Ian McCredie, head of global security services at Shell International, recently said growing risks have forced Royal Dutch Shell PLC to make its own security arrangements in areas where local security forces are largely ineffective.
“Globally, things don’t look too bad, but there are areas that are coming unstuck through no fault of our own,” McCredie told a London conference last week.
In particular, he named Nigeria, where separatist rebels have kidnapped 50-70 Shell employees over the past year and diverted an estimated $1 billion/year of oil revenue to the insurgents or corrupt officials.
He could as easily have spoken of Thailand, where a growing problem of Islamic militancy has raised the specter of terrorist attacks.
Rigs in danger
Indeed, gas producer PTT is being asked to pay the Thai government 30 million baht/year toward the cost of increased naval protection of its offshore drilling platforms.
Defense Minister Thammarak Isarangkura na Ayudhaya, who said the production platforms were potential targets for terrorists, has approached PTT Exploration & Production PLC and is hopeful the company will cooperate.
It was for its own good, he said, adding that the Thai navy had vessels and personnel but that it needed funds for crew allowances and fuel for extra patrols. A 30 million baht/year budget would allow daily patrols by six vessels instead of only three now, Thammarak said.
One hopes that actually will lead to improved security in a country where Islamic militants have recently killed a number of policemen in roadside bomb attacks and represent a potential threat to the global oil industry, especially along the busy Malacca Straits.
McCredie referred to the growing threat of piracy in the Malacca Straits, one of the world’s most important shipping lanes, where Shell has already begun to step up security on tankers that use it.
Leadership needed
Corruption is another problem, according to McCredie, who told his audience that stamping out corruption requires “strong leadership.” But just how strong?
Consider Vietnam, where seven people, including six oil company executives, are now on trial for alleged involvement in a $3.46 million corruption scandal.
The seven allegedly collaborated to embezzle the money from a project to construct workers’ housing units at an oil rig off southern Vietnam and another involving repairs to an oil rig from 1999 to 2002.
A court official in southern Ba Ria Vung Tau Province said the trial-scheduled to last until Oct. 18-is one of several recent corruption cases in Vietnam’s oil industry.
This sort of thing is clearly taken seriously in Vietnam, where embezzlement is punishable by death. But that may be too much for most oil executives. Indeed, as McCredie knows, heavy-handedness may invite problems: “If you surround yourself with razor wire, you are asking for trouble.”
In a word, perhaps, much could be done with the proverbial ounce of prevention. Forewarned is forearmed.✦
