Libya Boosts Oil-Field Security

By BENOÎT FAUCON

Libya is boosting security at its oil fields to avoid a repeat of the deadly terrorist attack last week in neighboring Algeria, the Libyan deputy oil minister said, as the hostage crisis reverberates through the global energy industry.

Libya will also send more troops to police its border with Algeria, which runs close to the gas field attacked by the Islamist militants, Libyan Deputy Oil Minister Omar Shakmak told The Wall Street Journal on Wednesday.

Kyodo/Reuters

Algerian workers stood at the In Amenas gas plant near the Libyan border on Jan. 16, in a photo secretly taken by one of the hostages.

Mr. Shakmak said he had no knowledge of a particular threat to Libya, but said Tripoli was sending more troops to the border and to desert oil fields, and boosting communications capacity, as a precautionary measure in response to the Algeria attack. "We have a concern since last week," he said.

The assault on the In Amenas field, which is operated by BP BP.LN +0.90%PLC, Statoil ASA STL.OS +0.48% and Algerian state oil company Sonatrach, left at least 37 foreign workers dead and exposed a formidable new threat for oil companies operating in the Sahara region.

Several regional experts have highlighted Libya's oil industry—where many international companies including U.S.-based ConocoPhillips, COP -0.72% Italy's EniSpA ENI.MI -0.31% and France's Total SA FP.FR -0.01% operate—as one of the most likely targets of a terrorist attack following the Algerian incident.

Many of the country's oil and gas exploration and production sites are located in the sparsely populated deserts of western Libya, not far from the Algerian border. Following the toppling of former dictator Moammar Gadhafi in 2011, experts said, Libya also suffers from lax security.

"The government is weak and the early signs indicate [Libya] will take longer than anticipated" to stabilize the security situation, said Tarek Alwan, head of SOC Libya Ltd., which advises oil companies on the North African nation.

There is evidence that heavily armed militias, some tied to al Qaeda, are operating in the country. In September, terrorists attacked the U.S. Consulate in the eastern Libyan city of Benghazi, killing four Americans including the U.S. ambassador.

Algerian authorities believe the Islamist terrorists attacked the In Amenas complex after crossing over from the Libyan side of the border, which is about 20 miles from the site, a senior Algerian security official said. The weapons they used were also thought to have originated in Libya, the security official said.

Algerian authorities believe the terrorist group was led by an Algerian national and included citizens from many North African countries.

—Sarah Kent contributed to this article.

Security Fears Cloud Libyan Oil Growth

By BENOÎT FAUCON, WSJ

Heightened security fears after the killing of the U.S. envoy to Libya will further slow the return of foreign oil workers to the country, potentially threatening Libya's plans to boost oil output and grow its economy, according to oil company executives and consultants.

"It's a serious blow to Libya in terms of security," said Tarek Alwan, head of consultancy SOC Libya, which advises international companies investing in the North African nation. "It will delay the return of international oil companies and expatriates."

Oil companies were beefing up their security precautions on Wednesday in the aftermath of the killing of Ambassador Christopher Stevens and three other American diplomats by suspected religious extremists in the eastern city of Benghazi. One European oil company told visiting foreign staff to stay at their Tripoli hotels as a precautionary measure, according to a Libyan oil professional.

Following the ousting of Moammar Gadhafi last year, Libya has surprised analysts by bringing its oil production close to pre-revolution levels much faster than analysts had expected.

Foreign oil companies with production interests in Libya—such as Germany's Wintershall AG, Eni SpA ENI.MI -0.33% of Italy and Total SA FP.FR -0.35% of France—have sent back expatriate workers.

But even before the U.S. envoy's killing Tuesday, attacks on Western interests in June and political protests this summer had already caused some oil-service companies and those with exploration concessions to revise their staffing plans for Libya.

That threatened the country's plans to boost output to 2.2 million barrels a day over the next three years, up 40% from present levels. Such an increase would be enough to overtake Angola to become the eighth largest producer in the Organization of the Petroleum Exporting Countries.

Back in July, Libyan production dropped by 200,000 barrels a day for a short period when protests over parliamentary elections disrupted operations at the country's largest terminal in el-Sider, in eastern Libya.

When it resumed its operations in May, BP BP.LN -0.45% PLC, which has by far the largest exploration plans in Libya, involving investment of $900 million, said the move would pave the way for a return of its expatriates. But three months on, a spokesman for the British company said it had yet to send its foreign staff back because the situation isn't considered safe enough.

Mr. Alwan said he knew of one international consultancy active in the oil sector had that pulled out completely from Benghazi, the capital of Libya's eastern region where the majority of the country's oil is produced, after a British diplomatic convoy was attacked in June.

When foreign staff return, Libyan oil managers say they are sometimes guarded by armored convoys when traveling to and from the airport. Restaurants where they plan to dine are checked first by security guards.

Once Libya accelerates plans to boost production, the reluctance of foreign oil workers to return could leave the country short of specialists in gas-injection equipment—needed to boost production from existing fields—and geologists and seismic workers needed for exploration of new fields, according to a Libyan oil manager at a large European oil operation.

Still, some Libyan officials are hopeful that the formation of a new government—expected to take place soon following elections in July—will lead to serious measures to improve security.

The tragedy "will be an incentive to be more dedicated about security," said Ahmed Shawki, head of marketing at the state-owned National Oil Co. "Other [oil-producing] countries had a worse situation," he added. "Look at Iraq."