Hard lessons

Big oil will struggle to buy more security

Oil majors cannot do much to protect their workers. The bloody showdown between Algerian security forces and armed hostage-takers at the In Amenas gas field underscores the lesson. Executives would be happy to throw money at the problem but this kind of safety cannot be bought by corporate cash.

There have been no suggestions that Statoil and BP, which operated In Amenas, were slack in their efforts to protect employees. The British and Norwegian companies might have wanted more protection but the Algerian government set the rules. They could do no more than lobby and threaten to leave if security was not improved.

In any case, the Algerian government seems to have taken seriously the responsibility to protect this economically crucial asset. Although details are sketchy, early reports suggest the sprawling gas complex was protected by a garrison of Algerian gendarmes.

When the facility was in fact overrun, the oil companies could do little. The national government decided on the bloody end to the siege, which at last count left at least 80 hostages and kidnappers dead.

The Algerian government is not alone in wanting to control security. Hired guns are often politically touchy, even where they’re arguably needed most. Iraq has long bristled at the presence of foreign security contractors on its soil, despite its own internal security forces’ obvious shortcomings.

Oil companies could easily afford to spend much more on security arrangements. Consider Royal Dutch Shell, which has had to grapple with a severe militant threat in the Niger Delta. According to data released by human rights group Platform, the Anglo-Dutch major spent $1 billion on security from 2007-2009, roughly one per cent of its capital spending. If an extra dollar on security were an easier way to safeguard production than, say, investing in difficult and expensive Arctic drilling, a company like Shell would probably jump at the opportunity.

In cold reality, though, the industry - and investors - will have to rely on governments to protect their people and assets. Unfortunately, those governments are not always up to the challenge.