Jenny Carter-Vaughan knows the power of fear of terrorism. In this article, the managing director of Expert Insurance Group – a specialist kidnap and ransom insurance broker – outlines the most volatile regions and explains how power workers can ease their concerns.
The attack in January at the Amenas gas facility in Algeria by Islamist terrorists has come as a wake-up call to many people involved in the energy industry. Previously many workers were inclined to brush off the very real risks that they face, on the assumption that in-situ security arrangements where they work and live are sufficient. The outrage at Amenas has changed that.
The problem is that many of the facilities which are crucial to the production of power are based in dangerous and unforgiving areas of the world. Areas where terrorists proliferate and the rule of law is often tainted by corrupt officials.
The Amenas incident made the headlines because of the audacious nature of the attack and the high number of casualties and deaths – 39 foreign hostages and an Algerian security guard were all killed. The Maghreb region of Africa has been the plagued by Islamist insurgents over the last decade and the authorities there have been involved in a struggle against the terrorist activities that occur there.
Egypt has been vexed with difficulties and problems. In March a British oil executive and his wife were kidnapped while driving from Cairo to Sharm El Sheikh. The couple were finally freed after local police agreed to release a relative of the Bedouin who had been accused of smuggling weapons from Libya to Egypt.
Libya has been struggling with violence and unrest since the revolution in 2011. In June this year the armed group,which had been entrusted with the task of protecting the Sharara oilfield, attacked the headquarters of the Petroleum Facilities Guard in Tripoli after becoming disgruntled about favours being handed out to a rival group.
Meanwhile, in Tikrit gunmen kidnapped a senior official in Beji power station in September and killed two of his guards.
So much trouble in the world
A significant number of kidnappings that are reported each year occur in Africa. Power workers who are involved in the oil or gas industry are most at risk when they are at sea. Somali pirates are notorious and are active up and down the east coast of Africa.
Attacks of piracy and armed robbery against vessels in and around the Gulf of Aden and Somali Basin have concentrated in the past on cargo vessels and private boats, however, of late, there has been an increase in incidents which involve workers and sailors on platform supply vessels, oil tankers and oil platforms. It is thought that these installations and vessels are being targeted instead of shipping, because of the intervention of international navies who are taking an increasingly proactive approach in this region.
Whilst the incidence of piracy in East Africa has decreased, the incidence of this type of outrage has risen off the coast of Western Africa. Nigeria has had a reputation for many years as a kidnapping hotspot, however the offshore area around the coast of Bayelsa has particularly been targeted.
In February, six workers were kidnapped from an oil services ship. In April, two Russian and two Ukrainian oil workers were kidnapped, only to be rescued by Nigerian police the following month. Onshore, nine oil services workers were kidnapped in April.
Other volatile nations include southeast Asia. In June this year engineer, Malcolm Primrose, a Scottish oil worker, was kidnapped by a group of armed men in Aceh, Indonesia. The motivation for the kidnapping was thought to be a grudge the perpetrators had against Primrose’s employers.
A ransom was demanded by the kidnappers. Primrose was eventually found alone at a security post inside an oil plantation, though no money had apparently exchanged hands.
In South America, problems still exist and kidnapping events are still common. In Venezuela as many as 70 people are reportedly kidnapped per day and in Columbia although Farc are in peace talks with the Columbian Government, incidences of kidnapping continue to be reported, including three oil contractors who were kidnapped in Southern Columbia this year.
Piece of mind
While no one can predict where a kidnapper or extortionist may strike, businesses and individuals working within the power industry need to think carefully and take action to protect themselves and their families against kidnapping and extortion attempts. A kidnap and ransom (K&R) policy should sit at the heart of the risk management programme.
Typically a K&R policy will provide cover not just for the payment or loss of the ransom payment but for essential support and help during the course of negotiations with the kidnappers and in taking care of the physiological needs of the family of the victim. Many policies will also include cover to assist the victim on their relief with recovering from the mental and physical trauma of the event.
Businesses need to consider not just the impact of a kidnapping on the member of staff and their colleagues, but also how this might impact on the business going forward. For example a key member of staff who is taken out of the game for six months or so may result in the loss of, or critical delays to, a project. On release, even an unharmed worker may not be able to return to work immediately, if ever.
This can have a severe detrimental effect on a business, particularly if the affected individual is a specialist in their field with unique or unusual knowledge. Projects which are delayed may impact cash flow or result in penalties being imposed. It may be impossible to finish a job and, in extreme cases, entire projects may have to be abandoned. This type of risk can be insured but a specialist insurance cover is needed.
As the power industry has become more and more globalised, so too has the reliance on individual self employed consultants, rather than direct employees. Power companies, unfortunately, are less likely to consider the kidnapping risks appertaining to local staff and self-employed consultants and contractors, will often also find themselves uninsured.
For employees who have previously enjoyed the benefits of employment by a big company, the minor, but important issue of insurance for both travel and kidnapping risks is often over-looked.
Don’t go it alone
When negotiating contracts with potential employers, consultants are advised to be clear what the employer will and will not cover and calculate their own fee accordingly, allowing for the cost of buying their own insurance from personal funds.
One of the issues that faces individuals in buying kidnap and ransom cover is that the benefits have to be pegged to the financial assets of the individual, rather than the likely ransom amount to be demanded. This is because the financial demand is paid by the insured’s family or business not the insurer. The insurer refunds the policyholder for the costs of the ransom after it has been paid.
Therefore an individual arranging cover may run into problems if they do not have sufficiently high assets on which to rely. Under such circumstances it may be better to ask the employer to arrange cover for them and forfeit a portion of their fee as the employer is likely to have greater assets on which to base the cover than the individual.
A good quality kidnap and ransom cover is an essential travelling companion, however it does not replace sensible risk management and preparation. Make good plans before you leave – know who you are going to meet and when and where.
Make arrangements with your contacts so you know what will happen if there is a change of plan and how you will communicate this. Have a plan B and a Plan C. Swap photographs before you leave so you know what your contacts will look like. Maintain your guard and be aware of your surroundings at all times. Remember the most dangerous time is when you are relaxed.