A SHADOW OPEC

Global Guerrillas operating in Iraq are rapidly developing the ability to disrupt oil exports at will. The tactics they are refining will play a significant role in global guerrilla strategic operations in other regions (this is part of more extensive analysis I have done for my book on GGs). Over time, these global guerrilla operations may yield enough control over global oil supply to replicate the power of OPEC.

One potential target region is Caspian Sea oil -- particularly from Kazakhstan and Azerbaijan. This production is well within the "easy" zone of operations of active GG groups (particularly Chechen mercenaries). Increased production from the Caspian Sea area is a critical part of the plan to meet the world's ravenous demand for oil. As a result, these pipelines offer extremely attractive targets for global guerrilla operations in central Asia. The potential of millions of barrels a day of production from the region has led to several major pipeline projects (new and upgraded pipelines to the north and west). Unfortunately, complex geopolitical and geographical hurdles make transporting this oil to major markets extremely difficult. For example: pipeline projects to China and through Afghanistan have been put on hold. These considerations have narrowed the list of active targets and simplified the problem for GGs. Here's a wrap-up of the major pipelines:

• The CPC. A pipeline that runs from Kazakhstan's Tengiz oil field to the Russian Novorossiisk black sea port. 0.56 million barrels a day. Ultimate capacity: 1.34 m barrels a day. 990 miles.
• The BTC. A new pipeline that runs from Baku (Azerbaijan) to the Ceyhan (Turkey) Mediterranean sea port. Construction on this 42-inch pipeline will be complete in less than a year. It will have the capacity of 1 m barrels a day. 1,038 miles. This pipeline also has co-location vulnerabilty with the Baku to Supsa (on the Black Sea) spur within Azerbaijan (115,000 barrels a day). Azerbaijan should ramp up production sufficiently to fill this pipeline over the next four years.
• The Baku to Novorossiisk (including the Chechnya bypass). 360,000 barrels a day. ~1,000 miles.
• The Atyrau (Kazakhstan) to Samara (Russia). This connects Kazakhstan's fields to the large central pipeline system in Russia (which offers another whole set of targets and analysis). 310,000 barrels a day. 432 miles (with some minor co-location vulnerability with the CPC).

Isolate, Control, and Profit
Given this sparse and undefendable network, the potential for GG control of oil production from the Caspian region is extremely likely. There is also the potential for cascading failures with the right analysis. Growth in the global demand for oil (particularly from China) and the ongoing disruption of Iraq's oil has reduced excess global production to less than 750,000 barrels a day. This makes even small disruptions in production extremely potent as a means of controlling oil prices. Here's the dominant strategy:

• Isolate the Caspian region from the Samara connection to the Russian pipeline grid (Transneft) through continuous attacks (akin to the attacks on the Kirkuk pipelines in Iraq). Given Transneft's limited transportation capacity (only 4 m barrels a day), it is possible that attacks on any major east-west pipeline will bump production from the Caspian.
• Control. Conduct regulated attacks against the BTC and CPC to control transport of oil to global markets. The key to maintaining the effectiveness of these attacks is to use them sparingly (a lesson drawn from Lawrence of Arabia's campaign). Extended shutdowns aren't necessary to exercise control and increases the potential of the development of alternative pipelines (ie. through Iran). If done correctly, these attacks alone will have the potential to turn participating GG groups into a "shadow" OPEC, with a pricing power akin to Saudi Arabia.
• Profit. Use control of the price of oil to coerce nation-states and profit from market timing investments. The elimination of ~2 m barrels (at its estimated peak) of production from global markets can produce significant (potentially $30-$50) price movements. These market fluctuations will provide participating GG groups the income potential necessary for funding ongoing operations (and expand operations using mercenaries).

Comments

[Watching Them, Watching Us]

The terrorists will never have the power to *increase* production, so they are never going to be as powerful as Saudia Arabia in terms of market price fixing.

Their actual effect depends on the stock holding policy of the consumers. If most pipeline disruptions can be mended within a month, then sufficient buffer stocks could smooth out any disruption, unless there are other factors e.g. exceptional weather conditions etc.

[praktike]

OK, this is off-topic, but I thought you might find this to be an interesting development.

Think AQ will try to infiltrate any new hires made by the oil industry to fill the void this will create?

[Tom]

If a terrorist orginization has these capabilities, it is as much of an interest of fringe arabic groups to control these groups as it is an interest of the CIA to control these groups. The beauty of an intelegence assets is that they really dont know who is controlling them. So despite a true controllers identity, a desired image can be portrayed.

The higher prices get, the more money is made off oil.

The CIA is wallstreet, Wallstreet is the CIA.

Osama was a CIA asset in the 80's and no one has ever explained how we lost control of him if we did at all.

[Tom]

Secondly, i almost forgot to mention. What nations are injured by excessivly high oil prices the most? I would think that a developing nation would suffer the most from these issues. For instance,china is becoming more and more dependant upon oil.....and as much as china is a trade ally, strategically, they are an enemy.

Do we control OPEC and control pricing...no. Do we control Osama bin ladin, its a good question i think.