The terrorist attack on the Algerian gas production plant in Ain Amenas near the Libyan border, in addition to the threats by the terrorist group behind the attack, have raised again the issue of risks faced by oil companies against their international investments, and the Arab ones in particular. There is no doubt that international companies reap huge profits from these investments. With petroleum exploration taking place in more than 30 countries, not to mention the development of non-conventional oils and exploration activities in Arctic waters, oil companies have more options to invest in various parts of the world. Those who believe that petroleum investments will remain concentrated in the Arab countries because of their huge petroleum reserves, and that there is no alternative to these, are deluded. This underscores the need to consider the various economic and political aspects of these attacks on Arab oil installations. The Algerian national oil company Sonatrach, since independence, has tried to build a hydrocarbon industry either by relying on its national staff, or in collaboration with international companies. Like other national oil companies, it secured huge achievements and has assumed an important place globally. Indeed, consuming nations and other Arab national oil companies consider Sonatrach to be a reliable source in providing supplies to the global markets without interruption. It was not easy for these companies to achieve this success given Arab chronic crises. So attempts to destroy what has been achieved are indeed strange, given that this success was the fruit of the work of Arab experts, engineers and workers and has benefited the peoples of the region greatly. For despite the political developments in the region, Arab oil companies managed to fulfill their commitments, and have even sought to increase their productive capacities. Only in extreme cases did they fail to honor their commitments. Otherwise, they would have lost the confidence of their customers, be they international companies or consumer countries. So what is the goal of the terrorist groups in threatening the Arab oil industry during this particular stage? True, these facilities are an easy target, because of their location in remote areas that are not easy to protect at all times. But is this the real reason, or are there other objectives, such as the destruction of the great success achieved in the region, and eliminating the livelihood of those employed in the industry (more than a million people) and who are dependent on oil revenues in the producing countries and beyond? There is at the same time a long-term investment policy in place, which was adopted by international companies a few years ago, in an attempt to compete with conventional oils. It is based on establishing a new petroleum industry focusing on non-conventional crudes, aimed at creating alternatives that compete with the conventional oil industry, whose center is located in the Arab countries. According to what we know, this industry (e.g. tar sands, shale oil, very heavy oil and petroleum liquids extracted from natural gas) or unconventional gas (methane extracted from coal layers and shale gas) cannot replace conventional oil or gas. Indeed, the production of all these alternatives will remain limited and insufficient to meet growing global demand, compared to conventional oils. But these industries are able to compete with conventional petroleum industry in terms of prices and attracting investment funds and projects. To be sure, these projects provide an opportunity for international oil companies to invest in modern hydrocarbon industries, in the consuming countries themselves. This may allow these countries to move towards energy independence sought by many Western countries, especially the United States, ever since the October War and the Arab oil embargo in 1973. The Arab oil-producing countries are thus faced with a realistic challenge, and must take the necessary initiatives to accommodate these changes and adapt their petroleum industries and investments, in addition to stepping up protection for their installations. Another remarkable thing is the nature of targeting Arab oil installations. There were two attempts in Algeria: First against the gas facility in Ain Amenas and then the gas pipeline in Bouira, about 90 kilometers east of Algiers. Attacks in Yemen take place each month on average, while there are constant threats in Libya, including a recent attempt to prevent exports from the port of Zawiya in the west of the country, not to mention the embargo on Syrian oil as a result of Western economic sanctions, and the devastation that hit a lot of oil installations and pipelines in Syria during the past two years. This is in addition to the embargo on Iraqi oil throughout the nineties, and the destruction of petroleum installations in Iraq since the occupation in 2003 and in previous wars. So why is this all happening now? This is an especially valid question if we recall that terrorist groups had avoided sabotaging the oil industry in Algeria throughout the civil war, in the nineties as well. Meanwhile, the progress in the development of non-conventional oils, and the decrease in its commercial costs, has reached a significant level. It is expected that this production (e.g. tar sands, shale oil and biofuels) will account for the net growth of global oil up until 2020, and more than 70 percent of the net growth until 2030, according to BP's energy outlook for 2030 released recently. BP's report estimates that North America would produce around 65 percent of the increase or growth in global oils by 2030, including 5.7 million barrels per day of oil extracted from narrow reservoirs and 2.7 million barrels per day from tar sands, in addition to 1.8 million barrels per day of biofuels. Meanwhile, other reports indicate that it may be possible to produce up to 5 million barrels per day of shale oil by 2030. And of course, there are also attempts to explore for oil in the promising Arctic, which means another chance for petroleum investments outside the Arab countries, despite the natural and environmental challenges, and the high cost of producing oil from frigid Arctic waters. * Mr. Khadduri is a consultant for MEES Oil & Gas (MeesEnergy)
