How has COVID changed the relationship between terrorism and energy resilience in Africa? And what can you do about it?
What effect has COVID had on the African energy sector as a whole?
COVID has a detrimental effect on natural resources all by itself (some would argue that this is also a positive effect on the environment, but that is another discussion). The precipitous drop in demand for hydrocarbons has already led to a similar drop in price, and therefore revenue, for both the established African producers such as Nigeria, Angola and Algeria, and the comparative newcomers like Senegal, Mauritania, Mozambique and Uganda.
This in turn has led to delay, cancellation or considered cancellation of many projects;
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Exxon Mobil have postponed their Area 4 Gas megaproject in Mozambique until further notice.
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The BP-led Greater Tortue Gas Development in Mauritania is delayed until 2022-2023.
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Total’s Tilenga project in Uganda is mothballed for a similar timeframe.
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ENI is cutting investment in Africa by 30%.
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Cancellations are being considered in Shell’s Bonga SW Project in Nigeria, Tullow’s South Lokichar Project in Kenya and Woodside’s Sangmar 1 Field in Senegal.
Algeria’s situation is particularly poignant. The Sonatrach state-owned oil company contributes 60% of the national budget and more than 95% of foreign exchange revenue, but its receipts are down 31% on Q1 2020, creating widespread instability in the country.
Why is energy always an easy target for terrorist groups?
Natural resources will always be part of terror, simply because so many individuals, communities, states and regions depend on them so heavily. Furthermore, their infrastructure is often dispersed, highly vulnerable and difficult to protect, making them an easy target. And lastly, they can deliver significant financial benefits to those who control them – abundance is regrettably no guarantee of benefit to the local populations.
How has COVID made life easier for terrorist and insurgent groups?
2020 has been a good year for insurgent groups, as security forces and state apparatus work under intense pressure to deliver public health and COVID 19 pandemic prevention. The armed groups have found themselves with much greater freedoms to exploit the long-term grievances of poor governance, neglect, ethnicity and tribalism, and they have not been slow to urge global jihad against overburdened security forces.
The French Security Operation BARKHANE in North Africa
Blaming COVID on global oppression of Muslims and non-Muslim decadence whilst providing alternative “governance” is a powerful recruiting tool, and the shackles placed on indigenous state apparatuses and international forces such as the 5,100 strong French Operation BARKHANE in the Sahel have created a near perfect storm for insurgency in North Africa.[1]
What are terrorist and insurgent groups likely to do next?
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Reduced security forces presence, greater economic disparities and a frightening public health crisis create a favourable situation for insurgent groups to use natural resources in pursuit of their own ends. The active groups in North Africa; Jama’at Nasr al-Islam wal Muslimin (JNIM)[2], Islamic State in the Greater Sahara (ISGS)[3], Islamic State West Africa Province (ISWAP)[4], Al-Qaeda in the Islamic Maghreb (AQIM)[5], Boko Harem (BH) etc are steadily taking advantage of this to consolidate their social and economic grip on both resources and communities – a grip that will be hard to dislodge.[6]
So what for the energy companies?
The threats to the energy sector in Africa have changed because of COVID.
Oil price volatility, demand uncertainty, a changed social situation and increased opportunities for terrorist groups mean that the business continuity arrangements of 2019 are no longer fit for purpose . To counter-balance the doom and gloom, there are also new potential opportunities for the well-run enterprises.
Therefore energy companies should consider:
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Re-examining the financial model. With reduced demand, revenue and investment because of COVID, both national and private energy companies should ensure that they have sufficient financial reserves to withstand whatever shock comes next.
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Updating Business Continuity Plans (BCP). All the new opportunities and threats (particularly terrorism) should be factored into resilience planning, resourced and rehearsed. Emergency evacuations are not beyond the bounds of possibility now, and they, among other scenarios, should be exhaustively exercised.
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Reviewing Risk Management. Many companies in all sectors have previously been content to create a risk register and never look at it again. With the multiplied uncertainties of 2020, pro-active risk management is very important for 2021.
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Increasing the efforts to build local capacity. The more that local people are genuinely invested in energy, the less vulnerable the infrastructure is to terrorism, and the better the energy company’s Environmental, Social and Governance profile is.
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Transitioning to renewables. Whilst hydrocarbon energy will remain critical to the human race for at least the next 50 years, its market share will steadily decline as renewables take over. This is not the time to be the last passenger to board the new train.
The combined effects of COVID and terrorism on the energy sector have created a very different environment from 2019. The operators which thrive best in the new environment will be those which adapt to it fastest. Business Continuity is all about fast adaptation, and Inverroy Crisis Management are all about Business Continuity.
Related Information:
As our Sector Lead for Africa, Toby has written a number of blogs focusing on Africa. He has explored issues ranging from water shortages to Higher Education, and the Changing Resilience Picture in Africa. Click on the text to read each one. Inverroy have also worked in Morocco and the Case Study from TAQA Morocco can be read here.
Inverroy have supported national parliaments, renewable energy companies and hydrocarbon energy companies in crisis management, emergency response and horizon-scanning in the UK, Iraq, Mexico, Ghana, Senegal, Niger and Morocco. We also have experience of working in Libya and DRC.
Inverroy Crisis Management Ltd can offer energy companies a world-class resilience capability, encompassing emergency response, Business Continuity and Planning, Crisis Management, disaster recovery, horizon-scanning and risk management.
Inverroy can also build genuine, long-term local business continuity capability on behalf of our clients, training, supporting, mentoring and exercising local staff. This education capability can be extended to local higher education (Inverroy currently delivers both training and assessment in Risk Management modules to higher education in the UK).
Delivering a business continuity capability like this supports clients to meet Environmental, Social, and Governance obligations, makes them a more trusted partner with host governments, makes them more attractive to investors, and makes them more likely to thrive in the long-term.
Contact Information:
For more details and advice, contact Inverroy at enquiries@inverroy.com. Get in touch with us if you would like to improve your company’s resilience during 2021.
ABOUT THE AUTHOR:
TOBY INGRAM, OBE
Senior Consultant
References:
[1] International Centre for Counter-Terrorism Apr 2020
[2] JNIM is a militant jihadist organisation in the Maghreb and West Africa formed by the merger of Ansar Dine, the Macina Liberation Front, Al-Mourabitoun and the Saharan branch of Al-Qaeda in the Islamic Maghreb. It is the official branch of Al-Qaeda in Mali, after its leaders swore allegiance to Ayman al-Zawahiri. (Wikipedia)
[4] Islamic State West Africa Province (ISWAP) | United Nations Security Council
[5] Al-Qaeda in the Islamic Maghreb is an Islamist militant organization (of al-Qaeda) which aims to overthrow the Algerian governmentand institute an Islamic state. To that end, it is currently engaged in an anti-government campaign. (Wikipedia)
[6]Peace Science Digest Apr 2016
