North Africa: A riskier environment

Author : Alan Franck, Editor, HazardEx

15 March 2013

Two months after the attack on the BP-operated In Amenas gas facility in the Algerian Sahara is a good time to take stock of the likely consequences of the upsurge in terrorism in this region. The incident, which left at least 37 hostages and 29 terrorists dead, will have serious consequences for foreign companies investing and operating in North Africa and beyond.

The Algerian site was said to resemble a fortified military stronghold more than a natural gas processing plant. Large numbers of security forces were stationed in the vicinity of In Amenas, with resources including attack helicopters and a unit of T72 tanks, but that did not stop the attackers taking many hundreds of hostages and killing a number of them.

Exclusive Analysis, a London-based risk assessor, warned twice last year that oil and gas assets in southern Algeria and foreign personnel employed there could be the target of kidnapping and attacks by Jihadist militants.

"I cannot believe that this is the last attack," its CEO, Simon Sole, told CNBC. “From AQIM's perspective, it's been a very effective attack - they've achieved global notoriety."

In early March Mokhtar Belmokhtar, the terror group leader who claimed responsibility for January’s attack, was reportedly killed by Chadian soldiers in Northern Mali, although this has not been confirmed.

But even if he is no longer a threat, others are likely to step into his shoes. This was recognised by UK Prime Minister David Cameron who said the world faced a ‘generational struggle' as Islamist terrorists switch their focus to North Africa.

To confirm this analysis, on March 8 a radical Islamist group based in Nigeria claimed it has killed seven Western hostages, seized from a construction project operating in the northern part of the country last year.

An exodus of Western energy industry workers from the region followed the In Amenas attack, and when they return, security costs will have risen sharply, along with insurance premiums and the cost of relocating personnel.

Projects may well be delayed as a result, with negative effects on the industry but also on the countries concerned, which are in many cases dependent on extractive industry revenues for their very survival.

Western energy and other companies will now be looking at all of their interests across the region, with Libyan oil and gas facilities and France's uranium interests in Niger looking particularly vulnerable.