Posts Tagged oil

Lebanon: Turmoil No Clear-cut Gain For Security Firms…Yet

A loser is someone is someone — individual or group — who cannot build snowmobiles when facing uncertainty and unpredictable change;
Whereas,
A winner is someone — individual or group — who can build snowmobiles, and employ them in an appropriate fashion, when facing uncertainty and unpredictable change.-Col. John Boyd

There are a couple of factors going on in Lebanon that are driving the security market there. One is the situation in Syria and the other is a massive gas field off of the coast.

With Syria, you see a lot of spill over across the borders that include refugees or combatants. As Syria continues to fall and morph into a massive jihadist playground, it’s neighbors will suffer. This surge of militant fighters streaming into Syria all have agendas and all are looking to cause chaos amongst their various enemies in the region. Sunni versus Shia, devout islamists versus infidels, etc..  Lebanon, will be impacted, and security in all of it’s forms is what the people will demand and seek if the state cannot provide it. Here is a quote about this reality.

The A to Z Group, a security company offering guard services and cash transfer protection to corporate clients and Lebanese public institutions, hired an additional 100 people about six months ago to meet demand, bringing its total staff to 250 people, General Manager George Ghorayeb told The Daily Star.
“We cover all of Lebanon and I’ve noticed that clients everywhere are afraid of the situation. The biggest demand is for residential and corporate guards,” he said. “There has been a big increase in buildings requesting services because they are scared.”
Elie Georgiou, the executive manager of PRO.SEC, a Lebanese firm that employs 800 people and offers physical security and close protection services, said business remained stable between 2012 and 2013, but there had been an increase in job seekers.

As for energy, the Levant Basin gas fields and rush of Cyprus and Israel to get in there and tap into it, is causing Lebanon to rethink it’s views on those fields. It wants in on that gold rush. (article posted below)

Competing claims by Israel and Lebanon to about 215,000 acres of potentially mineral-rich maritime territory and increasing instability caused by the Syrian civil war could also complicate the effort.
Lebanon began to tap its onshore oil resources in the 1960s, but the long civil war stopped all development. While the government has known about the resources lying off the Mediterranean coast for decades, the focus did not shift there until 2000. Political infighting, a major war with Israel and long stretches without a government have hampered decision-making since then.
Officials swung into action only recently, after Israel and Cyprus began developing their natural gas reserves in earnest. The Petroleum Administration, responsible for negotiating oil and gas contracts, was supposed to be appointed early last year, but squabbling over representation for the country’s different religious sects delayed the process by months. Ultimately, the six seats were given to men from each of Lebanon’s six largest religious groups.

So with that said, if Lebanon wants to do business with those companies that can extract this resource, it will have to get it’s house in order politically, and provide for the security needs of these companies. Enter the PMSC’s.

The first article I posted below delves into the potential for private security and gives a glimpse into the market of force in Lebanon and here is a quote that grabbed my interest.

This might be poised to change since many of the international firms that thrived off Western military contracts in Iraq and Afghanistan are diversifying operations and looking to new markets, Olver of Kroll said.
“The security industry in general is in crisis, so a lot of international companies are looking for the next big thing or to diversify into the next little five or six things,” Olver said. “A lot of the international oil and gas companies have set up one-man offices in Lebanon since the oil and gas tender round is about to start and a lot of security guys are looking to that sector. They see that the oil companies they already service in Libya are looking at Lebanon, so a lot of them have positioned themselves to be able to provide services in Lebanon.”

Interesting stuff and we will see how it goes?  Although the question remains, is turmoil good or bad for the security industry there?

I would say that security contracts pre-Arab Spring were of one type and quantity, but now that the market has changed, that security companies are probably having to adapt to the ‘new’ security requirements that have materialized as an outcome of the Arab Spring. Those companies that can evolve and innovate to meet those new security requirements will stand to survive the changing market.  Adapt/evolve/innovate–or die. Or how Boyd would put it, winners are those that can ‘build snowmobiles’. -Matt

 

 

Turmoil no clear-cut gain for security firms
August 19, 2013
By Lysandra Ohrstrom
As outbreaks of violence across the country become increasingly routine, one would expect Lebanon’s private security companies to thrive. But the global trends that have reshaped the international private security industry over the past few years and heightened risk aversion on the part of governments and corporations have complicated what would otherwise be a straightforward economic success story. Michael Olver, the director of Kroll’s Middle East business intelligence unit, said Lebanese firms were likely to see sustained or increasing demand for services from their existing stalwart clients like embassies, which typically boost their spending on security when the situation deteriorates in order to maintain operations.
At the same time, they will probably see a reduction in the number of multinational corporate clients, he said.
“Large international private sector firms are already evaluating the risk-return balance for having large offices in Lebanon and are going to be re-evaluating the need for a continued large-scale presence,” he told the Daily Star.
Kroll, which provides personal protection to high-level executive clients visiting Lebanon in addition to its business advisory and fraud investigation services, has already seen GCC nationals scale back travel to the country due the bans many Gulf countries have imposed.

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Mali: As France Goes To War Against The Islamists, What Will Be The PMSC Contribution?

I see three areas of focus coming out of this new conflict, that PMSC’s will be crucial for. The first is security services for private interest throughout the Sahel. In the articles below, I have listed all the actions of companies in Libya, Egypt, Nigeria, and Mali, and it is one of reaction to the events in Mali. The Islamists are targeting western interest as a way of hitting back at France and the west, and the hostage crisis in Algeria is a prime example.

The services I see as crucial would be an increase in PSD services, kidnap and ransom services, static security reviews and manpower increases at facilities, and evacuation services.

The second area of focus for PMSC’s would be logistics, and especially as the conflict drags on and the ECOWAS force comes into play. Whatever force they come up with, it is being drawn from the poorest nations in the area, and this army will have nothing in the way of equipment or support. So I could see the typical players for logistics stepping up for this conflict. The AMISOM mission is a good example of what I am talking about and I believe the main players there are Dyncorp, PAE, and Bancroft Global Development.

Perhaps because this is France’s deal, there might be more emphasis on using French PMSC’s? On the other hand, if the US is footing the bill for training up this ECOWAS force, then it will be their choice for who will support the mission. There will be plenty to choose from and we will see how this pans out?

The final area of focus will be training. I really think the model here will be something like what is going on with AMISOM for Somalia. The forces of ECOWAS will have very little to no experience fighting in deserts or fighting an insurgency. You need a robust training program that will meet then needs of such a mission. Not only that, but you must also account for the education levels of those forces being sent in the first place. So training will be vital to the success of France and the west in Mali, and this will be a long term effort much like how AMISOM has turned out.

I could even see some contracts coming up that are focused on training the new government of Mali. Training, mentoring, and support for both the government and the military, will all be possible contracts in the future for companies.

Overall though, I don’t give Mali much hope unless it figures out it leadership and government. Hopefully the new government will come together and stay focused, but these things tend to be really messy if we look at past experiences. Yet again, I point to Somalia as the model of how messy this could be. Mali must have a leader or leaders that the people (and soldiers) can support and even fight for. The west can expend millions of dollars on training this military to expel the jihadists from the north, but Mali must have a solid government or ‘foundation’ to build from in order to keep the jihadists and military in check, now and well into the future. -Matt

 

Edit: 01/20/2013- I wanted to add two more articles that detailed the efforts of energy firms throughout the region. Either companies are boosting security, or they are evacuating folks just to be safe.
The Energy Giants at Most Risk in Northern Africa

Foreign Firms in Algeria Boost Security

Security experts said Algerian authorities may now need to rethink the way security is handled, allowing more foreign involvement in the process.In other high-risk resource-rich countries, such as Iraq, foreign companies commonly employ private Western security companies that are staffed by armed expatriates. Algeria, in contrast, keeps the majority of armed security personnel local, said one security consultant.Typically in Algeria, an oil company hires a foreign contractor to advise on security or to head a team, but the majority of the personnel carrying arms are limited to Algerians, the person said. Some of that security is provided by companies set up by retired Algerian generals, the person said.The system could result in lower-quality security, he said. “Even before the French were in Mali, Algeria hasn’t been the safest place to operate in for a long time,” the security consultant said.

Algeria crisis triggers Libya, Egypt oil security review
Jan 18 2013
* Libya says boost oilfield protection in south
* Italy’s ENI biggest operator across the border
* Some firms in Egypt say reviewing security
* Staff evacuation, tighter security to raise costs,
By Marie-Louise Gumuchian and Ron Bousso
Libya rushed to beef up security at its oil fields and energy firms were considering similar measures in Egypt as Islamist militants threatened to attack new installations in north Africa.
More than 20 foreigners were still being held hostage or missing inside Algeria’s In Amenas gas plant on Friday after Algerian forces stormed the desert complex near the Libyan border to free hundreds of captives taken by Islamist militants.
Hundreds of workers were evacuated from a number of Algerian production sites on the border with Libya to safer places in the country’s centre and industry experts said that could ultimately lead to lower oil and gas production from the OPEC member state.

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Colombia: Oil Companies Say Security Is Government’s Job, And The Defense Minister Disagrees

“It’s impossible to maintain any longer our current security plan–one that was effective years ago when there were very few oil companies and fields to care for,” the minister said Tuesday. “There are now 130 oil companies out there.”

Very interesting news in Colombia. Lately there has been a spike in energy sector attacks by ELN and FARC. They are successful because they have reduced the size of their attack forces, which then helps them to attack more targets and thin out the government forces assigned to stop them. The ‘few and the many’ from the new rules of war comes to mind. Also, it is very easy for this few and many force to go on the offensive and cause damage. Just look at what MEND was able to accomplish in Nigeria?

“Before there were movements that were more massive,” Gutierrez said. “Now clearly it’s more individuals and cells, which is a different presence from what it used to be.”

Now combine these tactics with a highly dispersed government force trying to cover down on 130 oil companies and all of their infrastructure/people, and you can see why the defense minister would want the oil companies to pay for their own security. To help the government out because there are just too many people and things to protect against such a dispersed force.

Another thing I wanted to mention is that these oil companies need to realize that Colombians are paying for their protection, as they make oodles of money selling that stuff all over the world. That world market for oil will increase if Iran is attacked or nations fall to revolution.

So to me, this is a classic case where the oil industry will fight to keep getting their good deal and ‘free government security’.  I say make them pay for their own security so the government’s police and military can focus on serving the people and not just serving oil companies. Just a thought.

Also, these attacks coincide with another big development. Colombia is auctioning off 109 oil blocks to international oil companies. The value of those blocks depend upon how secure they are. Who wants to buy an oil block that is in a dangerous area, which would then equate to more risk and more cost?  So security of these sites is crucial to Colombia in order to get more action and attention in these auctions. The FARC and the ELN know this, hence why they are increasing attacks.

But back to private security. Colombia should continue to press the issue of getting PSC’s back in the game there. The companies should be investing in their own security. I compare it to these shipping companies that want the government to pay for all of their security in pirate infested waters, or depending on government to save the day. Hopefully Colombia’s defense minister can press the issue. -Matt

 

Oil companies in Colombia say security is government’s job
Wednesday, 10 August 2011
Dan Molinski
The head of an association of multinational oil companies operating in Colombia said Wednesday it’s the government’s job, and not that of the companies themselves, to provide security to oil workers and infrastructure against rebel attacks.
“We as a sector understand very clearly that security will be provided exclusively by the state,” Alejandro Martinez, president of the Colombian Oil Association, told Caracol Radio.
Martinez’s comments come one day after Defense Minister Rodrigo Rivera said the sharp growth in Colombia’s oil sector has made it impossible for military and police to adequately protect all oil installations, many of which are located in remote regions near guerrilla strongholds.
The defense minister said oil companies need their own private security forces to help government troops combat a wave of attacks and kidnappings by Marxist rebels that has threatened to derail the oil industry’s four-year growth spurt.

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Industry Talk: East Africa Hits It Big In Oil, Gas Boom

Lately I have been on an energy security kick. There is a lot of money in oil and gas, and the demand is only going higher. Not to mention that things are not very stable in the middle east, so a diversification of sources is in high demand. So how does this impact our industry?

Well for one, security of these wild cat companies that are searching and drilling on land and sea for oil/gas need security partners. These companies are willing to take the risks because the money is there, and capable private security companies are there to help them get there. That last part is important to note, just because thanks to ten plus years of war, we now have companies in this industry who know how to protect people and things in war zones. And especially in war zones that are populated with jihadists….a particularly wicked type of adversary.

These jihadists are also targeting anything to do with the west, to include oil and gas exploration. I wrote about this in my prior post about oil companies being targeted by jihadists in Somalia. Today’s war veterans and contractor veterans know this enemy very well, and they also know how to set up the security of a site to deal with this type of threat.

I also wanted to bring up this quote as a clue to the potential in this industry.

Still, major oil companies are falling over themselves to grab a stake in East Africa, largely by buying out smaller wildcat outfits which made major strikes.
One of these is Cove Energy, a London-listed company. It put itself up for sale in January after reporting one of the world’s largest natural gas strikes in a decade, a field off Mozambique containing an estimated 15 trillion-30 trillion cubic feet of gas, more than Norway’s entire reserves.
On Feb. 22, Royal Dutch Shell offered $1.6 billion for Cove’s 8.5 percent stake in the highly promising Block 4. Four days later Thailand’s state-owned energy company PTT Exploration and Production stepped in with a $1.7 billion bid. On Sunday, India’s state-run Oil and Natural Gas Corp. offered $2 billion.

If you are a private security company that specializes in Africa, then partnering with one of these ‘smaller wild cat’ oil exploration companies could be quite profitable. Any contract with such a company should include a percentage of the profits for the operation, or when the company is sold to a larger oil company. More risk should equal more reward, and hopefully PSC’s are fully realizing the potential in these contracts.(and why not do a profit share with your security contractors doing the work and taking the risk out in the field as well? hint hint)

The other industry angle with this oil and gas boom in East Africa (and West Africa) is that piracy will be increasing as interest in Africa oil increases. There is just too much money floating around on the high seas for pirates or even jihadists to ignore. Hostage taking on land and sea will increase as well, and especially if it is oil executives or engineers crucial to the operation of these sites.

One tangent I would like to quickly expand upon is rare earth minerals. I have to imagine that Africa has sources of minerals not yet discovered, that will be vital for these growing and hungry economies of the west and east. All the stuff that goes into computers or phones, the magnets used in electric/hybrid vehicle motors or in weapons like guided missiles, or gold and silver, are all much needed by all of the industrialized nations of the world. The protection of these mining operations and the protection of the transport of this stuff, are all areas that this industry handles. Especially with mineral finds that pop up in war zones.

Interesting stuff and it is definitely an area of this industry that we should all be paying attention too. Keep your eyes peeled for energy security related work and for new discoveries. -Matt

 

East Africa hits it big in oil, gas boom
Feb. 29, 2012
East Africa is emerging as the new hot zone for oil and natural gas exploration, with major discoveries by Anadarko of the United States and Italy’s Eni in the Indian Ocean off Mozambique and by Norway’s Statoil off neighboring Tanzania.
Even war-wracked Somalia, further north in the Horn of Africa, is part of the drive for energy resources in the region, with a Canadian company, Africa Oil, expecting to start producing within the next couple of months in the northern autonomous enclave of Puntland.
But the big prize there is the offshore oil and gas fields that Somali officials say contain more than 100 billion barrels of oil, more than Kuwait. If that’s the case, Somalia, torn by war since 1991, would become the seventh largest oil nation.

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France: Regulation, Expansion Of French PMSC’s Urged By Members Of Parliament

“Global sales of the sector(security) are difficult to evaluate, but the specialists put it between $100 billion and $200 billion a year,” the report said, adding that the Foreign Ministry puts the figure as high as $400 billion for the total market for security and defense services.
Some 5,000 security firms operate in the world market, which is changing continuously and sometimes with a hazy line between security and military practices, hence the usefulness of calling them security and defense service companies.
Of the French firms, average annual sales is 3 million euros ($4 million). The largest is GEOS with 40 million euros followed by Risk & Co with 28 million euros, the report said.

Very interesting article and France is now joining China in this ‘re-evaluation’ of PMSC viability. I think what we are seeing here is a realization by France that it is missing out on a massive market, and by not having a vibrant and competitive PMSC industry, that they are missing out strategically.

That last part is the most important part because like most of Europe, France needs oil. In a world where oil producing countries are threatened by regional instability or the demand continues to push supply, countries are looking to all and any means of achieving strategic advantage for those resources. Having French companies on the ground, working day in and day out with these oil rich, war torn nations, or protecting the various key individuals and projects within these zones, is one way to ‘influence’ and grab a larger piece of the ‘oil pie’ in those regions.

To further emphasize this last part, here is the quote that perked me up.

A visit to Libya showed the significant presence of “Anglo-Saxon companies,” which have used the uncertain situation on the ground to develop their businesses.
“Their presence seems to favor British economic interests,” the report said. “It seems very desirable, within the framework of Libyan law, for our societies to form partnerships to set themselves up for the long term in this country, as there are strong expectations toward France,” the report said.

The other oil related indicator of need is maritime security. France does not want to depend upon other nation’s PMSC’s to protect their flagged vessels. And those flagged vessels transport commerce and oil/gas.  It is of national interest to ensure these vessels are protected and the economy of France is not negatively impacted by piracy. PMSC’s are a strategic asset that France can tap into to protect that interest.

 French Navy commandos aboard cargo ships. The daily cost of a Navy team is 2,000 euros, compared with 3,000 euros charged by a private company, the report said.
A Royal Dutch Navy team on a cargo ship costs 80,000 euros, reflecting the deployment of 18 personnel, including a nurse. But the demand for onboard protection outstrips supply of Navy teams, and a flourishing private market has sprung up.
Some French oil companies have asked for Navy teams but have had to go to the private sector because squads were unavailable, Betto said…British companies dominate this sector, including Triskel, APMSS and Solace, with a U.S. specialist, Advanfort. An estimated 170 companies specializing in armed maritime protection were set up in Britain from Jan. 1 to Sept. 30 last year, the report said.
The only French firm in this market is Gallice. With annual sales of 20 million euros, it offers armed protection through an Irish subsidiary in order to avoid tangling with French law, the report said.

So France is putting military details on private vessels, and because the need outstrips the supply, they are having to look to the private sector for security–which means using  British or other companies. I am sure that does not sit well with these French shipping companies. lol

Also, how is putting Naval commandos on private vessels  the best use of that resource? Shouldn’t they be doing more important missions, like hostage rescue? Using highly trained commandos for basic protective duties is not a wise choice for this particular mission, and especially when you only have a limited number of those commandos.

Some of the companies mentioned in this article are Argus and a Global X. I have not heard anything about these companies, but here are some quotes about them below.

The European Union uses Argus, a Hungarian-registered company, for building security in Libya. The firm is led by French nationals, and using diplomatic status, the personnel carry weapons…A group of French companies — Geodis, GIE Access, Sodexo and Thales — has formed the Global X company to bid for contracts in U.N. peacekeeping operations, which is seen as a huge market. Such contracts would provide jobs for former French service personnel and create a presence where active French soldiers are not deployed.

 UN peacekeeping operations?  Interesting. Global X would be a serious contender as well, just because having french speakers is a big plus for a few places in Africa. 

So there you have it. Libya and it’s oil, maritime security, and peacekeeping are the markets that France is looking at, and they estimate the global security and defense market to be a 400 billion dollar industry! Not only that, but PMSC’s are viewed as strategic assets, much how China is seeing this industry.

The US and Britain are already way ahead of most of the world when it comes to this industry thanks to ten years of constant war. But as more countries catch on, I imagine the market will evolve and become more interesting as time goes by.

The definition of the state and it’s monopoly on the use of force is changing as well. Countries are realizing that PMSC’s, if used properly, can be ‘real levers of influence’ to quote the report. If anyone has any info on these companies or the article below, feel free to comment. -Matt

 

Regulation, Expansion of French Private Security Firms Urged
Feb. 26, 2012
A bipartisan French parliamentary report is calling for recognition and regulation of private military companies, hoping to reverse the strong climate of rejection regarding security contractors.
The report, published Feb. 14 and co-authored by members Jean-Claude Viollet (Socialist) and Christian Menard (Union pour un Mouvement Populaire), points up the growth of business in private security and military activity over the last two decades, led by U.S. and British companies.
The sector has become so important, France can’t ignore it, the report said.

 

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Industry Talk: The UN Is Looking For A Few Good Security Firms In Libya

Here you go folks. If you have an office in Libya, or are thinking of setting up shop in Libya, definitely give UNSMIL a call when there. They reached out to me in an email which I posted below, and are in the market for some ‘good professional companies that can provide the mission in Libya with security services’.

As to the type of missions, who knows?

I also posted a quick story below on a few of the security companies already in Libya. The cool thing with this story is that it sounds like the new government has changed it’s mind about foreign security. Here is the quote:

Since Libya’s new leaders have yet to succeed in creating a national army to protect the oilfields, Western security companies will have to fill the gap.
The oilmen are paying top dollar for security so they can repair damaged fields and get oil production going again.
Several weeks ago, London’s HIS security consultancy was reporting that the NTC was unwilling to allow private security firms into the country. This, it said, “is acting as a brake on the country’s resurgent oil production.” That, however, appears to have changed as security slumped.

You are probably wondering why the NTC is changing their mind? Well now that Ghaddafi is out, a few of the tribes throughout Libya are fighting with the NTC over who controls what. So the NTC is not able to get everyone under the same tent for the sake of the country and their security forces are over extended trying to deal with it all. And oil production is directly impacted by that instability, which is not good for rebuilding.

Bottom line, western companies want and demand security for their technicians and executives, and the NTC is now allowing them to contract with security companies to keep the oil flowing. That oil is what will help rebuild the country, and private security is a big part of that process. Or until the NTC can get a handle on the security of the country.  It looks like private security will also be a big part of the UN’s mission in Libya as well. -Matt

 

Dear Sir,
Thanks for your response below.
However, please note the United Nations in UNSMIL based in Tripoli and a branch in Benghazi is looking for good professional Companies that can provide the mission in Libya with a security services.
If your Company has a branch in Libya and you are is interested, kindly advice in order to provide you with a vendor registration form to register your company for bidding exercise.
Thanks; regards.
Anne Marie Hougaz-Laferla
Procurement Officer
UNSMIL – Libya
Tel.: 218-91-222-0094
E-mail: hougaz@un.org

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Security firms hustle in lawless Libya
Dec. 9, 2011
As rival militias in postwar Libya wage turf wars in Tripoli and the interim government struggles to form a national army, Western mercenaries are moving in to fill the security vacuum in the oil-rich North African state.
Under the circumstances, it’s not surprising that the executive bureau of the National Transitional Council, striving to govern a country wracked by gunfire and political feuding, is giving these companies the time of day.
Western oil companies and other business groups hustling to get a piece of Libya’s oil and natural gas wealth want protection before they start investing large amounts of money in the new Libya following the defeat and ignominious death of leader Moammar Gadhafi in an eight-month civil war.
“Compared to former Finance Minister Ali Tarhouni’s rather hostile attitude, Libya’s new leadership is showing greater openness toward foreign private security companies,” observed the Intelligence Online newsletter, which has headquarters in Paris.

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