The deadly attack on an Algerian natural gas complex will do little to discourage the drive for lucrative energy exploration in northern Africa, experts say, but it is forcing companies to increase security after largely ignoring the risks of operating in the remote desert region.
Spanish, Norwegian and British oil companies quickly evacuated workers from Algerian energy facilities in the wake of the well-coordinated hostage taking by Islamic terrorists, which ended in bloody chaos in an Algerian raid. Energy companies are loath to discuss the issue, but experts say the financial bounty is too high to scare away firms like gas giant BP and Norway’s Statoil for long.
“The risks are never going to be so much that they outweigh the rewards from working in these environments,” Alison Lyall, a security analyst at Harnser Risk Group in Norwich, England, said Monday.
Lyall, author of a recent report for the European Commission on evaluating the costs of security, say companies in the exploration and production industry – even those operating in risky areas – have simply paid little attention to the issue.
“There is a strong enterprise culture which prides itself on taking risks,” she said. “I can show you that the percentage spent on security on very high-value assets is shockingly low.”
The assault last Wednesday on Algeria’s Ain Amenas gas complex by a multinational band illustrates the danger posed by Al-Qaida in the Islamic Maghreb and its offshoots, who have grabbed power propelled by long-simmering ethnic tensions in Mali and the revolution in Libya. In the wake of the violence, energy companies will have to study operations for possible flaws and upgrade contingency plans with information gleaned from the shock attack.
Ian McCredie, former vice president of corporate security for Royal Dutch Shell, said the threat had obviously been underestimated.
“There will need to be reassessment,” said McCredie, now CEO of Forbes Research Group in the United States.
Nigel Inkster, a former senior British intelligence officer who heads a risk-analysis unit at the International Institute for Strategic Studies in London, said the incident raised questions both for oil companies and Algeria.
“The boardrooms of oil companies looking to work in Algeria are going to be convulsed by this, and uncertain of how to proceed,” Inkster said. “It raises all sorts of concerns about all sorts of economic activity … (including) uranium mines in Niger, which are pretty important to the global economy.”
Algeria has taken a strong tack against the terrorists, rejecting offers of help from Britain, the U.S. and others, to go it alone in a typical tough and uncompromising response. BP and Statoil were compelled to entrust their employees’ lives to the Algerian security forces, and that won’t change – at least immediately. Algeria insists that it has the know-how to assure the security of energy plants.
“We are going to reinforce the security and we will rely first of all on our own means,” Algerian Energy Minister Youcef Yousfi said on Sunday, according to state news agency APS. “There is no question of accepting outside security forces.”
BP and Royal Dutch Shell, whose employees in Nigeria have been the targets of gangs of kidnappers and militants, would not comment on security arrangements in Algeria. But Ted Jones, the CEO of specialist evacuation company Northcott Global Solutions in London, noted companies alarmed by the attack are scaling up their physical security, moving from unarmed to armed operations, and shifting nonessential staff to safer locations.
Companies can become complacent after a period of safe operation, he said, then change course when something terrible occurs.
“Suddenly something like this happens and they realize they’re much closer to the danger … and there’s a sort of panic response, which is perfectly natural,” he said.
The energy industry is not a new target. McCredie recalled that significant changes in security followed terror attacks in Saudi Arabia, including a 2004 hostage-taking incident at oil industry compounds at Khobar that ended in the deaths of 22 people.
“There have been all sorts of attacks in other places, Yemen, Syria, Iraq. These attacks are not unusual. What’s unusual about this one is it was a big surprise. It shouldn’t have been,” McCredie said. Al-Qaida in the Islamic Maghreb “had been making these threats for a long time. No one thought they had the capacity.”
But, he said, there are limits to what even extra security forces can accomplish in the battle against terrorists.
“They are mobile, it’s a huge vast area, very, very difficult to police, and [it is] difficult to keep up surveillance. So a small number of people can have the element of surprise,” McCredie said. “Security forces can’t patrol the whole area.”