The growing wave of political and social unrest in North Africa and the Middle East has encouraged the multinational energy supergiant British Petroleum (BP) to reevaluate the security measures and degree of involvement in OPEC member-states, most notably Algeria and Iran. Due to the UN sanctions imposed on Iran and the recent terrorist attack on the Algerian In Amenas gas plant, OPEC's overall production of oil is expected to decrease by 100,000 barrels a day in the first fiscal quarter of 2013, according to a recent article in Financial Times. The short-term will see rising gas prices as global demand is expected to grow while the supply is cut short. In the long-run, however, the effects are far more uncertain.
The recent In Amenas terrorist attack, which claimed the lives of 37 foreign workers, is expected to reduce Algeria's "production of liquids by some 57,000 barrels a day and gas by 9 bcm/year," according the the International Energy Agency (IEA). For a country where oil and gas accounts for 70% of the national budget, such an event is devastating both to the domestic economy and, on a larger scale, to the international oil-producing cartel to which it belongs. Moreover, the terrorist attack was conducted by an extremist terrorist group independent of al-Qaeda. This is important because the 2011 assassination of Osama bin Laden led many, especially BP, to believe that al-Qaeda, and terrorism at large, would surely decline in power and size in the future. Clearly, this is not quite the case.
This terrorist attack has encouraged BP to narrow its scope on Iran, which has seen incredible social unrest paired with growing animosity towards the United States and the First World at large over the past year. What makes Iran unique, among other things, in this situation is that this growing animosity has been reflected on the national level, most clearly the government's recent development of a nuclear program and the UN's subsequent economic sanctions. These sanctions have affected Iran's crude oil output dramatically: in January production hit rock-bottom at a devastating three-decade low of 2.65 million barrels/day.
As security is appearing to lessen in OPEC states, BP is torn over the future of its endeavors. No drastic action will occur in the short-term; this issue merely reflects the growing need for alternative energy. Apart from the recently-made-popular environmental costs of oil and natural gas energy, security is becoming a major factor as well. Although I–along with BP and all other multinational energy companies–hope that terrorist groups will not begin escalating attacks on U.S. and European commercial interests in the Middle East and Africa, this recent attack has shown that it is a definite possibility.
Very interesting take on the economic implications that terrorist attacks lead to. It seems to be that terrorists certainly target areas that will negatively the local economy, and in the case of oil, has enormous effects on the balance of the oil trade. To answer the question whether this issue reflects the growing need for alternative energy or heightened security of places like this it is important to pursue both strategies. As members of this little place we call Earth, it is so important to not be bullied by groups that resort to violence to get their point across!
ReplyDelete