US embassy cable - 05ALGIERS2091

S E C R E T SECTION 01 OF 02 ALGIERS 002091 
 
SIPDIS 
 
E.O. 12958: DECL: 10/04/2015 
TAGS: KHLS, EPET, ETRD, EWWT, PTER, PINR, ASEC, Hydrocarbons 
SUBJECT: VULNERABILITY OF KEY FOREIGN OIL SUPPLIERS 
 
REF: A. SECSTATE 182688 
     B. ALGIERS 2055 
 
Classified By: CDA Marc J. Sievers for reasons 1.4 (d), (e), and (g). 
 
1. (S) Post provides the following answers to the 
Department's questions on the vulnerability of key foreign 
oil supplies in Algeria: 
 
(S) -- Have host governments completed vulnerability 
assessments of the facilities (Arzew Terminal and Skikda)? 
 
Following the 2004 explosion at Skikda (see para 2), the GOA 
undertook a comprehensive audit of all port facilities, 
especially relating to hydrocarbon and industrial security. 
The Ministry of Energy oversees quarterly checks on all 
installations.  Algeria submitted its port facility security 
plan (PFSP) on June 6, 2004 to the International Maritime 
Organization (IMO).  The PFSP covered all major oil exporting 
port facilities.  Algeria's Port Security Officer is the 
Minister in charge of Ports, Mohamed Mhareb.  While the PFSP 
should provide for all contingencies in the event of an 
emergency, including a terrorist attack, a trusted industry 
source told EconOff that, to the best of his knowledge, a 
professional vulnerability or risk assessment of either 
facility for counter terrorism purposes had never been 
completed. 
 
(S) -- What actions have they taken to reinforce protection 
and harden vulnerable infrastructure to prevent terrorist 
attacks or other disruptions? 
 
Algeria has vast experience of internal terrorism dating to 
the 1990's, but over a decade of terrorist operations, 
including bombings, Algeria's "golden goose" i.e. the 
hydrocarbon sector has never been struck.  All facilities in 
country have either a military platoon or gendarmarie (local 
police forces) assigned to them.  This constitutes a 
protection force of 30 to 100 people per facility, in 
addition to a surrounding fence topped with razor wire and, 
in most instances, closed circuit TV surveillance equipment. 
In the south, the petroleum facilities are in the middle of 
the desert so a "sneak attack" would be highly unlikely if 
not impossible.  Facility security is therefore able to see 
anyone coming well in advance.  Despite the aforementioned 
security measures, industry experts indicated to EconOff that 
"Skikda and Arzew would be easy targets for an external 
threat," though post believes no internal terrorist 
organization has the capability to mount a successful attack 
on these facilities. 
 
(S) -- What would be the impact if one of these facilities 
reduced or halted its output? 
 
Algeria currently produces 1.8 million barrels of crude 
daily, of which it exports a total of 1.4 million barrels per 
day (BPD).  Skikda handles roughly 40% of Algeria's exports 
at 520,000 BPD; Arzew is the second largest crude export 
terminal at 470,000 BPD; Bejaia accounts for 370,000 BPD; and 
the port of Algiers ships 77,000 BPD.  Algeria expects to 
increase its total crude exports to 1.5 million BPD by the 
end of 2006.  The Skikda refinery refines 350,000 BPD and 
Arzew refines roughly 400,000 BPD.  Refined fuels are mostly 
used for internal consumption, but a small amount is exported 
to Western Europe.  Arzew is also the main terminal/export 
point for Algeria's liquefied natural gas. Algeria currently 
produces 2.8 trillion cubic feet of natural gas yearly and is 
the third largest source of U.S. natural gas imports at over 
120 billion cubic feet per year.  U.S. petroleum company 
Honeywell estimates that Algeria has the potential to 
increase crude oil production capacity to 2 million BPD and 
natural gas production to 4.0 trillion cubic feet per year by 
2010. 
 
(S) -- Are there any other facilities which are particularly 
vulnerable? 
 
The Hassi Messaoud area is the heart of Algeria's hydrocarbon 
extraction and production.  As noted, most of the facilities 
in that region are in the middle of the desert, but a 
successful attack on Hassi Messaoud would severely disrupt 
nearly all of Algeria's oil export capacity.  One of 
Algeria's pipelines terminates at the La Skhirra terminal on 
the coast of Tunisia.  The Tunisian authorities maintain 
security measures at that facility. 
 
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DOUBTS ABOUT SKIKDA SAFETY 
-------------------------- 
 
2. (SBU) A large, accidental fire broke out October 4 at the 
Skikda refinery when a crude storage tank was apparently set 
ablaze by an electrical spark (Ref b).  Though firefighters 
were eventually able to contain the fire, three of the 
facility's eighteen storage tanks were drained down and 
burned dry.  This same facility suffered a more serious 
explosion in January 2004, when a steam boiler at the LNG 
plant exploded, killing 13 and causing an estimated $800 
million in damage and a loss of more than 5 billion cubic 
meters per year in production. The Ministry of Energy and 
Sonatrach, the state-owned oil company, are conducting a 
formal investigation into the most recent accident amid 
mounting questions about Skikda's overall safety record. 
3. (U) Algeria's reserves and potential: Algeria's proven oil 
reserves are estimated at a modest 11.8 billion barrels. 
According to industry sector studies, sizable new finds and 
greater use of enhanced oil recovery techniques would 
increase probable reserves to as high as 43 billion barrels. 
SIEVERS