Bob Dudley, BP’s chief executive says the company, which had 18 workers at the remote Sahara gas plant, is “reviewing security” at its other facilities in the region and around the world.
The attack is the worst tragedy of its kind in living memory despite the energy industry’s presence in many unstable regions. BP has “never experienced an attack on this scale before”, Mr Dudley says.
Consultants say the industry will step up security, and may re-evaluate business interests in regions deemed politically unsafe.
Security remains a top priority in countries such as Iraq and Nigeria, where there have been instances of rig workers being kidnapped. The perception of risk for foreign oil workers and their families in north Africa, has soared.
Yet companies are only expected to pull out if the In Amenas attack becomes part of a pattern.
“The main issue to assess is whether the Algerian event represents a new ongoing threat and a general associated elevation in the risk environment or a one-off occurrence which may now result actually in tighter security in the region,” says Nick Robson, the head of Jardine Lloyd Thompson’s credit, political and security risk business.
During the civil war in the 1990s there were no significant attacks on any industry facilities.
As a material producer of gas — and supplier to southern Europe — Algeria has enjoyed interest from companies including BP, Statoil and Repsol, despite an increasingly punitive tax environment. The attack came just as the government was finally taking steps to improve business conditions and was due to introduce more generous fiscal terms.
“From 2006, after the government reversed the hydrocarbons reform law of 2005, the hurdle had become the regulatory environment … Now, all of a sudden, security has returned as a concern,” says Geoff Porter, of North Africa Risk Consulting.
Globally, demand for the services of the private security and risk management industry is expected to rise.
Mr Dudley says BP had contracted Stirling Group, a security firm, to provide liaison between the Algerian military, police and the community, although under Algerian law, private security firms are not allowed to operate at such facilities.
Elsewhere, where private security is allowed, companies such as Control Risks and G4S provide physical protection for oil and gas facilities as well as risk analysis.
None of several security companies contacted by the Financial Times was prepared to talk about the impact of the Algerian attack. But even before last week, spending on security was forecast to rise. An analysis from Frost & Sullivan published earlier this month said the security of critical facilities was the top priority for the global oil and gas industry.
Rising demand for energy, the construction of new facilities and physical and cyber threats to these installations have led to growth in the oil and gas infrastructure security market, the report said. The market is expected to increase from $18.31bn in 2011 to more than $31bn in 2021.
Risk premiums for kidnap for ransom insurance or terrorism insurance will be reviewed across the north Africa region in light of the attacks, says Mr Robson.
He expects the conclusion will be that the risk environment has “elevated generally” although this had already happened some time ago since “the weapons and rebels left Libya last year”.
The bloody hostage taking at the remote In Amenas gas plant has “burst the bubble” of security that has surrounded the Algerian hydrocarbons industry. It has also raised the risk profile across the region, compounding “a wider mood of instability across the Saharan region,” says Jon Marks, associate fellow on the Middle East and north Africa programme at Chatham House.
Source: CNN/ Financial Times