Written by Diego Cordano (1) Wednesday, 21 May 2014 13:34
Secure energy supplies play a crucial role in the world economy and are essential to fuel the development of contemporary society. North Africa is a region characterised by a high amount of energy resources, and its governments struggle to guarantee the protection of energy infrastructures, which are becoming targets for terrorist groups aiming to disrupt the economy of North Africa’s states and to hit Western interests. Over the last five years in particular, North Africa has been characterised by a high level of political instability. Several non-state actors with different agendas are active within the region and have shown on several occasions the will and the capabilities to target energy facilities. The 2013 attack in In Amenas, Algeria, is certainly a case in point.
North African energy infrastructure (View map) (7)
This paper analyses the development of terrorism against energy infrastructure in North Africa and its consequences. The first part of this paper will assess the energy relevance of the region, showing how interdependence between North Africa’s countries and Europe regarding energy trade can create vulnerabilities. The second section will look into the current scenario regarding terrorism against energy infrastructure and instability in North Africa, pointing out the difficulties that especially Algeria, Libya and Egypt are facing. Finally, the consequences of these attacks for the region and for energy security are examined.
The relevance of North Africa’s energy resources: Positive aspects and vulnerabilities
North Africa is an important area for the production of hydrocarbons. Libya, Algeria and Egypt play a leading role as producing states and are net energy exporters. Tunisia and Morocco are also characterised by a smaller production and are transit countries for important pipelines. Although oil and gas production and the reserves present in this region cannot be compared to those in other areas, such as the Middle East, North Africa’s role is still significant: according to the British Petroleum (BP) Statistical Review of World Energy, the region boasts 3.9% of world oil reserves and 4.5% of the world’s production. At the same time, as regards to natural gas, the whole region has 4.3% of gas reserves and produces 4.6% of the world’s production.(2)
Algeria, Libya and Egypt are certainly the states with the highest level of production and reserves in the region. Algeria and Libya are also members of the Organisation of the Petroleum Exporting Countries (OPEC). Algeria possesses 0.7% and 2.4% of world oil and gas reserves respectively, while contributing 1.8% and 2.4% of oil and gas production.(3) Algeria also exports liquefied natural gas (LNG), accounting for about 5% of the world’s total in 2011. The country has five crude oil refineries: the country’s largest refinery, Skikda, is located along the northern coastline. Three transcontinental export gas pipelines are present in Algeria: two carry natural gas to Spain and one to Italy. The largest pipeline, the Trans-Mediterranean Pipeline, runs from Algeria to Italy via Tunisia, while the Pedro Duran Farell pipeline travels 324 miles to Spain via Morocco. Algeria is planning to develop two additional transcontinental export pipelines: one should transport natural gas to Italy, while the Trans-Saharan Gas Pipeline is planned to deliver natural gas from Nigeria to Algeria (via Niger).(4)
Libya is the holder of Africa’s largest proved oil reserves (2.9% of the world’s reserves), while it accounts for 0.8% of world gas reserves (the fourth largest amount on the continent). Oil production was disrupted in 2011 and again in 2013 as a result of the civil war and political turmoil. Libya is believed to have the opportunity to significantly increase its reserves because the majority of the country remains unexplored. Ras Lanuf is currently the biggest refinery in the country, while the Greenstream pipeline, which carries natural gas towards Italy, plays a central role in gas export.(5)
Egypt is the largest non-OPEC oil producer and the second largest dry natural gas producer on the continent (following Algeria). Egypt’s importance has also increased because it is a major transit point for oil and LNG from the Persian Gulf to Europe, thanks to the presence of the Suez Canal and SUMED Pipeline. In addition, Egypt has the largest refinery capacity in Africa (23% of the continent’s total refinery capacity).(6) Morocco and Tunisia, although energy importers, also play a small role in the production and transfer of energy, and their territory is crossed by two important pipelines connecting North Africa to Europe: the Maghreb-Europe Pipeline in Morocco and the Trans-Mediterranean Pipeline through Tunisia.
North Africa is an important source of energy, especially gas, for several European countries. In particular, Spain, Italy and France are dependent on North African gas supplies to meet much of their energy needs. Looking, for example, at Algerian natural gas, Italy is the single largest recipient of Algerian pipeline exports (62%), with the remainder of exports to Europe going to Spain (27%), Portugal (6%) and Slovenia (1%). The European Union’s countries import, on the whole, 13% of natural gas from Algeria, which is the third country from which Europe imports natural gas after Russia and Norway. Egypt, Libya and Algeria are also among the export countries for Europe of crude oil and LNG, although with a relatively small percentage.(8) At a time when Europe is looking to ease dependence on Russian reserves, especially after the events in Ukraine in 2014, consistency and the possible growth in production in the North Africa region can be particularly relevant.
Finally, energy security assumes particular relevance in North Africa since states are deeply dependent on energy revenues. Algeria, for example, is currently heavily reliant on its hydrocarbon sector, which accounted for almost 60% of government budget revenue and about 98% of export earnings in 2011.(9) In the same vein, the Libyan economy is one of the most hydrocarbon-dependent countries in the world. Libya had net oil export revenues at US$ 4 billion per month from January to June 2013, according to the United States’ (US) Energy Information Administration. The oil and gas industry accounts for almost 70% of gross domestic product (GDP), 90% of fiscal revenues, and approximately 97% of export earnings.(10)
The scenario: Most attacks hit Algeria, Libya and Egypt
North Africa is characterised by the presence of several groups that have an interest in hitting energy infrastructures and disrupting the flow of energy between North Africa and foreign countries. The level of terrorism in the region has been rather high in the last three years. In 2013, for example, including kidnappings, assassinations, bombings, and direct assaults on government facilities and personnel, 51 terrorist attacks have been carried out in Algeria, 146 in Libya and 17 in Tunisia. These have been the highest figures since 2001.(11) Egypt is also experiencing a high level of instability, with terrorist and extremist groups carrying out attacks within the country, especially in the Sinai Peninsula.
In Algeria, complex regional dynamics have brought about a situation where ideology, ethnicity, economic considerations and criminality are deeply interconnected. Insecurity in Algeria has increased in recent years also because of the collapse of the Libyan state in 2011 and the insurgency in northern Mali. Algeria has experienced the most famous attack against energy infrastructure in the last few years. The Al Mulathameen Battalion led by Mokhtar Belmokhtar, an al-Qaeda in the Islamic Maghreb (AQIM) splinter group, claimed responsibility for the terrorist attack at Tiguentourine, near In Amenas, which led to the death of 11 Algerians and 37 foreigners.(12)
In Libya, the situation is even more complex as a result of the civil war. Several violent groups have emerged in the power vacuum contesting the new Libyan government, exploiting small weapons looted from former Libyan leader Muammar Gaddafi’s armoires. Militias and terrorist groups are targeting Libya’s energy facilities with the aim of undermining the government and advancing their political objectives. The east of the country is the more unstable area, where rebels fought hardest against Gaddafi’s rule and today try to use oil revenues to obtain political autonomy for the coastal region of Cyrenaica.(13) The rebels have been controlling some of Libya’s main oil and gas terminals, like those of Ras Lanuf, Es Sider and Zuetina. It must then be observed that, apart from rebels, energy infrastructures in Libya have also been attacked by ethnic minorities like Berbers and Toubous, demanding the recognition of their minority rights.(14)
In the same vein, Egypt has been affected by several attacks to energy infrastructure, especially in the Sinai Peninsula that is often seen as a good platform to confront both Israel and the Egyptian government.(15) The gas pipeline connecting Egypt to Israel and Jordan, for example, was attacked 15 times between early 2011 and July 2012. In February 2011, terrorists hit the pipeline near the El Arish natural gas compressor station, provoking a disruption of the supplies.(16) In April and July 2011, other attacks were carried out against the pipelines near Al-Sabil village in the El-Arish region and near Nagah.(17) These acts led to severe disruptions in the flow of gas from Egypt to Jordan and to a complete halt of Egyptian natural gas supply to Israel. In 2014, the attacks have again increased, with four attacks against the Arab Gas pipeline.(18)
The region presents important chokepoints, such as the Suez Canal and SUMED pipeline, which are strategic routes for Persian Gulf oil and gas shipments to Europe and North America. However, despite the many attacks which have affected the Sinai Peninsula, the Suez Canal and SUMED pipeline have not been attacked, showing a lack of will or capabilities to carry out attacks against these targets so far.
Political and economic consequences of terrorist attacks against energy infrastructure in North Africa
The strategy of hitting energy infrastructure is being increasingly taken into account by terrorist groups, since the attacks can disrupt energy flows, deprive states of an important source of revenue and decrease the legitimacy of governments by showing their inability to protect an essential sector of the economy. For potential attackers, energy infrastructure can therefore become a platform to communicate to governments and impact their economic interests, as well as a source of power and income.
The actors involved in attacks against energy infrastructure in North Africa are terrorist groups with a local agenda, as evident in Egypt or Algeria, or militant groups involved in a civil war, as in the case of Libya. For example, in Egypt, Ansar Beit Maqdis is the main actor involved in attacks against pipelines in the Sinai Peninsula and Bedouin have often collaborated with these actors because of their long-standing grievances against the government in Cairo.(19) It cannot be a surprise, therefore, that the attacks have all had mainly local or regional consequences.
The attacks carried out in North Africa have certainly caused high economic losses, both to the countries attacked and to the energy importer states. Jordan’s Prime Minister Abdoullah Ensour, mentioning the attacks against Egyptian energy infrastructure, pointed out that Jordan could have lost between US$ 4-5 billion as a result of these actions.(20) The governments of the region, especially Libya and Algeria, pay the higher costs of terrorism against energy facilities, seeing their revenue deeply reduced. In Libya, civil war and terrorism have resulted in a major fall in energy production from 1.4 million barrels per day (bpd) in July 2013 to the 250,000 bdp of December 2013, a fact that could bring on a contraction of the GDP by 5.1%. The 2011 civil war diminished the real GDP by 62% for that year, as a result of the drop in oil and natural gas production.(21) In Algeria, the attack at the oil facility in In Amenas is assumed to have deprived Algeria of more than US$ 10 million in lost revenue daily for several months.(22) This data makes clear that a major disruption of oil or gas production can severely affect the stability and the security of those countries.
The worsening of the security situation in North Africa can also affect the development of new facilities, diminishing foreign investments. The attacks or even the threat of future attacks have partially created a negative and inhospitable landscape for foreign firms to invest in the region. For example, security concerns about militant groups across remote areas in the Sahel have delayed the development of the Trans-Saharan Gas Pipeline, presenting considerable risks to investors interested in financing the project. At the same time, looking at the attack of In Amenas, BP has not scaled back its operations in Algeria, but it might think twice about expanding them and reconsider further gas exploration in North Africa. Other energy companies involved in the region, like Statoil, Total and ENI SpA, could do the same. This could be very bad news for North Africa, which relies on foreign investment and technology to develop its vast resources.
It is worth noting that North Africa’s countries have implemented measures to protect oil and gas facilities from attacks. In Tunisia, elite units have been deployed around oil and gas fields in the Sahara. Algeria has tried to improve its counterterrorism strategies, cooperating with several oil companies to train security forces for the energy installations.(23) At the same time, it must be observed that the attacks have prompted oil companies to increase their costs related to security.
Though the attacks have had serious consequences for North African nations, the attacks have not been able so far to provoke major consequences for European energy security or global energy security. Single attacks are unlikely to cause long-lasting outages or major economic damage, since energy supplies can be quickly restored. Even in the case of In Amenas attack, gas export flows quickly recommenced. Only coordinated and simultaneous attacks could generate severe consequences, increasing energy prices and undermining the economic growth and the economic recovery, which seems to have started in some European countries and in the US.
However, at present, the only actor with a global agenda that could potentially be willing to conduct such a coordinated attack appears to be the al-Qaeda core. There is evidence that al-Qaeda considers attacks against energy infrastructure as a way of carrying out its war against Western countries, Israel, and “apostate states.” The US Department of Homeland Security made clear in 2011 that al-Qaeda has a “continuing interest” in attacking oil and natural gas targets.(24) While in 1996 the leadership of al-Qaeda exhorted the protection of oil wealth in Arab countries, from 2002 they have modified this attitude with the aim of hurting the US by targeting energy interests around the world. However, despite its rhetoric and its possible support for affiliated groups carrying out attacks against energy infrastructure, the al-Qaeda core doesn’t seem to be interested in or able to conduct a massive campaign against energy targets in North Africa at this time.
North Africa’s states suffer the major consequences
North Africa has great potential to become a very important export area for oil and gas. However, political instability and terrorism can restrain and undermine the export of energy resources. In addition to the famous attack against the oil facility in In Amenas in Algeria, Libya and Egypt have also experienced several incidents of terrorism and violence related to the energy sector. It is worth noting that the actors involved in attacks against these infrastructures present a mix of motivations, and at times even connections with the al-Qaeda core, but usually show local and regional agendas.
North Africa’s states have been the most affected by these attacks. The repercussions of terrorism against the energy infrastructure in North Africa have certainly included high economic losses, which have the potential to undermine the stability of several regional governments deeply dependent on energy revenues. The worsening of the security situation in North Africa can also decrease foreign investments, which North Africa strongly relies on to develop its vast resources. At the same time, the activity of terrorist groups has increased the costs incurred by states and energy companies to protect energy facilities and personnel.
Although North Africa is an important energy export region, the attacks against energy infrastructure in North Africa haven’t provoked major global consequences. Only a campaign against energy targets in North Africa as part of coordinated and simultaneous attacks could have major global repercussions. This situation is unlikely to change in the near future. Al Qaeda, the main actor that could be interested in this kind of campaign, appears to have different priorities at present. However, given the relevance of this region in energy terms, the situation must be continuously monitored to identify possible changes.
(1) Diego Cordano is a Research Associate at CAI with a research focus on terrorism, insurgency and organised crime in several African regions, especially East Africa and the Maghreb. Contact Diego through Consultancy Africa Intelligence’s Conflict & Terrorism Unit ( firstname.lastname@example.org). Edited by Nicky Berg. Research Manager: Leigh Hamilton.