BP and Statoil faced a crisis at the hands of an international terrorist organisation in January. Brittany Golob investigates the communications implications facing the extractives industry

Whether it’s in the depths of a stormy sea or the sands of an unending desert or the focus of a city centre, extractives companies operate in some of the most demanding, unstable and risky environments in the world. The rewards, however, often outweigh the risks. Thus has been the case in recent crises in the extractives industry, most notably in North Africa.

On 16 January, the gas facility at In Amenas near the Libyan border of eastern Algeria was attacked by a terrorist group from Al Qaeda in the Islamic Maghreb (AQIM). The facility was jointly owned by BP, Norwegian national oil company Statoil and Algerian national company Sonatrach. After three days in which the AQIM attackers held the camp at In Amenas hostage, 40 hostages were killed. The remaining 685 Algerians and 107 foreign nationals on the site were freed and all militants were either captured or killed.

Though the crisis was effectively a closed case by 19 January when the Algerian army stormed the camp, the five Brits and 33 other foreign nationals killed may continue to impact the extractives industry.

“I hope that people are going to wake up to it,” Albany Associates’ head of operations Jem Thomas says. “When there is a crisis and you get through it, you’re meant to learn lessons.”

BP’s director of communications, David Bickerton, said at June’s Reputation in Oil, Gas and Mining Conference that BP has and is taking steps to internalise the lessons it learned during and since the crisis. “The period of the incident is only the first phase,” he says. “What happens next is what comes afterward.” What remains to be seen is if the extractives industry will reexamine its risk assessments and risk management processes in the wake of the In Amenas incident and other similar crises.

During the crisis and in the immediate aftermath, the response by both BP and Statoil was to extricate their employees from the site, ensure the lines of communication from the company remained clear and authoritative and provide support for affected members of their communities. Beyond that, the two companies’ communications efforts varied. Bickerton says BP’s was personal and support-based. Though the company is massive, it’s field employees tend to have strong ties with the organisation. BP thus provided the necessary outlets for grief counseling, accurate information and the like. “It’s absolutely important that people are sharing information up to the minute,” Bickerton says. Its communications policy was to keep its employees and their family members appraised of the progress in Algeria in real-time, if possible.

“At the end of the day,” Bickerton says, “A lot of this is about doing the right thing and those are things that cannot be trained for.” The organisation has focused on crisis preparedness since the Deepwater Horizon disaster in the Gulf of Mexico three years ago, thus its large-scale processes were in place when tackling In Amenas.

Statoil’s communications took a more news-based approach. Having benefitted from hostage crisis simulation training just a month earlier, it took on the role as the authority on the situation. It positioned itself by becoming the expert and the most reliable source of information on the proceedings in Algeria.

Due to massive public interest – Statoil is Norway’s largest company and 67% nationally owned – Statoil’s comms team worked with the media to provide journalists with credible and accurate information.

“It was almost like we were back in the 70s where there was one television channel and everyone crowded around it to get the news,” Jannik Lindbaek, head of media relations at Statoil, says. “For us, as a company, it was important to provide the context of international terrorism. We became one of the only sources of info for Norwegian media.”

Since the 19 January incursion by the Algerian army secured the facility from AQIM and the foreign nationals working on site had been sent home, the companies each focused on internalising the lessons learned at In Amenas.

The gas field has since been resumed to working order by Sonatrach, as it produces about 10% of Algeria’s gas, but BP and Statoil staff have not been redeployed. Though the public is far more familiar with explosions, leaks and natural disasters in correlation with the extractives industry, In Amenas was not an anomaly.

About a year ago, a labour strike at Lonmin’s mine in Rustenberg South Africa made international headlines when violence broke out, leading to nearly 50 deaths. The Marikana massacre is one of several labour disputes in the mining industry that have turned violent.

On 23 May, a French-owned uranium mine in Niger was also attacked by AQIM. About a quarter of France’s massive nuclear reactors run on uranium from Niger. The attacks led to significant setbacks for France’s mining operations in Niger including the delay of the opening of a new plant by three years. In Ghana, Chinese gold miners saw their visas rescinded when the mines were declared illegal in June.

To the untrained eye, these crises may seem like enough to tip the scales in favour of the risks rather than the rewards. Yet, most companies’ incursions into countries with unstable political or security situations has, for the most part, been unchecked.

Frances Nobes, global risk analyst at Red24, a London-based risk assessment firm, says the ongoing security issues that plague the Maghreb in particular are unlikely to seriously deter foreign investmentin the region. “With the quantities and quality of resources available in the Maghreb region, especially for extractive industries, the cost-benefit analysis for companies may still prove positive enough to continue production and operations in this region,” she says.

Despite the fact that In Amenas was judged to be at risk of threat from insurgent groups, companies tend to rely on physical security as a threat-mitigation tool. In Amenas may have been a particularly ripe target for AQIM because of the numerous foreign nationals at the plant and the perception of extractives as representing the wealthy west, Nobes says.

The high level of risk inherent in the extractives industry, an industry that has pushed further across the world and deeper into the earth’s crust than any other, is typically met with a prescribed series of precautions, Thomas says. “The standard procedure is come in, get the rights from the government to set yourself up, build a couple of schools, do what the CSR handbook tells you to do and employ a load of local people. But that’s pretty much it,” he says. CSR is becoming a core business strategy for many companies in the industry, but that tends not to extend into communications or relationships with local populations. That indifference toward local stakeholder engagement leads to the inevitable labour conflicts or armed violence.

Albany is currently researching the ‘licence to operate’ that most extractives companies receive from the government. Beyond the simple legal implications, a licence to operate also involves a range of stakeholders, from the government to local communities, the latter of which is often ignored by extractives companies that deal with local issues by increasing security, not engagement. Thomas’ research identifies a ‘social licence to operate’ in which local stakeholders – tribal and governmental leaders, employees and others – should be engaged by a company operating in a foreign environment. This is particularly essential in insecure regions in which a foreign company can either be an intrusion at opposition to the local economy or a partner in the local community. The social licence model can mitigate many of the risks inherent in extractives exploration through communication.

“Companies are spending more money on security instead of trying to engage with people on the grassroots level to address local problems,” Thomas says. “It’s really starting to fail.”

Even In Amenas, which was in the middle of the unpopulated borderlands of Algeria, could have been chalked up to a lack of stakeholder engagement on the local level. “Look at what happened in Algeria, that was Al Qaeda in the Maghreb, but you can bet your bottom dollar that there were local stakeholders who would have a degree of sway over those assailants. That was never ever considered,” Thomas says. Bickerton says that BP had pursued local engagement in Algeria prior to January, but that In Amenas, due to its remote location was not considered to be at risk due to non- engagement as there is effectively no local population.

Nobes and Red24 advise any company operating in the Maghreb to take measures to ensure its security and the security of its personnel. Extractives companies may heed this advice by building fortresses in the dessert to physically limit access. This strategy is akin to the early actions in Afghanistan and Iraq that saw a number of large, ultra-secure bases spring up around Kabul, Kandahar, Basra and Baghdad. This strategy was gradually superseded by the implementation of forward operating bases, smaller outposts that could be better integrated into and thus more attuned to the local community. One of the central tenets of counterinsurgency theory as set out in the U.S. military’s FM 3-24 is the establishment of security in conjunction with the local population. “Successful counterinsurgents support or develop local institutions with legitimacy and the ability to provide basic services, economic opportunity, public order and security,” the guide says. “Contact with the people is critical to the local COIN effort’s success.” Essentially, a military, or a company, operating in an unstable environment, should ensure security through engagement of local leaders, contribution to local infrastructure and communication with local populations.

Though this is a military-oriented directive, a company operating in an unstable political or security environment faces the same challenges that foreign soldiers fighting against insurgents do. The hearts and minds approach that became de rigeur in Iraq and Afghanistan, is relevant to business as well. “Behaviours have to be changed,” Thomas says. “Local stakeholders have a direct effect on a company managing to conduct its operations.” Extractives, he says, should pursue community engagement and communications strategies to progress with soft security policies.

Companies, particularly massive extractives companies, however, are reluctant to change until they must. “Perhaps an organisation has to experience a major reputation hit before they sit up and take notice,” CEO of Regester Larkin Andrew Griffin says. “Reputation is not something that you own, it’s something that is assigned to you by others.” The Deepwater Horizon crisis made BP sit up and take notice about its risk assessment strategies, crisis preparedness and communications capabilities. Since Deepwater, BP has better prepared its internal mechanisms and its leadership for handling a crisis.

“We have seen countless examples in recent years which show that how a company acts in a crisis – or how that company is judged to have managed a crisis – can define its reputation far beyond the life of that particular incident and issue,” Larkin adds.

Both BP and Statoil have instituted changes to their crisis preparedness systems since In Amenas, however, there has not been an industry-wide shift in approaching risk assessment, despite the recent crises.

“The drive to explore deeper is very strong and I think risk assessment is much more robust nowadays,” Thomas says. “But things like In Amenas, Niger and the Lonmin mine are just the precursor for worse and for more. We’re seeing it on the streets of Turkey and on the streets of Brazil. That activism is being brought out and will gain a voice and have to be dealt with. These kinds of crises are going to come up more and more. I hope that people are going to wake up to it.”

Both Lindbaek and Bickerton expressed their admiration for the ways in which the In Amenas crisis was mitigated, and rightly so. Their communications strategies, leadership presence and issue management were effective in this case. What remains to be seen is if the risk and resulting crisis that both companies had to manage will be internalised and taken into account when making future incursions into areas with clear and present risks associated.

“Some of the extractives are a little bit more clever about it, but I don’t think they’re doing it for the right reasons,” Thomas says. “If they really thought about it they could actually get a degree of real engagement with their stakeholders which could pay dividends to continue operating in risky areas.”

World markets are changing at a rapid pace, forcing extractives companies to alter their communications strategies. Those companies that dig miles underground in the sands of the Maghreb or the mines of central Africa, those that operate amidst unstable political environments and those that invest in developing markets must constantly balance risk and reward. After the terrorist attacks, labour strikes and political oppositions that have occurred over the past two years, the extractives industry must now reassess the way it approaches risk assessment.