Gas from high-risk Algeria
The acquisition in Algeria was the last foreign commitment made by Statoil during Olav Fjell’s time as CEO. Richard Hubbard, headhunted from BP to head the international department, was responsible for bringing the company into closer contact with Africa’s largest country by area. Four-fifths of Algeria’s territory is uninhabitable desert. But the Sahara is by no means without resources, and it contains large quantities of oil and gas. BP began operating in the country during the mid-1950s, and joined forces in 1998 with state oil company Sonatrach to produce the big In Amenas gas/condensate field on the border with Libya.
Between socialism and Islam
This occurred at a time when no other company dared establish itself in Algeria because of the civil war raging in the country.[REMOVE]Fotnote: In Amenas report.pdf, Equinor website: 2. The violence broke out after the first free elections, intended to replace a socialist one-party regime in 1991, ended with the army taking power. That was done to prevent the introduction of a fundamentalist government led by Islamic clerics, which looked like securing a majority of the vote. The coup unleashed much opposition and terrorism. Many people were imprisoned and some 100-150 000 people were killed in the fighting. New elections were held four years later, when the majority passed laws to make Islam the official religion. However, no political parties were allowed which built on this faith. Conditions calmed down in the late 1990s, when opponents of the regime were amnestied and the violence declined. But groups of Islamic extremists with links to Al Qaida were still present.[REMOVE]Fotnote: https://en.wikipedia.org/wiki/Algeria
Interests acquired
Around 2000, BP felt it had done well out of its Algerian commitment despite the violence. But it wanted to get others involved to spread the risk – including financial – which nevertheless existed.
Statoil, which was seeking to build an international presence, acquired interests of 50 and 32 per cent respectively in In Amenas and the In Salah gas field during the summer of 2003. The price was NOK 5.5 billion, and Statoil became joint operator of these fields. It also undertook to invest NOK 8.5 billion to help bring them into full production.[REMOVE]Fotnote: Annual report, Statoil, 2003: 20; Ryggvik, Helge, 2009, Til siste dråpe. Om oljens politiske økonomi: 317.
Algeria looked like becoming a core country in Statoil’s purposeful international commitment, observed executive vice president Ottar Rekdal.[REMOVE]Fotnote: Annual report, Statoil, 2003: 14. In 2005, the company became exploration operator for the Hassi Mouina block, where drilling began in 2004.[REMOVE]Fotnote: Annual report, Statoil, 2005: 21. By 2007, just over 10 per cent of Statoil’s international production derived from In Salah and In Amenas – which came on stream in 2004 and 2006 respectively.[REMOVE]Fotnote: Annual report, Statoil, 2003: 14.
Safety in Algeria received its first mention in a Statoil annual report in 2007. Sonatrach then took over responsibility in the country for the safe behaviour programme which Statoil had introduced and tailored to local conditions.[REMOVE]Fotnote: Annual report, StatoilHydro, 2007. For the safe behaviour programme, see Safe behaviour programme – Statfjord (industriminne.no) It later transpired that the field facilities were far from secure when terrorists really targeted them. The Algerian government was still weak after the civil war. A number of local conflicts existed, and crossing the borders was easy.
Terrorist attack
The In Amenas gas installations were attacked on 16 January 2013 by heavily armed Islamists. Lasting four days, the assault was very brutal and ranked as one the largest against a petroleum facility in the industry’s history.[REMOVE]Fotnote: In Amenas report, op.cit: 13. Some 700 workers were quickly seized as hostages. The Algerians were separated into one group and roughly 130 foreigners of 30 different nationalities into another. A life-and-death struggle ensued.
Forty employees from 10 countries were killed during the attack, including five of the 17 Statoil employees at the plant. They were Tore Bech (58), Thomas Snekkevik (35), Hans M Bjone (55), Alf Vik (43) and Victor Sneberg (56).
Algerian forces launched a counter-attack on 17 January to regain control of the facility. Tough tactics were used by the army to crush the terrorists, including shooting from helicopters towards the living area. The Islamists responded by using hostages as human shields. Many were killed by a big explosion and fire in the production area.
After two days of fighting, the action was completed with 29 of the hostage-takers killed and three captured. The leader of the attackers, Algerian Islamist Mokhtar Belmokhta, did not personally take part and thereby escaped.[REMOVE]Fotnote: For a detailed account of the attack, see page 13 of the In Amenas report.pdf
According to the Norwegian Institute of International Affairs (Nupi), the terrorists wanted to hit the Algerian government where it would hurt the most. The oil and gas sector represents Algeria’s economic foundation, and foreign companies are seen as allies of the regime.[REMOVE]Fotnote: Nupi, “In Amenas-angrepet – Ett år etter”, 16 January 2014.
Investigation report
The Norwegians who survived have since talked of grotesque scenes. They were returned as swiftly as possible to a reception centre established by Statoil in Norway for reunions with family and friends. Psychological follow-up was provided.[REMOVE]Fotnote: https://old.magma.no/a-lede-under-et-terrorangrep
CEO Helge Lund returned as quickly as he could from a foreign trip and went straight to the centre to talk with the next of kin. He subsequently received praise from several of those affected by the attack for his personal engagement. And he got in touch both on the phone and in letters.[REMOVE]Fotnote: https://www.vg.no/nyheter/innenriks/i/Ovarq/paaroerende-hyller-helge-lunds-innsats-under-terrordramaet-i-algerie.
Statoil ensured that a detailed internal investigation was conducted. That was important to understand what had happened and how the security measures had failed. The report made it clear that the terrorists were responsible for the loss of life.
Responsibility for security at the facility was split between the army, in charge of external measures, and a company hired by Sonatrach to handle internal safeguards. The fact that security was so dependent on Algerian military protection was criticised. Nobody had envisaged a scenario where a large armed force reached the facility. The Algerian troops were unable to detect the attackers or prevent them reaching the site. Statoil was condemned for lack of understanding and inadequate prioritisation of security at In Amenas.[REMOVE]Fotnote: Aftenposten, 20 January 2018. The system established by the company to manage risk was too weak.
Given the circumstances, Statoil’s contribution was nevertheless found to be as effective and professional as possible. No examples were found where a different response by the company could have changed the outcome. The lesson was that Statoil’s overall capacity and culture had to be strengthened so that it was prepared for the threat posed by operating in such an unstable and unpredictable setting.[REMOVE]Fotnote: In Amenas report, op.cit: 4.
As a result, the investigation was followed up by an internal programme in Statoil to improve security and clarify management’s duties and responsibilities for emergency preparedness.[REMOVE]Fotnote: https://www.equinor.com/news/archive/2013/09/12/12SepInAmenasreport
New investment in Algeria
Statoil’s Algerian involvement continued after the attack. Pulling out was not an option. Part of the In Amenas gas plant was back on line within roughly a month. “We basically want to maintain our operations in Algeria. We have big activities there,” said Lund when he visited the site in March 2013. He emphasised that the investigation would have to determine how far this was safe.[REMOVE]Fotnote: https://e24.no/naeringsliv/i/zG9OWw/helge-lund-sterke-inntrykk-i-in-amenas.
That year, the company secured an interest in Algeria’s Timissit licence together Sonatrach and Shell.[REMOVE]Fotnote: Statoil website. And the production sharing contract (PSC) for In Amenas was extended for 10 years in 2017. About USD 500 million was due to be invested in the field, with Statoil providing USD 235 million. This would cover 60 new wells, improved storage facilities and a compression project.
Where risk assessment was concerned, Statoil noted four years after the attack that it assessed a number of types of risks – including political – in relation to foreign activities. The group had established routines for this, utilising both internal and external expertise. In 2017, its assessment of activities in Algeria remained unchanged.[REMOVE]Fotnote: Aftenposten, 20 January 2018.
It is nevertheless worth noting that the general advice from Norway’s Ministry of Foreign Affairs in 2021 was that Algeria remained risky for foreigners to live and travel in.[REMOVE]Fotnote: https://www.regjeringen.no/no/tema/utenrikssaker/reiseinformasjon/velg-land/reiseinfo_algerie/id2414745/. The threat of terrorism and kidnapping still existed.
