01/17/2013 03:00 pm ET Updated Mar 19, 2013

In Amenas Hostage Standoff In Algeria Delivers Big Blow To Army-Backed Oil Security

* In Amenas is first big attack on Algerian energy

* Oil sites had benefited from military-style security

* Fears rise attacks could spread to Libya's West

By Alex Lawler and Julia Payne

LONDON, Jan 17 (Reuters) - Algeria's In Amenas field, where Islamist fighters seized dozens of foreign workers this week, is at the heart of an oil and gas region that has attracted international firms in recent years partly because of its military-style security.

"For this group to have attacked there, in spite of tremendous security, is remarkable. Even as an Algerian, I need a special permit to go there," said Azzedine Layachi, an Algerian political scientist.

Events this week may change perceptions of an oil industry that has attracted billions of dollars in foreign investment since Algeria's government crushed an Islamist revolt during the 1990s. That in turn could store up trouble for a government reliant on oil and gas revenues to finance domestic spending.

Algeria is also an important supplier of gasoline rich crude oil to world markets.

The In Amenas gas facility operated by BP, Norway's Statoil and OPEC member Algeria's state firm was attacked by militants on Wednesday.

They kidnapped dozens of foreigners in retaliation for France's intervention in Mali. After a military raid on Thursday to end the crisis, an Algerian security source said at least seven foreigners were among 30 hostages killed.

"Over the last decade security had become less and less of a concern. For the first time in a decade the security situation has plummeted, causing consternation amongst international oil firms," said Geoff Porter, director of North Africa Risk Consulting.

In Amenas became the first major attack on Algerian energy assets, prompting BP, Statoil and Spain's Cepsa to start evacuating staff even though some of their projects are located hundreds of kilometers away from the site.

The Algerian oil and gas industry is dominated by state oil firm Sonatrach, which employs over 100,000 people. It operates the biggest oil and gas fields including the country's No.1 oil deposit Hassi Messaoud, located in the centre of the country.

Sonatrach has encouraged foreign investment since the late 1990s after the end of a civil war, which cost an estimated 200,000 lives.

As a result, oil majors ventured into remote and challenging areas on the border with Mali and Libya, including In Amenas.

"The military was providing its own security to oil companies in the desert and people were fairly comfortable about flying down to the desert," said John Hamilton of CBI Research, an Africa specialist.


In the past years, Spain's Cepsa has become a significant foreign player in Algeria and says it is responsible for 17 percent of the country's output, producing 220,000 barrels per day from a group of fields near the Libya-Tunisia border.

The fields, including the country's No.2 oilfield Ourhoud, are located some 300 kilometres north of In Amenas.

U.S. Anadarko operates fields in the same area with Cepsa with its own share of output being 60,000 bpd.

Other large foreign investors include Italy's Eni, responsible for producing 70,000 bpd, as well as BP, Statoil, Total and Maersk, each producing in the area of 20,000-30,000 bpd.

Industry sources said every oil company was employing dozens of expatriates all of whom were usually flown in for short rotations taking several weeks. BP, Statoil and Cepsa all said they had begun to evacuate personnel from Algeria.

Large oil service companies such as Halliburton also employ international staff.

Most large fields are located far away from In Amenas and are believed to be still well insulated from attacks.

Several oil experts said the biggest risks were for the fields near In Amenas in the southern Illizi province where Eni, BP and Statoil operate. They include deposits such as Eni's Zarzaitine or Total's Tin Fouye further West.

Repsol lists Illiza province as one of its most important areas of exploration globally.

Sam Ciszuk from KBC consultancy said he believed a number of fields near In Amenas would be evacuated.

"The more worrying scenario is that the Islamists next pour over the border into Libya. The Libyan government is fractured and the military too weak to be efficient," he said.

He added that although most of Libya's fields are in the east, Western deposits were producing up to 300,000 bpd. The biggest field include Eni's Elephant and Conoco's Waha. Libya's production was halt during the 2011 civil war.

With France's military intervention in Mali, risks are on the rise of displacement of jihadists, many of whom will likely look to Libya for refuge.

"The worst case would be that the interim Libyan government breaks down and we see a return of large-scale fighting between tribes and factions, with Libyan production dropping off significantly," said Richard Mallinson from Energy Aspects consultancy.



01/18/2013 6:43 PM EST

2 American Hostages Still Unaccounted For

According to NBC News, U.S. officials have confirmed that the total number of Americans taken hostage on Wednesday was five. Of those, one was confirmed dead: Frederick Buttaccio of Texas. Two others managed to escape during Thursday's raid, while the remaining two are believed to be still in captivity. The militants had extended an offer to the U.S. to exchange two hostages for two jailed jihadists, which would account for the missing Americans.

The AP reported earlier that U.S. officials were refusing to disclose the exact number of remaining captives for fear that it might compromise their safety.

Read more at NBC News.

--Kavitha A. Davidson

01/18/2013 5:44 PM EST

Who Is Mokhtar Belmokhtar?

The Huffington Post's Hunter Stuart has written a profile on the man known as "Mr. Marlboro," believed to be behind the attack in Algeria.

Called "The Uncatchable" by French intelligence, Belmokhtar is known to locals as more of a businessman than a terrorist, having consolidated his power by being a benefactor to the region's poor desert people.

Stuart writes:

Until recently, Belmokhtar was a senior commander for al Qaeda in the Islamic Maghreb (AQIM) but split from the group last year to form his own militia, called Those Who Sign With Blood.

The group's ability to take over such a high-profile target as the In Amenas gas plant, and to hold captive such a large number of hostages, illustrates its power and dexterity in the region.

To read the entire profile, click here.

--Kavitha A. Davidson

01/18/2013 5:32 PM EST

Kidnapper Identified

17-year-old Abdullah Abdallah Ould Hmeïda has been identified by Mauritanian news agency Sahara as one of the al Qaeda-affiliated militants who laid siege on the gas plant in the Algerian desert. Ould Hmeïda, who joined the group at age 14, was killed in the Algerian military's rescue operation yesterday.

--Shirin Barghi

01/18/2013 4:48 PM EST

American Hostage Was Shot By Militant

The Guardian spoke to an Algerian oil worker who has since been freed from the gas plant. He provided harrowing details of the terrorists' actions and the subsequent raid by Algerian forces.

At 10am on Thursday, when the Algerian army assault began, he said he heard "explosions, shots, bombing and women's screams". Then the hostage-takers told local workers: "Algerian brothers, don't be afraid, go in peace, you're going to go home, we're your brothers, we're all Muslim." One American hostage who had been with his Algerian colleagues was wounded after a fall, another was shot by a militant. "I don't know if they'd seen he was American or if they were afraid when he moved," he said. The American did not die immediately, he said, but he understood the man had since died.

The State Department has confirmed the death of one American, reported by the AP to be Frederick Buttaccio from Texas. It is unclear whether Buttacio is the hostage described above.

To read the rest of the first-hand account, visit the Guardian.

--Kavitha A. Davidson

01/18/2013 4:38 PM EST

Gallup: Algerians' Disapproval Of U.S. Leadership Among Highest In The World

A new Gallup poll reveals that Algerian approval of U.S. leadership has sunk to its lowest level since 2009, when Obama took office. In 2012, 68% of Algerians disapproved of U.S. leadership, rivaling the 71% rating received by the government under the Bush administration in 2008.

Algerians' disapproval of U.S. leadership is now among the highest in the world, behind only Pakistan and the Palestinian Territories. As news of the hostage crisis in Algeria -- involving Americans among other foreigners -- continues to unfold, the data show that the U.S. may need to tread carefully in its handling of the situation. While it is unclear at this point how Algerians feel about the terrorists' actions, it is clear that the large majority of Algerians were disgruntled with U.S. leadership before this crisis and thus may be leery of any action the U.S. might take.

To see the full report, visit Gallup.

--Kavitha A. Davidson

01/18/2013 4:30 PM EST

Fire At The Gas Plant

Al Arabiya English is reporting a massive fire at the In Amenas oil facility.

@ AlArabiya_Eng :

#BreakingNews: Reports of massive blaze in Algeria gas plant where hostages were held

--Eline Gordts

01/18/2013 4:27 PM EST

Dead French Hostage Identified

French Foreign Minister Laurent Fabius announced on Friday that at least one Frenchman was killed during the hostage crisis in Algeria. "The Algerian authorities have just informed us that one of our compatriots, Mr. Yann Desjeux, unfortunately lost his life during the operation to free hostages," Fabius said in a statement, according to Reuters. "The lives of three others of our compatriots who were on the site during the terrorist attack have been saved," he added.

--Eline Gordts

01/18/2013 4:18 PM EST

Name Of Dead American Hostage Released

Per the AP, the American hostage who has died in Algeria is Frederick Buttaccio from Texas. How he died remains unclear.

To read more, click here.

--Eline Gordts

01/18/2013 4:05 PM EST

Number Of Americans Still Being Held Unclear

The AP reports that Americans are still being held hostage, though the exact number remains unclear. After receiving an update from Algerian Prime Minister Abdelmalek Sellal, Secretary Clinton stressed that the "utmost care must be taken to preserve innocent life."

Read more from the AP.

--Kavitha A. Davidson

01/18/2013 3:38 PM EST

'Without The Ouster Of Gaddafi, There's No Mali'

In the Jan. 11 episode of The World This Week on France 24, Paris Match's Régis Le Sommier connected the dots between Mali and Libya, stating that the toppling of Muammar Gaddafi paved the way for the militant resistance in Mali.

"Libya has given these people a number of weapons, there's been an outflow of weapons toward these people. They have gathered in central Mali, they've created the conditions for a new tribal zone over there, bringing back some threats directly toward Europe from this region," Le Sommier said. "What have we left in Libya? What is the state of Libya now? Not that I worship Gaddafi, but weren't we much better off when Gaddafi was there?"

A number of the kidnappers and arms used in the Algeria attack are believed to have come from Libya.

Watch the clip below:

For the full episode of The World This Week, click here.

--Kavitha A. Davidson