Making progress

An Executive Interview with C2G Energy Ltd

OG. CIS and Russian energy companies need to change their security strategy from the ‘men with guns’ approach. Do you agree with this statement?
TR. All energy companies are required to provide physical security in order to protect their assets and personnel. At best this is because there is a moral obligation to do so by the employer, and at worst because without such protection in place insurers would not provide cover. However, as new types of threats emerge and CIS companies begin to operate internationally, present security arrangements could be augmented with technology and other “soft” services in order to offer a C21 solution that is preventative in strategy, adds commercial value to capital projects, and has in-built transferability from the CIS to international markets.

This is not to say that physical security is now redundant; there are many areas of the CIS/Russia (and the world) where physical security measures are required and this will continue to be so; these include international border areas and other regions like the North Caucasus where companies such as Rosneft have experienced appalling risk to personnel, for which a strong physical security force is required.

However there are now a number of new factors that demand a change in approach to security from CIS energy companies. These include a massive expansion in geographical footprint both at home and abroad. No guard force can be in two places a once! New operations include complex businesses that are both offshore and onshore, (LNG) which must be secured from the upstream (Shtokman) all the way through to the downstream - in foreign countries. Companies such as Lukoil and Gazprom now work abroad with foreign governments and partners, who are moving towards a preventative strategy based on technology, and integration of operational and security systems with soft services (sustainable development, community relations, local content, etc). The key driver for this preventative strategy is economic. The provision of large guard forces and quick reaction forces is becoming financially unsustainable and commercially unacceptable to host governments.

Overseas operations are crucial for Russian/CIS operators and will increasingly require a common security solution with foreign partners and host governments. C21 threats to energy companies no longer differentiate between Exxon (an IOC) and Gazprom (an INOC); all are now legitimate targets of terrorists, economically disenfranchised people and even failing states around the world.

The new task of the security department is the selection, integration, and coordination of the relevant security response to match the threat - in every operating country. Commercial security partnerships of relevant expertise (soft or hard) will become the norm in C21.

In 2006 this author discussed future security architecture with Rosneft’s CEO, Mr Bogdanchekov. He stated the need for a technology/systems security model to counter emerging risk associated with Rosneft’s expansion. He cited the need to raise capital on the money markets for new multi-billion dollar projects which would require in exchange, evidence of a sustainable, preventative security management system that could ring fence this enormous investment in Rosneft. This need is only more obvious in 2008 as Russian/CIS energy companies begin to exert their influence on the international stage.

Tim Reilly has worked for Exxon, Chevron (Kazakhstan), JKX Oil & Gas and Shell; the latter as Government Affairs Adviser for the Caspian Region. Most recently he was MD for Oil & Gas at Kroll’s Security group. A Russian speaker, he was educated at Cambridge, Durham and the Moscow State Institute of International Relations.