* Algeria's In Amenas attack changes risk/reward equation
* Oil firms urge host governments to boost security
* Local relationships also crucial to risk management
By Peg Mackey
LONDON, March 25 (Reuters) - Rising Islamist violence isforcing international oil firms to look hard at exposure acrossswathes of Africa and weigh whether to operate remotely for fearexpatriate staff may be targeted.
Since a siege at Algeria's In Amenas gas plant in January inwhich dozens of foreign hostages were killed, militants havestruck foreign targets in fellow African oil producers Nigeria,Libya and Egypt.
Earlier this month, a Nigerian Islamist group said it hadkilled seven expatriate construction workers, a departure from along-running focus on local targets. Although Nigeria'sIslamists currently operate hundreds of miles away from southernoil fields, that could easily change.
At about the same time, al Qaeda's North Africa wing said ithad beheaded a French geologist captured in northern Mali,describing the killing, like the In Amenas bloodshed, asretaliation for French intervention against Islamists in Mali.
That raised fears attacks could spread across west Africa.
"In Amenas has changed the calculus of risk and reward. Wemay need to select a different model for operations," said asenior Western oil executive, who declined to be identified dueto the sensitivity of the issue.
"Should we have more remote basing of expatriates and havemore locals on site? It's up for discussion."
Oil companies typically fly in dozens of foreigners to oiland gas fields and installations for short rotations.
While numerically only a small part of the operation - mostof the 700 workers at In Amenas were Algerian - these skilledtechnicians play a big role in keeping output up and running.
The attack at the gas plant in the southern Saharan deserttriggered a mass exodus of expatriates: hundreds of workers wereevacuated to safer places in the country's centre andnon-essential staff were brought home.
"There hasn't been a complete flight out of Algeria, butunless Algiers proves that security is resilient and up-to-datewith the threat - you can't expect companies to return," aWestern diplomat said.
Chief executives are also pushing host governments to raisetheir guard and foot more of the bill for rising security costs to keep projects at full strength and encourage new investment.
Royal Dutch Shell has said it is persuing newupstream opportunities in Libya and other majors are consideringprospects in Algeria, where foreign operators - London-based BP and Norway's Statoil - suffered their worst-everincident.
But analysts warn that the increase in militant activityacross North Africa and Nigeria - which together pump more than5 percent of world oil supply - threatens to slow production.
"A raft of kidnappings and murders of foreign workers hasfurther destabilised Nigeria and marks a new chapter in theviolent campaigns by Islamic extremists targeting Europeansacross the region," the International Energy Agency said in itslatest monthly report.
One foreign company is considering not placing any whitestaff in North Africa, said a security expert, though he feltthe perceived threat was far greater than the actual risk.
OFF GUARD
Despite the instability across much of North Africa sincethe Arab Spring of 2011, In Amenas caught many off guard,because Algiers was seen as very much in control of its energysecurity. Immediately following the attack, the OPEC producerstepped it up, but some say it could do more.
"There are still efforts that can be made to increasesecurity in Algeria: more cooperation on intelligence, bettersurveillance equipment and enhanced security around the sites sothreats can be seen earlier," said a Western source familiarwith logistics at the remote desert plant.
At the time of the siege, British company BP - whichconsiders itself the biggest foreign investor in Algeria - hadabout a third of its 60 staff in the country at the plant.
The UK major says it remains committed to Algeria, where ithas operated for more than six decades, and the safety of itspersonnel is the highest priority. "The security situationacross North Africa is under review," a BP spokesman said.
In neighbouring OPEC producer Libya, there is preciouslittle cooperation with international oil companies, thepost-war government is in flux and armed clashes are common.
There is little targeted violence against foreigners,security sources said, although in March a gun battle broke outat the Mellitah gas complex in Western Libya jointly owned byLibya's state oil company and Italy's ENI.
More broadly, armed men have spread through the Sahara sincethe revolution which overthrew Muammar Gaddafi.
Libya and Algeria are Africa's third and fourth largest oilproducers. Together with Egypt, they are important gas suppliersto Europe. Libyan oil output is now close to pre-war levels of1.6 million barrels per day, but long-standing investors arefrustrated by supply disruptions caused by protests and strikes.
LOCAL TIES
Another way to manage risk is to team up with localpartners, say security and oil industry sources. "Communitypolitics is the bedrock for our security plans," a securityexpert, who requested anonymity, said.
Some foreign companies have taken that to heart,strengthening or developing ties with communities near oilfieldsand keeping expatriates working on site, rather than remotely. "Reliable networks are worth much more than any sort of privatearmed protection services," a Western oil executive said.
That message has got across in Egypt, where securityconditions for now are "very manageable", according to a Westerndiplomat. That said, the brief capture in Egypt's SinaiPeninsula of U.S. Exxon Mobil's country boss and hiswife made headlines.
"You need to go more local, looking for services and jobcreation," said Majid Jafar, Chief Executive of CrescentPetroleum, whose firm is active in Egypt and autonomousKurdistan in northern Iraq.
"You need to deal with local mayors, understand whyrelations with the central government might not be that strongand how to address that."
France's Total pulled staff out of the Nigeriancapital Abuja in January following the kidnapping of a Frenchnational by Nigerian Islamist group Ansaru, which also said itkilled the seven construction workers this month.
"The oil companies are looking at what can be done inpreparation and how to harden themselves as a target," saidPeter Sharwood-Smith of risk consultants Drum Cussac.
"Ansaru have made it clear they're targeting Westernersspecifically and the oil industry seems a very obvious target."
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