Security risk ‘nothing new’ for oil & gas sector, Genel CFO says
Terror strike in Algeria is a stark reminder, not a wake-up call
By Gaurav Sharma | CFO UK | Published 15:47, 22 January 13
The oil and gas sector has always had to contend with security risk, Julian Metherell, CFO of Genel Energy said on Tuesday.
Speaking in wake of a terrorist strike on a gas plant in Algeria, Metherell told delegates at an Economist Group event in London that his peers viewed the incident as a stark reminder of security risk rather than some sort of a wake-up call.
“We in the business have had to live with security and geopolitical risk for a while. This tragic incident is a reminder to the wider world of the climate oil and gas companies operate in some parts of the world,” he said.
“In fact, the willingness to take risk drives the upstream or extraction and production (E&P) component of the oil and gas business. The 'high risk, high reward' connect is well documented in our case and those of our peers,” Metherell continued.
On 16 January, armed Islamic militants seized control of the In Amenas gas project in Algeria taking several workers hostage. A subsequent counterterrorism operation by Algerian forces resulted in over 40 civilian deaths.
Nearly 30 militants were also killed; but not before they had mined and planted explosives around the whole facility. It also emerged that foreign nationals working at the In Amenas facility were deliberately targeted. BP and Statoil operate the facility in conjunction with Algeria’s Sonatrach.
Speaking about his company’s own investments, Metherell said, “By investing in a company operating in Iraqi Kursdistan, as we do, our equity investors take-up a level of risk that they are comfortable with. It’s not that security or geopolitical risk is not there. Only those investors who are comfortable with the level of risk we have undertaken are there for the ride.”
The Genel Energy CFO also said that there was a tendency within the sector, and the wider energy business, to perhaps learn and rigorously adapt from another’s misfortune. “BP’s oil spill in the Gulf of Mexico (and the industry-wide changes that followed) is an obvious example,” he said.
In response to a question, on the UK’s anti-corruption legislative framework, Metherell described the country’s Bribery Act (2010) as a “good thing.”
“I feel it is a development which helps level the playing field for UK-listed companies when it comes to anti-corruption due diligence. The new law prepares us and holds in good stead against comparable global anti-corruption laws that have been around for decades, the US FCPA (1977) Act for instance,” Metherell said.
“In some ways, I think Bribery Act (2010) is up to date, comprehensive and is better relative to anti-corruption legislations in some jurisdictions,” he concluded.
London-listed Genel Energy was created in 2011 as a result of the reverse acquisition of Turkish Genel Enerji by Vallares, an investment company fronted by former BP CEO Tony Hayward. It currently has E&P operations in Iraqi Kurdistan with plans to expand its activities into other Middle East and North African countries.
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