Security risks from militants loom large in West Africa
Increasing attacks on oil and gas firms in West Africa have forced governments and firms to take precautions
The rise of Islamist militancy in the north of the region has unsettled foreign oil company staff in West Africa, but the potential for renewed political violence and continued oil theft in the Niger Delta, together with an escalation in oil-related piracy, may prove to be bigger risks to the sector.
Total's decision in January to pull its expatriate staff out of the Nigerian capital Abuja highlights growing concerns that local groups could mount a campaign against foreign firms. In Total's case, the worries were heightened by the company's French origins, which could make it a target following France's intervention against Islamist rebels in Mali.
The company's move followed the kidnapping of a French engineer working on a wind-power project in the northern Nigerian state of Katsina in December, for which the Ansaru Islamist group claimed responsibility. In mid-March, seven hostages working for a construction firm in northern Nigeria were reported to have been killed by Ansaru, though details remain unclear. Other kidnappings in the region recently have included that of a GDF Suez employee and his family in neighbouring Cameroon, whose abductors claimed to be from Nigerian-based Boko Haram. Ansaru is believed to be a splinter group of Boko Haram promoting international Jihad, in contrast to Boko Haram's more domestic-focused Islamist agenda.
However, so far the exploration and production activities of international oil companies, located largely in the south of the country, have not been threatened by Islamist militants, whose strongholds lie mainly in Nigeria's northern states.
Oil and gas installations in the Niger Delta region are protected by heavy security. This is provided by both the government and - at considerable expense - the companies involved, following years of political and criminal activity aimed at the industry there. Political violence in the Delta, including attacks on oil and gas facilities and hard-to-defend pipelines, cost the country billions of dollars in lost revenues at its peak. However, this has eased, following a government amnesty for members of the Movement for the Emancipation of the Niger Delta (Mend), the region's main activist group, in 2009.
Fears of a revival in terrorist activity have been heightened by the conviction in a South African court in January of Henry Okah, a Nigerian portrayed by prosecutors as a Mend leader. He was found guilty of carrying out two car bombings in Nigeria in 2010. Okah's conviction prompted one faction within Mend to threaten reprisals, although another faction has publicly disowned the threat and claimed Okah was a peripheral figure in the organisation.
Regardless of Mend's intentions, pipeline attacks carried out by criminal gangs to steal oil for illegal refining and onward sale - so-called bunkering - remain widespread in the Delta. The problem has prompted Shell, the main foreign producer in the region, and others to declare force majeure on exports on several occasions this year and last.
In early March, Mutiu Sunmonu, the chairman of Shell's Nigerian operations, said the firm may have to completely shut down its key Nembe Creek oil pipeline in the Delta due to oil thieves' attacks. He said pipeline attacks caused it to lose a total of 450,000 barrels of oil output over three days in February.
With some estimates putting total lost output in the delta at up to 400,000 barrels a day, Nigerian authorities have repeatedly stressed they are keen to do battle with the oil thieves. However, they have had limited success so far. Allegations of collusion between some local officials, oil-company employees and the thieves are commonplace, but tackling bunkering is also made more difficult by the landscape in which it is taking place.
The thieves' hideouts and the makeshift refineries used to process the oil are hidden within a maze of swamps and waterways in the Delta and are difficult to approach, even if they can be identified from the air."The authorities have to send people in on the ground, but the terrain is difficult and the oil thieves know the area much better than the security forces. That makes dealing with them a lot harder," says David Slater, a Nigeria analyst at consultancy Cross-Border Information.
Energy minister Diezani Alison-Madueke said in February the country had requested assistance from the UK and other countries to tackle bunkering. She said that, as bunkered products were sold outside West Africa and proceeds of their sale were laundered beyond the region, international help was needed to tackle the issue. However, analysts say it is likely that much bunkered oil is sold in West Africa, so even if tougher measures were taken at a wider international level, much of the trade was likely to be untouched.
Pirates target oil cargoes
Piracy in the Gulf of Guinea is another risk that could almost be regarded as a spin-off from the problems in the Delta, as many practitioners have their origins in the region.
The threat of piracy is moving steadily up the agenda for energy firms, as their activities spread into new territories along the West African coast. A problem that has dogged general cargo vessels for years is now becoming a greater issue for the oil sector.
The number of reported incidents of piracy in the Gulf of Guinea has risen sharply in recent years. According to the International Maritime Bureau (IMB), which manages a piracy-reporting centre, attacks on all types of vessels reported in the region increased by 42% in 2012 to 51 incidents. A further 11 incidents had been reported by early March this year, including three successful hijackings, and the kidnapping of 11 crew members.
However, the IMB cautions against using these figures to indicate rising risk to shipping in general. "The region has always been one of very high risk, but unfortunately incidents were not being reported openly, so the perception of risk there has been quite low over a number of years," says Cyrus Mody, the IMB's assistant director. He says one reason for the rise in reported incidents is a change in the type of vessels targeted by pirates since 2010. They now seek more valuable and easily saleable oil-products cargoes, whose owners are more likely to report them stolen.
That doesn't mean large crude carriers, whose cargo requires more effort to steal, process and sell, or energy company supply vessels, are certain to become more heavily targeted. However, they, along with other types of vessels, remain at risk of violent attack aimed at robberies of belongings.
Hostage taking also remains a threat, given perceptions - often justified - that ransoms can be extorted from international companies for the return of crew members or oil industry workers. While rigs and platforms are generally heavily defended by security guards and the Nigerian navy, ships - like pipelines - remain more vulnerable.
Nigeria has historically been - and remains - the largest source of hijackers. Mody notes that while hijackings are spreading to encompass waters off Cote d'Ivoire, Benin, Togo and other countries in the region, the pirates can still largely be traced back to Nigeria.
Piracy in the region has generally taken place against slow-steaming or stationary vessels in or around ports, contrasting with attacks on vessels on the high seas in the Gulf of Aden and the Indian Ocean. But there has been a rise in piracy taking place further out to sea than has been the norm in West Africa, sometimes 100-150 miles from shore. That suggests increased capability among the region's maritime criminals.
Mody says a more coordinated approach to seeking out and prosecuting pirates would help fight the problem, as would greater advisory assistance from the wider other governments. Local agencies could also improve their response to distress calls from vessels under attack, he says. "It does happen off and on, but it's not a very regular feature. Ships don't always receive a 100% response," Mody says.