Last week’s terrorist attack at the BP/StatOil run gas facility in In Amenas in Algeria has prompted many observers to question the viability of foreign companies operating in unstable territories. Traditionally, North Africa has been a relatively stable place for oil and gas operators to do business in, but it appears that the fall out from the downfall of Gaddafi has opened up the floodgates for a new existential terror threat in North Africa. Tackling extremism in North Africa is one issue but from a business perspective, the debate between high risks versus high reward will be a tough and uncomfortable one for companies. Here are some immediate issues that may need to be addressed:
- What is the corporate business strategy: continue operating, scale back or exit?
- Will North Africa become a no go area for expat workers?
- Will more companies upscale their security arrangements to private defence contractors?
- Will companies offer their staff increased ‘hardship’ allowances and significantly enhanced accidental death benefits?
- Will companies who are operating in North African, shift their (back office) operations to ‘safe haven’ countries such as Saudi Arabia, UAE and Qatar which was a trend that was quite evident in the aftermath of the Arab Spring
Ultimately the decision by companies to operate in unstable territories will come down to weighing up pros and cons of critical risk and reward aspects. I believe there is still a future for companies to continue to operate in North Africa. Indeed, the recent events of last week have not deterred Alstom to do business in the region having just recently signed a contract in Libya. How terrorist threats are dealt with will be a challenge facing world leaders but for CEO’s the urgent issues of employee safety and emergency planning need to be top of the agenda.
Photo credit: tome213