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African militants may force foreign oil firms to use remote control
March 25, 2013 / 3:52 PM / 5 years ago

African militants may force foreign oil firms to use remote control

* 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 (Reuters) - 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 incident.

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.”

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