Will More Violence in Africa Deter BP?

BP’s (NYSE:BP) problems in Algeria have continued into this week, but that has not prevented the British oil and gas producer from pursuing new operations in the neighboring country of Libya.

A security source told Reuters that suspected Islamist militants had attacked an oil pipeline in the northern part of Algeria on Monday. The incident resulted in the death of two guards and the wounding of seven others. The Al Qaeda in the Islamic Maghreb militant group is believed to have been responsible for the attack.

Typically such attacks are not seen in the north, as the region’s heavy security presence has pushed the majority of AQIM activity to the south. The Djebahia region, the group’s stronghold, is located approximately 45 miles east of the capital city of Algiers, which is situated along the Mediterranean coastline. In Amenas, where the attack on a BP facility left 37 civilians dead, is on the country’s border with Libya, and the weapons used by AQIM militants were smuggled in from Algeria’s eastern neighbor, according to the publication.

Markets are at 5-year highs! Discover the best stocks to own. Click here for our fresh Feature Stock Pick now!

However, this raid was far less dangerous than the four-day siege that began on January 16. “In comparison to the In Amenas attack, this is a very minor event,” the source said, referring to the attack on BP’s natural gas plant.
The violence at In Amenas did not make the oil and gas producer consider leaving the country. “We have high-quality assets in Algeria, where we’ve been present for 60 years,” said company spokesman David Nicholas in a statement made a week later. “We remain committed to operating there.” After all, militant attacks of this nature are not unusual or rare. “If you want oil and gas you have to go to these places,” Gal Luft, co-director of the Institute for the Analysis of Global Security, told Bloomberg. “This is the cost of doing business.”

Even with two attacks in the region of Africa made dangerous by civil unrest, BP is considering expanding its operations. As The Wall Street Journal reported Monday morning, the company is reviewing plans to begin exploratory drilling in its onshore Ghadames block, near the Libyan border with Tunisia.

“In light of the security situation, we’re reviewing the plan to start drilling in the second half of this year but no decisions have been taken,” a spokesman said in a statement seen by the Journal. BP has been reviewing the security of its operations throughout Northern Africa since the In Amenas attack earlier in January. BP ran the plant with Norway’s Statoil (NYSE:STO) and the Algerian state oil company Sonatrach.

Don’t Miss: Will Halliburton’s Stock Continue to Climb?