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Companies to stay in Algeria despite hostage crisis

27.01.2013 - 20:11

In the wake of the recent Al-Qaida attack on an Algerian natural gas facility and the subsequent hostage situation, security at such facilities will be increased, but most international oil and gas companies will continue their operations in the African country.

Militants stormed the Tigantourine natural gas facility near In Amenas two weeks ago in eastern Algeria. Dozens of people were killed when Algerian military forces retook the facility.

“The oil companies operating internationally are well accustomed to these risks and problems,” Manouchehr Takin, senior petroleum upstream analyst with the Centre for Global Energy Studies (CGES) in London, told New Europe on 24 January.

Takin noted that the dramatic hostage siege earlier this month in Algeria has prompted some “knee-jerk reaction” by all companies, prompting them to review the situation and consider safer areas.

The natural gas project is a joint venture between BP, Norway’s biggest energy explorer, Statoil, and state oil and natural gas company Sonatrach.

Statoil could accelerate a shift toward US shale investments and Brazil after the attack in Algeria. But Statoil probably won’t withdraw from Algeria or other countries in the region based on the In Amenas attack. “We neither will nor can let terrorism dictate our strategy or our choices,” CEO Helge Lund told a press conference in Stavanger on 21 January. “We have a responsibility to run our business and support daily operations.”

Takin noted that because Norway is a neutral country, they had the impression Statoil should not be attacked or taken hostage. So probably the shock is greatest to the Norwegian company because they didn’t expect this. “Norwegians are doing a lot of good work in the developing countries,” Takin said. “When unfortunately these tragedies and extremism issues occur, they don’t look to see who is from where,” he said. “But I think most international companies will continue in Algeria,” he said, adding that they will put much more emphasis on security and they might require further support for security from the Algerian government. “But I think they will remain there and they will continue - Statoil maybe a little less,” the CGES analyst said.

BP said in a statement that “it remains committed to operating in Algeria where it has high quality assets and has been present for over 60 years”.

Takin explained that international oil companies have worked in areas where there is risk all over the world - weather, financial, climatic, geological, government and security risks. “I don’t think it will cause a paradigm shift, the beginning of a new phase of the industry because these things are there,” Takin said.

Two days after the end of the hostage crisis at the natural gas plant, the Algerian Parliament approved amendments to its hydrocarbons law that will offer foreign energy firms easier tax terms and other incentives. The amendments offer incentives to foreign companies that want to invest in shale gas and shale oil. For their part, EU countries, which will need expanded access to natural gas to offset the decline of their indigenous reserves and lessen their dependence on Russia, are looking at developing Algeria as a major natural gas exporter.

 

KGeropoulos@NEurope.eu

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