arabia and the United Arab Emirates said oil companies there have put operations on high alert, a status that requires closer monitoring for possible intrusions and threats to infrastructure.

As Iran's Islamic Revolutionary Guard Corps ramps up preparations for new targets, American facilities are considered the most at risk of retaliation, said U.S. officials familiar with intelligence on Iranian plans.

Following the September attack on Saudi facilities, U.S. preparations include at least one scenario in which Iran launches missile strikes on the Saudi oil terminal of Ras Tanura, according to a person briefed by the U.S. government.

While repairs to its oil facilities continue, Saudi Arabia says it has fully restored its production capacity of 12 million barrels a day. The strikes on Saudi Arabia's Khurais oil field and Abqaiq -- the world's largest oil-processing facility -- led to the most extensive outage the oil industry has seen, knocking out 5.7 million barrels of daily crude-oil production, nearly 6% of global output.

Saudi Arabia's capacity is expected to expand this year following the end of a dispute with Kuwait over shared oil fields.

But the naval branch of Iran's Islamic Revolutionary Guard Corps has recently revived a contingency plan in case of U.S. attack that calls for strikes on Kuwaiti and Saudi oil platforms with explosive-laden boats, a person familiar with the IRGC Navy force said.

The United Arab Emirates' energy assets and its trading hub of Dubai are also vulnerable to attack, according to this person and a person familiar with U.S. intelligence operations in the region.

Iran's Revolutionary Guard has considered targeting Western expatriates in Dubai, which would heavily undermine the emirate's role as a safe financial and trading center, according to a former adviser to the Iranian paramilitary force.

Dubai "will not be safe anymore," the person familiar with the IRGC Navy said.

After the September attack on Saudi facilities, the U.A.E. government commissioned a study and found their energy infrastructure was highly vulnerable, according to a Middle East diplomat. As a result, Emirati intelligence services have been trying to de-escalate tensions by reaching out to Iranian officials, a U.S. official said.

The threat to U.S. interests may have hurt Exxon Mobil's chances of joining with Qatar on a major gas project, according to a person familiar with the negotiations.

Qatar, on the advice of its security services, has grown increasingly reluctant to offer Exxon Mobil a role in the North Field expansion project because they believe U.S. companies would be first hit in the event of heightened conflict with Iran, the person said.

Exxon Mobil declined to comment on the Qatar project. Qatar's national petroleum company didn't respond to requests for comment.

Owners of oil tankers said Friday that they had seen no disruptions of ship flows across the Strait of Hormuz and the Persian Gulf, but some fear that Western-owned tankers could be targeted by Iran for attack or seizure. The U.S. accused Iran of orchestrating attacks on tankers off its southern coast last year, which Tehran denied.

"There are some more escorts now by Western warships, but not nearly enough to prevent another attack," said a Greek shipowner whose company operates more than two dozen oil and product tankers. "We hope tankers won't get in the line of fire again, but unfortunately commercial ships are easy targets."

--Costas Paris contributed to this article

Write to Benoit Faucon at benoit.faucon@wsj.com, Summer Said at summer.said@wsj.com and Sarah McFarlane at sarah.mcfarlane@wsj.com

 

(END) Dow Jones Newswires

January 03, 2020 13:46 ET (18:46 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.

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