* Algeria's In Amenas attack changes risk/reward equation
* Oil firms urge host governments to boost security
* Local relationships also crucial to risk management
By Peg Mackey
LONDON, March 25 Rising Islamist violence is
forcing international oil firms to look hard at exposure across
swathes of Africa and weigh whether to operate remotely for fear
expatriate staff may be targeted.
Since a siege at Algeria's In Amenas gas plant in January in
which dozens of foreign hostages were killed, militants have
struck foreign targets in fellow African oil producers Nigeria,
Libya and Egypt.
Earlier this month, a Nigerian Islamist group said it had
killed seven expatriate construction workers, a departure from a
long-running focus on local targets. Although Nigeria's
Islamists currently operate hundreds of miles away from southern
oil fields, that could easily change.
At about the same time, al Qaeda's North Africa wing said it
had beheaded a French geologist captured in northern Mali,
describing the killing, like the In Amenas bloodshed, as
retaliation for French intervention against Islamists in Mali.
That raised fears attacks could spread across west Africa.
"In Amenas has changed the calculus of risk and reward. We
may need to select a different model for operations," said a
senior Western oil executive, who declined to be identified due
to the sensitivity of the issue.
"Should we have more remote basing of expatriates and have
more locals on site? It's up for discussion."
Oil companies typically fly in dozens of foreigners to oil
and gas fields and installations for short rotations.
While numerically only a small part of the operation - most
of the 700 workers at In Amenas were Algerian - these skilled
technicians play a big role in keeping output up and running.
The attack at the gas plant in the southern Saharan desert
triggered a mass exodus of expatriates: hundreds of workers were
evacuated to safer places in the country's centre and
non-essential staff were brought home.
"There hasn't been a complete flight out of Algeria, but
unless Algiers proves that security is resilient and up-to-date
with the threat - you can't expect companies to return," a
Western diplomat said.
Chief executives are also pushing host governments to raise
their guard and foot more of the bill for rising security costs
to keep projects at full strength and encourage new investment.
Royal Dutch Shell has said it is persuing new
upstream opportunities in Libya and other majors are considering
prospects in Algeria, where foreign operators - London-based BP
and Norway's Statoil - suffered their worst-ever
But analysts warn that the increase in militant activity
across North Africa and Nigeria - which together pump more than
5 percent of world oil supply - threatens to slow production.
"A raft of kidnappings and murders of foreign workers has
further destabilised Nigeria and marks a new chapter in the
violent campaigns by Islamic extremists targeting Europeans
across the region," the International Energy Agency said in its
latest monthly report.
One foreign company is considering not placing any white
staff in North Africa, said a security expert, though he felt
the perceived threat was far greater than the actual risk.
Despite the instability across much of North Africa since
the Arab Spring of 2011, In Amenas caught many off guard,
because Algiers was seen as very much in control of its energy
security. Immediately following the attack, the OPEC producer
stepped it up, but some say it could do more.
"There are still efforts that can be made to increase
security in Algeria: more cooperation on intelligence, better
surveillance equipment and enhanced security around the sites so
threats can be seen earlier," said a Western source familiar
with logistics at the remote desert plant.
At the time of the siege, British company BP - which
considers itself the biggest foreign investor in Algeria - had
about a third of its 60 staff in the country at the plant.
The UK major says it remains committed to Algeria, where it
has operated for more than six decades, and the safety of its
personnel is the highest priority. "The security situation
across North Africa is under review," a BP spokesman said.
In neighbouring OPEC producer Libya, there is precious
little cooperation with international oil companies, the
post-war government is in flux and armed clashes are common.
There is little targeted violence against foreigners,
security sources said, although in March a gun battle broke out
at the Mellitah gas complex in Western Libya jointly owned by
Libya's state oil company and Italy's ENI.
More broadly, armed men have spread through the Sahara since
the revolution which overthrew Muammar Gaddafi.
Libya and Algeria are Africa's third and fourth largest oil
producers. Together with Egypt, they are important gas suppliers
to Europe. Libyan oil output is now close to pre-war levels of
1.6 million barrels per day, but long-standing investors are
frustrated by supply disruptions caused by protests and strikes.
Another way to manage risk is to team up with local
partners, say security and oil industry sources. "Community
politics is the bedrock for our security plans," a security
expert, who requested anonymity, said.
Some foreign companies have taken that to heart,
strengthening or developing ties with communities near oilfields
and keeping expatriates working on site, rather than remotely.
"Reliable networks are worth much more than any sort of private
armed protection services," a Western oil executive said.
That message has got across in Egypt, where security
conditions for now are "very manageable", according to a Western
diplomat. That said, the brief capture in Egypt's Sinai
Peninsula of U.S. Exxon Mobil's country boss and his
wife made headlines.
"You need to go more local, looking for services and job
creation," said Majid Jafar, Chief Executive of Crescent
Petroleum, whose firm is active in Egypt and autonomous
Kurdistan in northern Iraq.
"You need to deal with local mayors, understand why
relations with the central government might not be that strong
and how to address that."
France's Total pulled staff out of the Nigerian
capital Abuja in January following the kidnapping of a French
national by Nigerian Islamist group Ansaru, which also said it
killed the seven construction workers this month.
"The oil companies are looking at what can be done in
preparation and how to harden themselves as a target," said
Peter Sharwood-Smith of risk consultants Drum Cussac.
"Ansaru have made it clear they're targeting Westerners
specifically and the oil industry seems a very obvious target."