Hostage crisis hikes security worries in key oil region

Oil companies in Houston and elsewhere monitored security Thursday at facilities in Algeria, a major source of U.S. oil imports, as an ongoing hostage crisis unfolded at a natural gas field there.

Algeria is the eighth-largest source of foreign oil shipped to the United States at about 358,000 barrels per day, according to the most recent annual data available from the U.S. Energy Information Administration.

It ranks 16th in the world for oil production, with about 1.9 million barrels per day, and is Europe’s third-largest source of natural gas, the information agency says. By comparison, Texas, the largest oil-producing U.S. state, averaged about 1.5 million barrels a day in 2011, according to the most recent annual data.

Oil companies from around the world – including London-based BP, Norway’s Statoil, France’s Total, Italy’s Eni, Canada’s Talisman Energy as well as the Houston-area’s ConocoPhillips and Anadarko Petroleum – have interests in oil and gas plays in Algeria, according to company websites.

Anadarko, based in The Woodlands, is among the most significant players, with large stakes in three Algerian projects, including one that is expected to produce up to 135,000 barrels of oil a day, said James Sullivan, an analyst for Alembic Global Advisors.

Protecting employees

Statoil and BP, which describes itself as the largest foreign investor in Algeria, are among the foreign owners of the Ain Amenas facility that militants stormed on Wednesday. They were evacuating workers from other sites in the country, according to company statements.

Others, like Anadarko, said their focus was on protecting their employees as the hostage standoff escalated.

“We continue to closely monitor the situation in Algeria,” Anadarko spokesman John Christiansen said in an email. “The safety and security of our personnel is our highest priority, and for their protection, we will not discuss security precautions or actions at or around our operations.”

Read more: Houston engineer still captive in Algeria

Oil companies have been involved in Algeria for decades. Production in the North African nation has been steady for years after a push to increase oil drilling and output in the early 2000s, said Bhushan Bahree, a senior director of global oil research for IHS CERA. Algeria’s oil production is not expected to grow substantially in the near future, although projects like the current Anadarko endeavor are set to come online, he said.

Security concerns

But the hostage situation at Ain Amenas has raised the possibility of more threats from militants crossing porous borders in the vast territory of the Sahara Desert, said Richard Cochrane, an analyst covering the Middle East and North Africa region for global research firm IHS.

“This attack is the most dramatic hostage or kidnapping crisis to have taken place inside Algeria in recent memory,” Cochrane wrote in a note on the events in the Northwest African region often called the Maghreb.

He was skeptical of claims by militants in neighboring Mali that the gas field attack was retaliation for French intervention in that country.

Still, any such attack is a cause for security concerns, Cochrane said.

“What is certain is that the attack has confirmed the worst fears of the governments of the Maghreb, particularly Algeria, Tunisia and Libya, regarding the spread of Islamist militancy stemming from the crisis in Mali exacerbated by weakened state security capacity,” he wrote.

Although western facilities and personnel have faced elevated risks because of escalating militant activity in Mali, “this attack is the first evidence of a specific threat, one that is only likely to grow as the intervention in Mali accelerates.”