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Threats to the Oil & Gas Industry
A Synopsis of the Terrorist Threat Facing the O&G Industry
Introduction
Terrorism is a tactic involving the premeditated use of violence against civilian or military targets to influence, coerce or damage the adversary's state to gain political, economic or religious goals. In 2006 there were 344 significant attacks against O&G targets compared with 265 in 2005. These attacks resulted in significant loss of life and tens of billions of dollars in lost production as well as physical and reputational damage to many companies.
The Oil & Gas industry forms part of the Critical National Infrastructure (CNI) of every developed nation in the world. Local terrorism and militant action regularly impinge on the safety of personnel and operational activities but more recently there is an increased risk of global terrorism from threats such as Al-Qaida. Upstream operations are particular vulnerable since they are often located in regions where the host nation cannot provide effective security.
The dynamics of terrorism have changed. In previous decades, acts of terrorism and other direct action were traditionally preceded by periods of civil unrest and political disturbances. In the second millennium in many instances, no such warning signs were apparent. In 2006 in Nigeria for example, the almost unknown Movement for the Emancipation of the Niger Delta (MEND) evolved from obscurity to mounting radio-controlled VBIED attacks in less than 6 months.
The Internet provides an ideal communications system for terrorist and militant groups and is a major factor in the ability of new groups to mount sophisticated attacks early in the existence. In particular, technical data is readily shared within Islamic ideology groups.
In 2006, no less than 33 countries O&G producing countries were affected by terrorism or militant action, including acts of piracy. Targets of attack were extremely varied but pipelines and personnel were highly prominent.
Improved security in the industry forces terrorists to change tactics. There are already indications in early 2007 that aggressors will increasingly use stand-off weapons such as free-flight rockets and mortars as effective close-in security prevents more traditional forms of attack.
Motives for attacking industry assets are also varied. Militant actions in the Nigerian, Pakistani and Indian theatres, are motivated by the perception of unfair profit sharing. In Iraq insurgents attack assets and personnel in an attempt to prevent the US and allies accessing Iraqi oil and to destabilise the government.
Al-Qaida have long recognised that oil and gas are an Achilles heel of the west and that cutting the supplies, especially from the Middle East, could eventually cause the economic collapse of the US and some of its allies. The advent of Russia as primary source of oil and gas precludes this threat from being realistic but there is potential for serious disruption and economic damage
Pipelines
Pipelines are a traditional target for attack because they are difficult to protect and the effect of damage is immediate, i.e. cutting off supply of the product. In addition, almost 65% of pipelines are installed above ground and are vulnerable to attack. Pipelines often follow existing roads or traverse uninhabited areas, which reduces the chance of the terrorists being caught in the act.
The method of attack is usually by placing an IED directly on the pipeline. In some instances, multiple IEDs have been used, in an attempt to destroy a segment of the pipeline, making repair more difficult.
In 2006 there were also secondary devices laid at the scene of pipleine IED attacks, to prevent repair crews accessing the site. In several instances, military landmines were also used, causing fatalities to repair and security personnel.
Improved pipeline security - for example patrolling, Unmanned Aerial Vehicles (UAVs) and electronic surveillance systems, force change in terrorist tactics. The use of stand off weapons such as mortars and free-flight rockets of military and improvised origin have been recently used to overcome new pipeline security measures. This method of attack is less effective than conventional IEDs but also posses less risk to the attackers.
Personnel
Most attacks against O&G sector targets are premeditated and require a degree of forward planning. The foremost exception to this is personnel who often present themselves as unwitting targets of opportunity. Personnel are targeted primarily for Kidnap & Ransom (K&R) but also they are attacked and killed to discourage foreign presence from the industry.
Attacks on personnel are often spontaneous and occur in places where expatriates gather or on transit roads where security is weak or non-existent. Bodyguards do deter kidnappings and they are often killed as an immediate action in the abduction operation.
In 2006 there were xxx attacks where personnel were directly targeted, resulting in significant injuries and numerous fatalities.
At the end of 2006, the risk to O&G sector personnel in Nigeria and Iraq was severe with a certainty that further attacks on facilities, abductions and killings were imminent.
Installations
Installations include refineries, LNG liquefaction plants, bulk storage facilities and terminals. Traditionally, these facilities are the most heavily protected and therefore seldom targeted for attack. In 2006 the Auiba facility in Saudi was attacked by two simultaneous suicide VBIED\Õs but the attack failed because of high security at the site. Conversely, an exploration facility in Ethiopia was assaulted by terrorists in April 2007 that resulted in 74 fatalities. Large static facilities are relatively easy to protect from traditional IED and VBIED attacks but are vulnerable to attack from stand-off weapons. This method of attack was utilised in 2006 against targets in Iraq and Pakistan.
Offshore
Whilst there have been attacks on offshore assets and acts of piracy against O&G vessels, there has not been a direct terrorist attack against an ocean going O&G vessel since the suicide boat attack on the MV Limburg in Yemeni waters in October 2002. The most serious consequence of an attack on an oil tanker is likley to be the environmental damage from the oil spill, rather than damage to the vessel. In the case of the Limburg incident, approximately 90,000 tonnes was spilt, but was quickly contained.
LNG tankers are a noted concern, although their vulnerability and non-economic effects of attack are often exaggerated. However, there are only a limited number of LNG vessels in existence and the demand is growing. A loss of a few of these vessels would impact world supply.
Platforms too are substantial structures but not totally immune from attack.
Electronic - Cyber attack
SCADA is the acronym for Supervisory Control And Data Acquisition. The term refers to a large-scale, distributed measurement (and control) systems. SCADA systems are used to monitor or to control processing or transport processes in a wide variety of industries including the distribution of gas and oil pipelines.
Like any software, access controls designed to protect SCADA systems from unauthorised access are not immune from attack. SCADA networks were originally developed with little attention paid to security. As a result, many SCADA networks may be susceptible to attacks and misuses.
Some areas and illustrations of possible SCADA vulnerabilities include operator errors and corruption, unsecured electronic communications, hardware and software limitations, physical security weaknesses, natural disasters, poorly written software, and poor security administration. Vulnerabilities may allow a person of malicious intent to cause significant harm.
Summary
The risks posed by terrorism to the O&G sector are significant and diverse. There is a great variation in the type of threat between the many theatres of operations from local terrorists and militants but there is also a common threat from global groups aligned to al-Qaida.
The dynamics of terrorism has changed dramatically in the second millennium and a major consequence is that the O&G industry must be prepared for the next level of threat on a global basis.