Speaker: Dr Rupert Herbert-Burns, Triton Consulting

1. Petroleum Supply & Trade Security Challenges in the
Indian Ocean Maritime Economy
Dr. Rupert Herbert-Burns
Indian Ocean Naval Symposium, Perth, 27 March 2014

2. Agenda
1. What are the features that combine to make up the petroleum
energy system in the Indian Ocean Maritime Economy?
2. What are the various challenges in trying to ensure the security of
petroleum supply and trade in the Indian Ocean Region?
3. Examine oil and gas target vulnerabilities, and assess the threats to
the petroleum sector at strategic, operational and tactical levels
4. Consider different possible futures & offer some recommendations

3. To put things in perspective…
• Indian Ocean has total surface area of 21.45 million sq nautical miles (or 73.56
million sq km) [some 20% of the planet’s total water surface area]
• The 36 states that comprise the IOR have approximately 35.4% of the world’s
population - over one third
• Between them, these states combined have 38.13% of all world’s coastline
• As is well known, the region also has the worlds most critical chokepoints – Bab
al Mandeb, Strait of Hormuz, Strait of Malacca and Suez Canal
• Proven oil reserves: 50.1% of global total
• Oil production capacity: 37.5% of global total
• Crude oil & products lifted through region: 42.5 % of global total
• Proven gas reserves: 49.6% of global total
• Gas production capacity: 28.0% of global total
• LNG lifted through region: 55.9% of global total
• Refining capacity: 18.1% of global total – almost a fifth
• Primary refining nodes: India, Saudi Arabia & Singapore

4. What comprises the petroleum energy
system in the IOR?
Reserve
Base
Exploration,
Development
& Production
Export
Terminals &
Shipping
SLOCs/SPS
[Petroleum
on the
water]
Petroleum
Gateways
Physical
Markets
• All of these features, or
components, require security in
order to ensure holistic systemic
security in the IOR
• Some can only be ensured by
state means such as Reserve
Base, Physical Markets &
Petroleum Gateways
• Some can only be ensured
through international law
[UNCLOS] and collective
security, namely SLOCs
• Terminals & shipping requires
both state & industry means
• Centres of E,D & P are a mix of
state, industry and if necessary
international assistance

5. Proven Crude Oil & Gas Reserve Base
Country Oil reserves as % of global total Strategic source volume indicator
Saudi Arabia 15.9 Exceptional – Global
Iran 9.4 Very High – Global
Iraq 9.0 Very High – Global
Kuwait 6.1 High – Global
UAE 5.9 High – Global
Qatar 1.4 Medium – Global
Country Gas Reserve as % of global total Strategic source volume indicator
Iran 18 Exceptional – Global
Qatar 13.4 Exceptional – Global
Saudi Arabia 4.4 Very High
UAE 3.3 Very High
Australia 2 Very High
Iraq 1.9 Medium
Indonesia 1.6 Medium
Egypt 1.1 Medium
Kuwait 1 Medium

6. 0
10
20
30
40
50
60
70
80
90
100
11 12
49
13
1
13
1 1
95
3 2
Drilling rig count
Offshore Exploration, Development & Production
Source: Baker Hughes & Rigzone
Increases in drilling rigs
and subsequently
offshore production
units out to 2030

7. Offshore Exploration, Development & Production

8. Strategic Export Terminals in the IOR
Key Crude Oil Terminals - 37.5% of global total
Key LNG
Liquefaction
Terminals
55.9% of global
total

9. Strategic Petroleum Streams [SPS]
• Based on long-established Sea
Lines of Communication
(SLOC), SPS are the world’s
crude, product, LNG & LPG super-
highways
• Security is underpinned by
combination of sovereign state
protection/monitoring (TW & EEZ);
inter-state co-op (e.g. Malacca) &
UNCLOS-Freedom of Navigation.
• The security of the vessels (and
the associated petroleum stream)
is considered of vital national
security to exporters &
consumers, and essential to
international economic security
• Historically, SPS have been
targeted by states, terrorist groups
& criminals (pirates) alike, though
for different motives
Continuous stream of oils & liquefied gases ‘on the water’ that must not stop

10. Chokepoints
Chokepoint Alternative Routes Volume of crude oil per year
Approx. number of tankers
per year
Suez Canal Additional 6,000 nm
transit via Cape Agulhas
for tankers; some oil can
be diverted through
Sumed
Approx. 1.64 billion barrels
(223,738,063 metric tonnes)
[Sumed – 2.5MBD]
1,398 (av. crude oil tanker
size in global fleet is
160,000 DWT)
Bab el
Mandeb
Additional 6,000 nm
transit via Cape Agulhas
Approx. 1.2 billion barrels
(164,324,693 metric tonnes)
1,027 (av. crude oil tanker
size in global fleet is
160,000 DWT)
Strait of
Hormuz
Some oil can be diverted
via Petroline from
Abqaiq to Yanbu & via
ADCOP
Approx. 6.12 billion barrels
(834,924,966 metric tonnes)
[ADCOP = 1.5MBD]
5,218 (av. crude oil tanker
size in global fleet is
160,000 DWT)
Malacca
Straits
VLCCs & ULCCs must re-
route via Lombok Strait;
smaller ships can transit
via nearer Sunda Strait
Approx. 5.5 billion barrels
(750,341,064 metric tonnes)
4,690 (av. crude oil tanker
size in global fleet is
160,000 DWT)

11. Petroleum Hubs & Gateways
Requirements:
• Strategic location
• Massive tanker handling
capacity & roads
• Storage capacity
• Refining capacity &
flexibility
• Product & distillate
redistribution network
• Stable political
environment & robust
national security
Security challenges & realities:
• Security of SPS and routes to/from gateway
• A vital security concern for all not just for state in which it is sited – collective security
• Attractive target for sufficiently capable terrorist group
• Critical node in time of war

12. A changed trading picture…
Changing petroleum trade logic
Increasing trend towards larger shipments of refined products & distillates to countries with
limited/no refining capacity + value of cargoes has resulted in change in export trade patterns
from massive regional refining hubs & petroleum gateways
Dominated by:
• Saudi Arabia
(Abqaiq/Ras
Tanura/Jubail:
1.11 million
barrels per
day
• India
(Jamnagar)
1.24 million
barrels per
day
• Singapore:
1.35 million
barrels per
day (3 sites
combined)

13. Petroleum Markets
• Market security is a vital part of system. For the economic (and political) security of
producers/exporters to be ensured, security of market is essential to ensure its ability to
purchase/consume – Phenomenon classically symbiotic
• Market security is ensured in the following ways: security of the shipping routes that lead
to it; alliances and/or trade agreements with the producer (in the case of LNG); security of
EEZ, littoral and territorial approach waters to national terminals/processing
infrastructure; and, security of vessels themselves
• This reveals in a stark way the mutual dependency between producers & consumers not
only in the IOME but also the wider Indo-Pacific region,
Suppliers
• Saudi Arabia
• UAE
• Qatar
• Australia
• Iran
• Iraq
• Malaysia
• Mozambique
• Tanzania
• Kenya
• Somalia
Consumers
• Kenya
• Tanzania
• Iran
• Seychelles
• Comoros
• India
• Sri Lanka
• China
• Philippines
• PNG
Intermediate
Consumers
• India
• Singapore

14. Challenges, targets &
threats

15. Challenges to ensuing the security of the IOME
• Region is multifaceted: geographically & thematically
• Dispersal of industrial activity – some emerging regions
do not have adequate resources to ensure offshore
security
• Eclectic and unpredictable range of possible threats to
security
• Mutable geopolitical and geostrategic realities
• Complex state, intergovernmental organisations &
commercial sector cooperation
• Considerable challenges to development of multi-
dimensional collective security architecture in absence of
formalised cooperative/alliance structures

16. Mutable Geopolitical & Geostrategic
realities & possibilities
• Increasing international O & G exploration investment in
East Africa and IO SIDS – leading to extra-regional state
interests (Europe, China & US)
• Expansion/extension of Indian naval power projection &
influence throughout IOR
• Chinese expeditionary naval deployment & protection of its
supply interests further westwards
• Potential reintegration of Iran into the regional and
international arena – both politically & commercially
• Triangular power inter-relationship between Iran, Iraq &
the GCC
• US ‘flexible response’ to the IOR amidst declining crude
requirements from region

17. Threats to petroleum sphere: Past, present &
future
Past
• Tanker War
• M/T LIMBURG
• ABOT & KHAOT
• M/T M.STAR
• Balhaf Terminal
• AQ attack on
Abqaiq
• Piracy
• Territorial
disputes
• Sanctions
Present
• Extant maritime
terrorist threat:
AQAP, LeT
• Somali
hijacking, piracy &
armed robbery at
sea
• Persian Gulf
geopolitical fragility
• Intra-state conflict:
Egypt, Iraq, Yemen
& Somalia
• Territorial disputes
– Iran & UAE
• Sanctions
Future
• Somali piracy
resurgence
• Non-Somali
piracy (Bay of
Bengal)
• Intra-state
conflict
• Inter-state
conflict
• Sanctions &
blockade
• Territorial
disputes –
Kenya &
Somalia

18. Security threat & vulnerability convergences
This view reveals the
paradox of great separation
of activity in terms of time &
space juxtapose the
problem of threat & target
convergence

19. Risk: targeting complexity & consequence
VLCCProduct /
chemical
tanker
VLGC
Coastal
processing
facility
(inc.
refinery)
Offshore
support
vessel
Coastal
terminal
Offshore
terminal
MOPU (FPSO)
Inshore
gravity
drilling rig
Complexity
Consequence
MODU
Seismic
survey / sub-
sea
construction

20. Threat Examples: Strategic Level
Interstate war in major supply region – SPS, Chokepoint &
tanker security impacted during the Iran-Iraq War
• Attacks against by both sides throughout war resulted in
over 540 attacks, 324 merchant seamen killed &
hundreds of millions of dollars in lost ships and cargo
• Tanker War was most intense assault on merchant
shipping since the Second World War
• Targets: 58% - tankers 10% - LPG carriers
• largest loss of life/most serious destruction occurred
when tankers were attacked at terminals [Kharg & Sirri]
• Despite intensity of campaign, neither side managed to
achieve disruptive strategic effect upon shipping of oil
they hoped for
• Despite ironic intensification of attacks following
international intervention, introduction of convoys & US
attacks against Iranian IRGC(N) saved vessels & ended
war
• IRGC Pasadran units introduced/developed excellent
asymmetric maritime attack tactics – proof of concept &
still in use today

21. Threat Examples: Operational Level
Protecting Iraqi crude export terminals [ABOT
& KHAOT] following AQ-I terrorist attack
• On 24 April 2004, an AQI maritime suicide attack
cell detonated three WBIEDs close to Iraq’s only
sea-based export terminals - Al Basra & Khor al-
Amaya
• 2 US Navy sailors & US Coast Guardsman were
killed
• No tankers berthed at the terminal or at
anchorage at the time of the attack
• The attacked resulted in the considerable
expansion of the operation to protect the
terminals – CTF-158 and later CTF-IM
• Set the standard as to how this should be done –
but required considerable resource
• This was the first maritime terrorist attack of this
kind. Though it has not been duplicated since, it
proves that an attack against the industry at this
level is certainly possible for a suitably capable
team .

22. • On 10 May 2012 the Aframax crude tanker
M/V SMYRNI hijacked by Somali PAG in an SPS
off coast of Oman
• Pirates armed with AK-47, RPG & 12.7 DShK
HMG
• Value of vessel and crude approx. $170m
• There was no armed security team embarked
• Vessel was held off north coast of Puntland for
10 months until her release following payment
of ransom
• At the time of release there were some 300
pirates on board
• Somali PAG skill-sets still very much alive
Threat Examples: Tactical Level
Terrorist attack against a VLCC Pirate hijack & release of VLCC
• At approx. 0030 local time 28 July 2010, VLCC
M/V M.STAR was target of a 2-boat maritime
attack group in a SPS west of Strait of Hormuz
(26º27' N 56º14' E)
• Using WBIED, an Abdullah Azzam Brigades
(AAB) cell executed exceptionally brazen &
complex attack against tanker under cover of
darkness & whilst full-away in approaches to
world’s most vital petroleum chokepoint
• Had attack succeeded it would have been
most spectacular & costly maritime terrorist
attack in history
• Groups now of greatest concern: AQAP & LeT

23. Possible Futures &
Recommendations

24. 2020+ Future A: Resource imbalance &
overstretch
Concurrent security crises
1. Resurgent piracy threat to
international shipping in the
HRA
2. Regular terrorist attacks
against terminals & visiting
tankers/VLGCs in Yemen
3. Terrorist & piracy threat to
evolving offshore sector in
Gulf of Aden/Somali Basin
4. Heightened inter-state
tensions in PG/GOO
requiring international naval
deployment
5. LeT activation of its
maritime cadre for offensive
terrorist operations in the
NW IOR
Resource challenges
• East African navies low on sufficient
long-range patrol vessels/corvettes &
MDA + lack of SAR capacity & aviation
• Yemeni coastguard desperately short on
numbers of suitably armed patrol
vessels, trained personnel & C3I
• Reduced numbers of warships
available to patrol IRTC/HOA & HRA
• Unspecific IOR region multi-national
naval alliance/coalition
• Limited number of replenishment at sea
vessels within region to support
expeditionary/long-term MSO
• Inability to properly monitor key
SPS, SLOCs as they converge
towards, hubs, chokepoints & vulnerable
coastlines
• Lack of robust oil spill response capacity
& coordination

25. 2020+ Future B: Resource boost & collective
security
Well-established regional resource-building
& assistance project
• Assistance to East African navies to acquire
long-range patrol vessels/corvettes & MDA
[utilisation of UAV as affordable force
multiplier]; estb. Of SAR & oil spill response
• International support to build and train robust
Yemeni coastguard & maritime C3I capacity;
-UAV/MDA support from neighbouring states
• Supporting multilateral provisions to ensure
extra-regional naval support in times of crisis
• Indian Ocean Region-led naval ,mission-
specific, coalition task forces
• Procurement programme by GCC for
‘shared’ replenishment at sea vessels that
can be deployed to support local naval
forces engaged in high-tempo MSO
• Adoption of greater development and
utilisation of navies in joint constabulary
roles for routine MSO in E. African EEZs
Concurrent security crises
1. Resurgent piracy threat to
international shipping
2. Regular terrorist attacks
against terminals & visiting
tankers/VLGCs in Yemen
3. Terrorist & piracy threat to
mature offshore sector in
Gulf of Aden Somali Basin
4. Heightened inter-state
tensions in PG/GOG
requiring international naval
deployment
5. LeT activation of its
maritime cadre for offensive
terrorist operations in the
NW IOR

26. Summary & Recommendations
• Defined the features of the IOME petroleum energy systemic
• Examined the considerable challenges to ensuring the security of the IOME
• Considered varied threats at strategic, operational & tactical levels
• Posited possible variations on future IOR security environment
Recommendations
• Build upon the work and fast accelerating legitimacy achieved by IONS
• Encourage IORA to lead further in helping understanding of petroleum sector
security requirements
• Include participation and expertise of shipping & offshore industry in developing
security capacity where it is limited
• Embrace the regional security risk analysis and risk management approach
suggested at this symposium
• Encourage major power strategic dialogue & confidence-building measures at top
level & bilateral ‘mission-specific’ security partnerships and secondary tier level
• Understand and prepare for the addition of future target vulnerability
convergences in the GOA/HOA, Somali Basin, west coast of India & Bay of Bengal