The hostage crisis in Algeria has highlighted the dangers of working for oil companies in some of the world’s most volatile regions but isn’t likely to stop the stream of young workers seeking the money and career growth prospects of the frontier posts.
In those assignments, an up-and-coming engineer or manager can take on the most responsibility and get credit for big gains, said Steve Newton, managing director of executive recruiting firm Russell Reynolds Associates.
While such posts also come with high pay and a likely track to long-term career success, they can be in dangerous places, some of which are major sources of world oil.
“I don’t want to be flippant about it, but this does come with the territory,” Newton said.
Algeria, for instance, is the eighth-largest source of U.S. oil imports and ranks 16th in the world for oil production, according to the most recent data available from the U.S. Energy Information Administration. But security there remains a major problem.
Algeria reinforced security last year at oil fields, according to a note from Catherine Hunter, Middle East and North Africa analyst for research firm IHS Energy. “But the attack suggests that current measures are still insufficient to counter the threat.”
The Northwest Africa region where the hostage crisis has unfolded is experiencing more militant activity than in years past because of growing instability in the area, said Daniel Byman, senior fellow at the Saban Center for Middle East Policy at the Brookings Institution.
Militant groups in countries where oil companies operate, including Boko Haram in Nigeria and Al Qaeda in the Islamic Maghreb in Northwest Africa, have also gained strength because of increased financing from kidnappings for ransom, said Rick Nelson, former director of the homeland security and counterterrorism program at the Center for Strategic and International Studies.
“It’s been a very lucrative business for the terrorists,” Nelson said.
The groups’ abilities to fund and coordinate attacks, even in the remote, harsh desert expanses of Northwest Africa, will make militants more dangerous to oil companies because they view oil industry personnel and facilities as Western targets and will likely attempt more attacks on those assets, Nelson said.
While that may present an increased business risk, oil companies will respond with more security measures, Byman said.
“Oil tends to be better guarded and certainly will be after this,” Byman said. “So while there is going to be definitely an increase in the desire to hit oil companies, the companies involved are going to put a lot of resources to try to reassure foreign workers that it is safe and they are protecting them.”
Although such measures will be costly, they will be worth it to companies that want to keep talented workers engaged in countries that have high security risks, said Joseph Ahmad, a Houston employment law attorney who has represented executives and other energy industry employees in disputes related to overseas work.
Earning big money
“There has to be outsized profit to be made that makes it worth the companies’ while to pay all this excess security and to pay for these relatively rich expat contracts,” Ahmad said.
U.S. oil company workers who travel to work at sites in dangerous countries can make substantially more than they can domestically – generous packages that lure many younger workers overseas for years, he said.
And since oil companies probably will react to the Algeria incident with stronger security efforts, the allure of overseas work won’t change, Ahmad said.
But the larger salaries of a foreign assignment for an energy company are not the only draw, said Newton, the executive recruiter.
Other longer-term career benefits combine with the increased pay to make overseas opportunities too attractive to ignore for those working in the energy industry, he said.
“The opportunity of working remotely often gives younger people a greater sense of leadership and management responsibility because they are untethered from headquarters,” Newton said.
“Overseas assignments allow individuals to grow more rapidly with respect to their assignments,” he said. “You have less support, you are able to make decisions, you are much more the leader in the field.”