Energy in Crisis: Key threats facing the oil industry

Despite a continuing decline in usage, oil remains the predominant energy source globally. Serving as a fundamental pillar of our modern energy framework, oil plays a pivotal role in propelling the worldwide economy.

‍Its usage spans three primary domains: fuelling transportation, generating electricity, and facilitating industrial processes.

Due to its finite nature, reliance on oil can have multifaceted adverse effects. These can range from air pollution and the emission of greenhouse gases - that contribute significantly to climate change - to oil spills, which can destroy marine ecosystems and incite civil unrest.

A growing concern continues to evolve around physical threats to the companies and the infrastructure responsible for the production, operation, and distribution of oil. The impacts of this can then trigger ripple effects to the global economy, causing price surges, and further geopolitical fallout.

Cyberattacks against oil infrastructure

The pivotal role of the oil industry within a given country’s critical infrastructure makes it a popular target for politically motivated attacks.

A cyberattack on an oil facility holds the potential to paralyse a wide spectrum of operations, spanning from local to national level. The ability for it to impact the economy, whilst being difficult to confirm the perpetrator, makes it a relatively low risk yet high reward option for malicious actors.

In line with the rest of the world, the oil industry has become increasingly digitised, which has resulted in a significant growth in the number of entry points to its networks.

Conventional components, such as drilling rigs and storage tanks, have undergone modernisation with advanced hardware and software control systems. Many of these systems now rely on internet connectivity for proper functioning.

Critical control systems, that were once isolated, are now integrated into a network susceptible to infiltration through multiple access points.

This was evidenced in 2021, when a hacking group used ransomware to breach the computer systems of Colonial Pipeline, one of the largest pipeline operators in the US, and demanded a ransom to restore access to the systems and data. In response to the attack and to prevent further spread of the ransomware, Colonial Pipeline shut down its operations for several days, leading to fuel shortages and price increases in various parts of the East Coast of America.

Furthermore, aspects of oil facilities, such as the operational technology (OT), are often deliberately kept separate from the rest of the IT environment due to their fundamental role. However, experienced hackers could manipulate the technology of an offshore facility which in turn heighten the chances of a fire or explosion.

Physical attacks by state and non-state actors

As we have noted with cyber-attacks, the significance of oil in daily life means it often becomes a prime target for those aiming to inflict physical harm upon a nation and its economy.

In times of conflict, critical infrastructure often takes the initial hit due to the potential fallout. The war in Ukraine showcases this, with multiple instances of oil depots, ports and refineries being targeted.

This strategic approach has also been favoured by terrorist organisations. Yemen’s Houthi rebels had routinely targeted Saudi Arabian oil infrastructure.

One of the most significant attacks was in 2019 when the rebels orchestrated fires at two key facilities operated by Saudi Aramco, the state-owned oil giant of Saudi Arabia. The attack executed using ten drones, suspended production of 5.7 million barrels, which represented more than half of the Kingsdom’s output.

The same facility had previously been targeted in February 2006, when a failed suicide bombing attempt was claimed by al-Qaeda.

The attacking of oil fields and facilities, alongside shipping routes, was a prominent feature of al-Qaeda’s ‘economic jihad’, which aimed to deprive Israel, America, and the West more broadly, of key resources.

In 2013, al-Qaeda in the Islamic Maghreb (AQIM) conducted one of the largest attacks on a facility, at Statoil’s Tigantourine gas plant. The attack, in the vicinity of In Amenas, killed 39 foreign nationals.

Oil infrastructure in Latin America has also been subject to targeting, as evidenced by Colombia's recurring reports of attacks on oil pipelines. Instances in 2021 were attributed to the Ejército de Liberación Nacional (National Liberation Army) (ELN), which employed explosives in Santander's northeastern region, causing damage to the pipelines and halting operations.

Both the ELN and Fuerzas Armadas Revolucionarias de Colombia (Revolutionary Armed Forces of Colombia) (FARC) have historically exploited oil infrastructure to showcase the strength of their organisations and exert pressure on the government during negotiation periods.

The below map showcases the location of attacks by both ELN or FARC over the last five years, that targeted oil facilities.

Oil theft and smuggling

Oil theft continues to be a prominent risk to critical infrastructure.

In multiple parts of Africa, oil theft and associated criminality, such as smuggling and selling on the black market, increased significantly following the COVID-19 pandemic, when the economy came to a standstill. As the standard of living decreased and poverty increased, the search for compensation became more intense.

An example of this is Nigeria, which has been significantly hit. In October 2022, authorities stated the country had lost over GBP2.9 billion due to oil theft that year. The large-scale theft from pipelines has impacted exports, forced some companies to shut down production and crippled the country’s finances.

Oil thieves are also participating in maritime piracy, utilising speedboats to launch attacks, on both small and large tankers, primarily in the Gulf of Guinea.

Additionally, following a period of decline, oil production in Venezuela has recently begun to rebuild. However, an upsurge in criminal activity continues to impede the market’s recovery.

The state oil company, Petróleos de Venezuela (PDVSA), which distributes gasoline and diesel throughout the country, has dealt with a series of attempted thefts from their pipelines in recent months.

Gangs operate by creating holes in pipelines and connecting hoses to steal the product. Fuel smugglers along the Colombia-Venezuela border have similarly played a role, transporting oil into Venezuela to alleviate its persistent fuel shortages.

This is like the border between Algeria and Tunisia, with the rampant smuggling of petrol and other commodities leading to the creation of an established parallel economy propping up the marginalised, low socio-economic border populations.

Significant global events can often worsen oil shortages, as we have witnessed from the Russian invasion of Ukraine. These scarcities subsequently drive up the value of oil, providing an opportunity that criminal gangs frequently exploit, leading to an upsurge in criminal activity.

Civil unrest

Throughout history, instances of civil unrest have frequently focused on disrupting oil infrastructure to achieve political objectives.

Given Iraq’s significant economic dependence on oil, protestors often express their dissatisfaction with the government, by conducting protests that impede operations at oil facilities. The most intense waves of protest activity have been documented primarily in the southern oil-producing regions of the country, including Basra, Nasiriyah, and even Baghdad.

In 2022, it was reported that Iraq had to cease more than a tenth of its oil production due to a combination of maintenance requirements and ongoing protests. More recently, these protests have been conducted by the disenfranchised youth, who are demanding more employment opportunities.

Likewise, in Libya, protests targeting oil facilities have been a recurring problem for multiple years. In July 2023, production at Libya's El Feel, Sharara and 108 oilfields was shut due to a protest against the abduction of a former finance minister.

The Sharara field, one of Libya's largest production areas with a capacity of 300,000 barrels per day, has become a frequent focal point for various political grievances and demands raised by local protesters.

Oil remains a crucial energy source globally, fuelling economies, transport and industry. The challenges facing the sector from cyberattacks, physical threats, and environmental risks, continue to showcase the need for companies to engage with comprehensive security measures and ensure a resilient energy future.

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Each week, our Threat Intelligence team will be analysing a different energy industry as part of our Energy in Crisis series (including Nuclear, Wind, Solar, Hydroelectric and more). Follow us here or on LinkedIn to stay up-to-date with the latest analysis.