The Maghreb, or North Africa, boasts Africa’s most developed oil region, with the majority of the continent’s proven oil reserves and refining capacity. While Algeria, Libya, and Egypt dominate the sector, significant opportunities exist in Tunisia and Morocco. Notwithstanding the enormous potential presented by the Maghreb, the operating environment remains far from straightforward. A variety of risks abound – geopolitical tensions, political instability, civil unrest, and transnational militancy. Aside from these macro risks there are the operational questions of corruption, complex legal and regulatory environments, and tactical security concerns.

Political and operational risks have long been present in the region but are felt more acutely today as the revolutions that toppled dictators in Libya, Egypt, and Tunisia have unleashed complex and violent forces that dramatically weaken state structures that previously suppressed these forces. The conundrum facing international oil companies (IOCs) and investors is how to interpret and manage the risk calculus of making sure their people, assets, and reputation are not exposed while at the same time juggling the economic pressures of restarting or increasing their operations. This is further complicated if the asset is noncore or operated by an indigenous company that has a very different interpretation of threats and required responses. The enduring consequences of the In Amenas attack in Algeria in January 2013 are an example of this.

Militancy in southwest Libya

A relevant case study worth examining is the multifarious security risks facing IOCs operating in North Africa presented by militant networks in southwest Libya. There are strong suggestions that southwest Libya has become a haven for transnational militant networks exploiting the vacuum left by the ousting of the Gadhafi regime and the current uncertain political transition. In periphery areas often neglected by central government, militant networks hold a certain appeal to some local interest groups that are politically and economically marginalized by Tripoli. Various reports speak of the worrying emergence of “islamo-gangsterism,” whereby jihadist militants involve themselves in the contraband networks in the border areas blending Islamist militant activity and organized crime. As militant networks build relationships with certain local groups, their ability to use southwest Libya as a rear base for attacks against oil and gas facilities in the wider Sahel region increases. The overall picture is more complex, but this is just one of many factors that influence the way these networks operate.

A proper understanding of these militant networks to project force and target oil and gas facilities requires both a strategic perspective and a clear view of specific threats that can only be had from close study on the ground.

Crucially, operators and investors need to understand the domestic political situation in Libya and that of its neighbors as well as the capabilities of the internal security apparatus in these countries to challenge such militant networks. In some cases, the lack of capability in this area is a key vulnerability. The In Amenas attack has shown the shortcomings of relying too heavily on internal security systems, overly bureaucratic command structures, and inadequate response capabilities – even in a country known to have the largest military budget in continental Africa. Libya, for its part, is not yet capable of providing effective security for IOCs as it is plagued by a range of security challenges including the fundamental question of how to create a new security force from a variety of competing interest groups. As for Tunisia, its security forces tend to overestimate their strength while being under-equipped and lacking an overall national security strategy.

As well as understanding the individual composition, capabilities, and character of each country’s internal security forces and intelligence services, it is important to examine the nature of cooperation between these governments. This is a transnational threat where militants benefit from the freedom of movement afforded to them by lax border controls and relationships with local communities. The role of foreign governments, including the US, Britain, and France, in the provision of counterterrorism measures must also be properly understood. Impact assessments and scenario planning should be undertaken on situations such as overt military intervention (e.g. the French into Mali) or covert drone strikes in and around an oil and gas asset.

Last, and most challenging, is the opaque nature of the militant networks themselves – mapping such complex, nebulous, and rudimentary networks is fraught with difficulty and runs the danger of oversimplification. While certain questions about the presence, intent, and capability of these networks have to be chalked up to the unknown, this by no means makes the risk unquantifiable and therefore unmanageable. Decision-makers need to rely on a more sophisticated treatment of security risks, one that not only assesses the likelihood and impact of the risk but also an asset’s vulnerability to that risk.

Shortcomings in risk assessments

The In Amenas attack and the two attacks at Arlit and Agadez in Niger in May 2013 have drawn attention to some significant shortcomings in traditional security risk assessments. As Statoil’s publication about the investigation into the In Amenas attack observed, “the terrorism threat was not broken down into defined scenarios against which protective measures could be planned and designed.”

Based on its experiences of operating in the post-Arab Spring environment and other challenging jurisdictions such as Yemen and Somaliland, Salamanca Group has developed an in-house security risk assessment (SRA) that aims to tackle the shortcomings of traditional methods by applying a more structured, intelligence-led approach to security solutions. The SRA is based on a collaborative approach, with Salamanca experts working with clients to develop successful outcomes. The threat of militancy, for example, is treated as a broad threat stream against which detailed tactical scenarios of how it may manifest itself against a given asset are developed. This logic allows for the identification of vulnerabilities in a sequence as the scenario develops, thereby minimizing the possibility for vulnerabilities to be overlooked.

Addressing vulnerabilities

“Protective measures” does not just mean practical measures to physically secure an IOC facility. This is one aspect, albeit a crucial one, but it must go hand in hand with other more strategic measures. Ongoing monitoring of local political, security, and transnational dynamics is essential and can be achieved through sophisticated community relations building and ground-truth intelligence gathering. This provides the much-needed early warning threat reporting on both “over the horizon” and local issues. Stakeholder mapping and behavioral analysis of the local operators, state oil companies, and security structures are also crucial and allow IOCs to adopt an appropriate and nuanced engagement strategy with key stakeholders. As well as engaging with host governments, relationships between IOCs and national governments are vital, in particular in the resolution of certain strategic disputes that IOCs may face. Lastly, collaboration among IOCs working in the same regions should be continually encouraged so that corporations adopt a more unified approach to sharing intelligence, conducting risk assessments, delivering coordinated security responses, and agreeing on key strategic decisions that affect the region and sector as a whole.

There is no silver bullet approach for IOCs who have to deal with the challenges presented by the energy-rich yet high-risk Maghreb region, but bespoke, intelligence-led security solutions combining the measures outlined above will provide greater clarity for decision-makers to make informed judgments about their investment decisions and risk strategies.

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