'Grave fears' for energy industry in North Africa

The al-Qa'ida attack on foreign workers at the Algerian gas plant has made Western companies nervous

BP may be forced to reconsider further gas exploration in North Africa as a result of the Algerian hostage crisis, fearing more targeted attacks against its workers in the region, industry sources said yesterday.

The British energy giant is Algeria's largest investor in a country that is the third-largest supplier of gas to the EU. BP, already a major investor in Libya, had been granted new gas licences in the country days before Islamic terrorists took over the In Amenas gas plant near the Algerian/Libyan border.

With Bob Dudley, BP's chief executive, warning last night that there remained "grave fears" for some of his workers, senior industry insiders said there would have to be careful consideration of security and protection from al-Qa'ida in the Islamic Maghreb (AQIM) before BP further expanded in the region.

A source said: "The Algerians are very security conscious, and they have to be. They have a massive problem, as does Libya, as does Morocco. This is a serious issue. Algeria will not take any messing around with security, because gas exports are essential to them.

"But BP will want to look at this again, as security is the key aspect. If there was a reason why they wouldn't want to invest, it would be because of security."

It is unlikely that BP will scale back operations in Algeria, but the source said that expansion across the region would need to be reconsidered.

While the short-term threat to European gas supplies from the crisis appeared to be minimal, there is now a longer-term risk to supply. Western energy companies with workers in other plants in Algeria evacuated some staff while the hostage crisis was ongoing.

Drilling by Total of France and Italy's Eni SpA might also be affected by the hostage crisis, said the sources. BP, Norway's Statoil and Spain's Compañia Española de Petroleos SA evacuated workers from other Algerian energy facilities as the crisis unfolded. Helge Lund, Statoil's chief executive, said about 40 non-essential staff would be flown back to Norway. BP was also evacuating some non-essential workers.

Algeria's oil and gas exports are the country's dominant industry, with energy accounting for 70 per cent of tax revenues and 98 per cent of its exports. Key markets are Italy, which gets a third of its gas from Algeria, and Spain, which receives half of its supplies from there. Algeria sends a small amount of gas to the UK. It is also a major oil producer.

While gas prices rose in Italy in the wake of the hostage-taking, they fell again on Friday after flows were restored.

The issue of securing gas and oil supplies in the Middle East and North Africa is not as important to Washington as it was a decade ago, when the US was preparing to invade Iraq. The US is becoming increasingly reliant on its own resources, particularly shale gas, with production expected to increase fourfold in the next 20 years.

The situation is more precarious in the UK. Despite the coalition giving the green light last month to shale gas exploration, there is not the vast open space in this country to allow for fracking, meaning the UK must look for a diversity of supplies, including oil and gas from Europe, the Middle East and Asia, as well as renewable energy and nuclear power. Last week, the leak in the Brent oil pipeline in the North Sea, now being brought under control, underlined the continuing fragility of supply.

Dr John Burman of Cambridge Global Research Ltd, a consultancy advising financial institutions on their Middle East investments, said: "For the UK, in particular, Algerian gas is more of an issue than Algerian oil. Algeria is a smaller producer than, say, Qatar, but it is still a major gas player. The problem for Algeria is that gas exploration and extraction requires significant levels of technological investment. If the energy majors are pulling out because of the terrorist threat, Algeria's gas industry will suffer acutely."

BP, Statoil, and the Algerian state oil company, Sonatrach, operate the In Amenas gas field, supplying 12 per cent of Algeria's natural gas output.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Tradewind Recruitment: English Teacher

Negotiable: Tradewind Recruitment: My client is an excellent, large partially ...

Tradewind Recruitment: Science Teacher

£90 - £140 per day: Tradewind Recruitment: I am currently working in partnersh...

Tradewind Recruitment: Year 3 Primary Teacher

£100 - £150 per day: Tradewind Recruitment: Year 3 Teacher Birmingham Jan 2015...

Ashdown Group: Lead Web Developer (ASP.NET, C#) - City of London

£45000 - £50000 per annum + Excellent benefits: Ashdown Group: Lead Web Develo...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee