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.