* Firms had not considered measures for such a large attack
* More security needed before foreigners return
* January siege left 40 workers dead
By Balazs Koranyi and Henrik Stolen
OSLO, Sept 12 (Reuters) - The head of Statoil saidhe would not resign after an internal investigation by the oilmajor found management had failed to foresee and prepare for adeadly attack at an Algerian gas plant in January despitemultiple warning signs.
Some 40 employees were killed when Islamist militants raidedthe gas plant deep inside the Sahara desert, near the Libyanborder, taking foreign workers hostage in a four-day siege thatended when Algerian forces stormed the plant.
Statoil and BP, its partner in the In Amenas venture,said it was impossible to predict an attack of suchunprecedented scale.
However, the Statoil report revealed that the plant had beengoing through an internal crisis: workers were on strike frommid-2012 until just days before the assault, and had threatenedexpatriate employees.
"Although unforeseen and unprecedented, an attack on InAmenas should not have been entirely inconceivable," the reportsaid in a section titled "Failure of Imagination".
"Despite the turmoil in the region, the In Amenas jointventure operated on an unchanged threat level from February 2012until the attack," the report said.
Statoil Chief Executive Helge Lund acknowledged the reportand said he did not plan to resign. Chairman Svein Rennemo saidthe board had full confidence in Statoil's management.
However, the 78-page report concluded: "Security isgenerally not well understood within Statoil's leadership ranks,and as a result has not been prioritised, resourced or managedproperly."
The crisis was especially worrying in the context ofneighbouring Libya, which has become "a large ungoverned space"and Mali - which had "developed into a safe haven for jihaddistsand terrorists".
Algeria's oil industry relies heavily on foreign investmentand needs billions to revive stalled growth and keep supplyingEurope with oil and gas.
BP and Statoil have yet to send back their expatriateworkers. Algeria has not done enough to remove their concernsabout security, they say.
"There has not been any high-level strategic securitydialogue with Algerian authorities involving the companies,"said the report, released on Thursday.
NO DIALOGUE WITH ARMY
The report detailed that security at the plant was dividedinto an internal layer, for which the joint venture wasresponsible, and an external one, guaranteed by the army.
Complicating the situation, security inside the facility wasprovided by an external contractor, and then some responsibilitywas transferred to the security unit of Algeria's state energyfirm Sonatrach.
"In effect it meant that there were two parallel securityorganisations operating at the site, not always with a highdegree of mutual respect, trust and collaboration," the reportsaid.
Against this background, it would hardly be surprising ifthe attackers had benefited from some inside knowledge, thereport concluded.
Finally, internal security had limited exchange ofinformation with the army and relied too heavily on localauthorities for protection, the investigation concluded.
"Neither Statoil nor the joint venture could have preventedthe attack but there is reason to question the extent of theirreliance on Algerian military protection," it said.
The plant usually employs around 700 people, mostlyAlgerians, and at the time of the siege BP had about 20 peopleon site while Statoil had 17. There were also dozens of foreignsubcontractors on the site.
Responding to the report, BP said agreement on furthersecurity measures was still needed before its people couldreturn.
"Because of the nature of the incident and the fact that theresponse was an Algerian military operation, there are manyquestions arising which BP is not in a position to answer,including how the terrorists were able to breach the militaryzone to attack the plant," the British oil major said.
Officials in Algiers could not immediately be reached forcomment. One industry official close to the talks with theenergy firms said a return of expatriate workers was close, butthere were outstanding matters to resolve.
Algerian officials have in the past said they have met allsecurity demands made by the companies.
The facility, operated by BP, Statoil and Sonatrach, wasproducing about 9 billion cubic metres of gas per year, some11.5 percent of Algeria's total, but it continues to run belowcapacity as it sustained major damage in the attack.
BP (BP.)
