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This column is usually about Asia, but this month, World Oil wanted to address the Tigantourine gas plant assault in Algeria and what energy companies might do to address increasing attacks on the oil and gas sector, worldwide.
To recap, on January 16, the Signed-in-Blood Battalion (SBB) terror group raided the Tigantourine gas plant near In Aménas. Tigantourine is run by Algeria’s state-owned Sonatrach along with BP, Statoil and JGC Corp. About 1,000 people worked there, both Algerians and foreigners. SBB is a spinoff of al Qaeda in the Islamic Maghreb (AQIM). AQIM is waging operations throughout North Africa and includes veterans of Algeria’s Armed Islamic Group of Algeria (GIA).
The SBB took over the Tigantourine housing compound, killed multiple workers, and then began to move hostages on buses to the gas plant. The military surrounded the area and strafed the buses with helicopter gunships, killing many terrorists and maybe hostages, too. It is confirmed that some hostages escaped during the strafing, however.
The remaining terrorists made it to the plant, strapped bombs on hostages and evidently the plant’s pumps as well, and demanded the West release particular Islamist jihadist prisoners. Having none of it, the Algerian army stormed Tigantourine, killing most of the terrorists. All hostages there were killed. Of the 48 hostages killed, 37 were foreign, and 11 were Algerian. Algerian forces killed 32 terrorists.
The dollar cost of the attack was also high. The plant was offline from January 16 to February 24, when the plant partially came back online. This has cost Algeria, BP and Statoil $560 million in lost revenues. The plant can only operate pump No. 1 at present, which has reduced production from 9 Bcm of gas per year to 3 Bcm a year. This means 12% of Algeria’s total gas production is gone. Most foreign workers with technical skills have been sent home, which will cripple repairs and hinder regular operations, which will cost millions.
Rumors claim Sonatrach CEO Abdelhamid Zerguine will be replaced by the head of E&P, Said Sahnoun, supposedly at the request of the Algerian oil ministry. While this has not happened, yet, Zerguine took the blame for not having enough security at Tigantourine, including armed guards inside the housing compound, something regulations precluded. More, BP, as a result of the attack, is reconsidering its 2009 deal to invest $900 million in Libya’s energy sector. BP is doubtful about the region, a precarious position for an energy company that makes a living on future energy assessments.
There have been questions raised about the heavy handedness of the Algerian response that some say contributed to the deaths of hostages. Algerian military capabilities do not align with most Western standards. Algeria does not have precision commando units such as SEAL Team 6. But Algeria does have a bloody history of fighting the GIA, an organization with al Qaeda-like goals. From 1992–98, the GIA waged a war that killed as many as 200,000. Massacres of civilians were common. So the government acted quickly at Tigantourine. This kept the situation from embarrassing the government, and it sent a message to terrorists seeking to attack Algeria and damage its energy sector: “We will disrupt your plans with no reservations.”
One of the key lessons of this tragedy is the need for premium threat intelligence. Energy companies in low-intensity conflict zones (LICs) should consider such intelligence mandatory to enhance physical security, shape investment strategies, improve corporate-government relations, and calibrate insurance policies—all risk reducing activities that can help save lives and protect revenues.
LIC intelligence is a specialty that regular police and military are not trained in. LIC intelligence describes where a war has been, where it is today, and where it might be going in the future. It also tells what types of violence terrorists/insurgents carry out, and it also explains if their ideology puts a corporation in its crosshairs or not.
Energy companies in LICs can use this type of intelligence to upgrade physical security measures that counter each threat identified. Sonatrach’s Zerguine said internal regulations prevented armed guards in the Tigantourine compound. LIC intelligence could have demonstrated the need for armed guards, which could have saved lives.
LIC intelligence can help shape business strategies. It can answer questions like, “Do we want to invest in this LIC zone?”, “How long might this war last?”, “What’s the worst case scenario if we’re attacked?”, and “How much is it going to cost to provide protection?”
Companies can use LIC intelligence to procure better security from the host nation. If a company knows well its threat environment, it can negotiate for effective protection. This might require a company coordinate with the host nation’s military. World Oil reported this very scenario in its February 2011 article, “Philippines address Palawan security as oil stakes increase.” Here, Philippine generals proposed merging military and energy company assets and finances to protect E&P projects from local terror groups.
Finally, LIC intelligence can help calibrate insurance premiums. If, for example, an insurgent group mostly uses car bombs against buildings, and an energy company applies setback to prevent such attacks, then in theory, its premium can be lowered. This is advantageous to energy companies such as Shell that insures many of its own operations.
CEOs, security chiefs, and accountants should address these issues jointly. Doing so increases the effectiveness of LIC intelligence and the security of companies in unstable environments. After Algeria, such security should become the norm. 
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