April 1, 2016

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TSG IntelBrief: Confronting the Terror Threat to Oil and Gas

On March 18, four militants from al-Qaeda in the Islamic Maghreb (AQIM) launched homemade rockets at a natural gas plant in the remote central Algerian desert. While the attack on the Krechba plant, outside of the Algerian town of In Salah—jointly operated by British Petroleum (BP), Norway’s Statoil, and the Algerian national oil company Sonatrach—caused no casualties or damage, it served as a reminder of the increasing vulnerability of oil infrastructure in regions experiencing marked increases in violent extremist activity. The threat is particularly acute in North Africa, where the combination of vast territory and weak states has provided violent extremist groups with the space to proliferate. 

Though the March 18 attack had little concrete impact, any attack on Algerian energy infrastructure evokes memories of the January 2013 assault and subsequent hostage crisis at the Tigantourine gas facility—also operated by BP and Statoil—near the Algerian town of In Amenas. The operation, carried out by al-Qaeda linked al-Mourabitoun, left 37 foreign nationals dead, and raised serious questions about security infrastructure meant to defend against such attacks. In addition, it elevated concerns about the vulnerability of foreign staff at oil and gas installations, which are often in remote areas. The In Amenas assault, and possibly this most recent attack in In Salah, indicates that violent extremists groups are fully cognizant of this vulnerability. 

Since the In Amenas incident, the Algerian government has taken steps to improve security at remote oil and gas facilities. However, foreign companies have little tolerance for insecurity, particularly when it comes to ensuring the safety of their staff. Following the March 18 attack, both BP and Statoil announced that they would begin a ‘phased temporary relocation’ of all foreign staff from their facilities in both In Salah and In Amenas. While the facilities will remain operational, foreign staff often provide critical technical support, and their prolonged absence will likely affect production. 

This is especially concerning for Algeria, which relies on oil and gas exports for 35 percent of its gross domestic product. Despite the enhanced measures taken by Algerian security forces, continued instability and weak governance in neighboring countries—namely Libya, Niger, and Mali—have created a significant security burden for the territorially largest country in Africa. Violent extremist elements have maintained a strong presence in the Sahara for years, and the proliferation of kidnappings has effectively discouraged Westerners from working or traveling in the more remote areas of the vast desert—as there is no guarantee that local governments have the capacity to protect them. If the same perception develops among oil and gas workers in Algeria, it could severely hamper the productivity of the country’s oil and gas industry. 

In Libya, this dynamic is magnified by the absence of effective state institutions and rule of law. Libyan oil and gas exports account for 95 percent of export earnings, and 60 percent of gross domestic product. The country faces a dilemma in that stabilization cannot occur without the reconstruction of the oil and gas industry, but foreign companies—particularly Western companies—will be hesitant to fully reinvest until the safety of their staff can be guaranteed. Operating from its self-declared capital in the central coastal city of Sirte, the so-called Islamic State has launched repeated attacks against major oil and gas terminals in Ras Lanuf and Brega. Islamic State activity, in particular, will do much to give foreign companies pause, given the extremist group’s penchant for decapitating Western prisoners. 

Even if the Islamic State is driven out of the populated north of Libya, its presence in the country is likely to persist. Many of the oil and gas extraction sites in Libya, as in Algeria, are in the remote southern desert regions. In order to reassure foreign companies, Libyan security forces—in whatever form they take—will need to demonstrate their ability to counter the threat posed by a well-armed and extremely mobile enemy. Algeria, too, will need to continue to update its tactics to respond to the rapidly evolving threat of violent extremism in the Saharan region. Failure to do so could lead to another In Amenas style assault, which would have serious implications for the oil and gas industry in North Africa as a whole. 

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