The energy sector in the Middle East and North Africa is presented with as many challenges as it is opportunities. Security risks, in particular, tend to receive the most news coverage and are often among the top concerns of energy professionals travelling to the region.
However, there are numerous means of mitigating this risk with the implementation of sound, responsible and practical management measures. Here are some of the country-specific issues to watch over the coming months, as well as advice on how to face them:
In Iraq, the new government is unlikely to appease all members of the public. This is standard in most democracies, but in Iraq, those dissatisfied with the process are more likely to take up arms in response.
The largest share of the country’s oil wealth is located in the south. Social tensions here are lower than in the mixed communities of the central provinces.
Nonetheless, low-level criminality and militancy remain a concern. A rise in militancy similar to that seen before the security clampdown of early-2008 (with Operation Charge of the Knights) is unlikely and the police force and Iraqi army grow stronger every day, but firms need to be vigilant nonetheless.
Tensions continue to boil further north around the disputed city of Kirkuk, not least because of the massive oil wealth situated beneath the city.
However, energy operations remain largely secure in the adjacent oil-producing provinces of Arbil, Dahuk and Sulaymaniyah in Kurdish Regional Government (KRG) territory, and conditions do not look set to deteriorate.
Turning to Algeria, the levels of militancy here have declined over the past year, but certain parts of the country remain at risk of terrorist and criminal violence.
Al Qaida in the Islamic Maghreb is mustering on the southern fringes of the country, while remnants of the organisation are still active in the north-eastern region of Kabylie. Unlike the Sahara in the south, Kabylie is among the most industrialised parts of the country and it is here that foreign companies are most likely to encounter security risks. Militants remain intent on abducting individuals working for foreign firms in an attempt to acquire ransom money.
This money is, in turn, used to finance terrorist attacks, and although these have diminished in frequency over recent months, they remain an ongoing concern in the urbanised north nonetheless.
In Yemen, a lack of authority in rural areas has allowed for the development of low-level, but potentially threatening, criminality, separatist militancy and even terrorism.
Al Qaida in the Arabian Peninsula has created a new base in the Yemeni interior and has threatened attacks on all foreign interests in the country.
The organisation has a history of targeting the oil sector, with the past decade seeing attacks on pipelines, oil-firm compounds and even the oil tanker, the Limburg, in 2002.
One mitigating factor is that most of the country’s pipelines are safely buried underground beyond the means of all but the most determined and well equipped terrorist organisation.
Furthermore. even al Qaida is bound by the strong tribal rules that govern the country.
Firms which honour and respect these bonds and loyalties will enjoy far fewer problems and much greater protection than those which do not. However, if those bonds are to be maintained. companies will need to demonstrate their willingness to help local residents, as Yemen faces the prospect of exhausted oil, gas and water reserves over the coming years.
Neighbouring Saudi Arabia was subjected to a campaign of al Qaida violence between 2003 and 2006, the energy sector in Saudi Arabia has been largely spared from terrorist attacks over the past four years.
However, al Qaida groups have repeatedly warned of attacks on foreigners, the energy sector and the ruling family of the kingdom.
The attack on Prince Mohamed bin Nayef (the country’s anti-terrorist head) in August demonstrated the ambition – and capability – of the group, which should not be taken lightly. While security in the country remained heightened, further terrorist attacks should still be anticipated.
How to face the risks:
Companies are advised to review security measures at their business premises in the region.
Accommodation needs to be secure, and accompaniment by risk specialists on the ground remains advisable in several (but certainly not all) Middle Eastern countries.
Insurance cover should be obtained for a range of perils and, given the nature of risk in certain countries, cover for terrorist acts and kidnap for ransom should be considered.
Staff should also undergo safety training specific to operating in challenging regions. This will ensure that they are ready, comfortable and confident about facing their working environment.
Cultural awareness should form an integral part of this training because, as highlighted in the case of Yemen, and as frequently demonstrated elsewhere in the region, one of the most effective means of reducing risk is by engaging local communities through the provision of employment and economic stimulation.
John Drake is senior risk consultant at AKE Limited
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