Bloomberg | 15 February 2017

Libya Crude Output Rises as Work Conditions for Big Oil Improve

Libya’s crude production exceeded 700,000 B/D and is expected to keep rising as working conditions in the conflict-ridden country improve for international companies such as Eni and Total, an official from the state oil company said.

The North African country’s crude production is expected to reach 1.2 million B/D by August and 1.7 million by March 2018 when the nation’s ports and export terminals will be operating at full capacity, Jadalla Alaokali, board member of Libya’s National Oil Corp., said in an interview in Cairo. Output at the El-Feel, or Elephant, oil field is expected to resume within 1 month, pumping 75,000 B/D, he said.

Eni and Total are working in Libya without difficulty, and Schlumberger resumed operations in the country about 3 months ago, he said. Eni is expected to start production from an offshore area in 5 years, he said.

“Eni and Total are working there with no problems, so the situation is improving every day in Libya, and I’d like to take this opportunity as an introduction for those who have interest to work in Libya,” Alaokali said. “More than 45% of the land is still virgin, hasn’t been explored, so we still have large areas that haven’t been discovered, so the opportunity is there.”

Read the full tory here.

IPIECA | 10 February 2017

IPIECA Launches Responsible Security Tools

IPIECA has developed two responsible security tools, produced in partnership with the Geneva Centre for the Democratic Control of Armed Forces (DCAF) and the International Committee of the Red Cross (ICRC). The two tools are:

The tools have been developed for all extractive companies to support engagement between companies and government security forces. Before engaging or investing in new operations in a host country, companies need to assess and evaluate the risks involved. The Host Country Security Assessment Guide is aimed to assist companies in evaluating the national and regional security contexts and identify the different challenges that are likely to affect extractive operations. Complex environments pose particularly challenging security and human rights risks and require a thorough analysis of the security sector and actors.

The security of company operations in a host country depends significantly on the company’s engagement and relations with the national security sector. Therefore, it is important to establish predictable relations with key security actors early on because inappropriate or underprepared first consultations with stakeholders can have long-term negative effects on company operations. The Host Government Engagement Strategy Tool is aimed to support company representatives prepare for these first consultations and establish a strategy for the engagement and communication with security sector representatives.

Read more about IPIECA here.

King & Spalding | 18 January 2017

Maritime Cybersecurity Regulation on the Horizon

Over the past year, various institutions and organizations—both domestic and international—have shown an interest in moving the increasingly prevalent cybersecurity conversation offshore. Domestically, both Congress and federal agencies have pushed to mandate cybersecurity measures for ships, ports, terminals, and offshore facilities. Internationally, a United Nations agency has issued new guidelines designed to enhance cybersecurity in worldwide shipping operations.

Critical energy infrastructure has long been at the forefront of cybersecurity, both because it is a frequent target of cyberattacks and because the potentially debilitating effects of a successful attack. However, maritime cybersecurity regulations will not necessarily target just the energy industry and are likely to come from a variety of sources, some of which may be unfamiliar to industry players.

Despite a strong national interest in regulating the cybersecurity of critical energy infrastructure, the industry’s maritime operations have largely gone under the radar. To date, approaches to cybersecurity in the energy industry’s maritime operations have largely been voluntary and, thus, company- or even vessel-specific. At the same time, global economic growth and the corresponding increase in energy demand have led many energy companies to explore offshore options for replenishing reserves and meeting production needs. Oil and gas producers, in particular, have shown a steadily rising interest in maritime technologies, such as floating production, storage, and offloading vessels and floating liquefied natural gas operations, that can both meet energy demand and align companies with global efforts to reduce emissions. But the rapid adoption of new operational technologies and an increased dependence on networked cyber structures opens the possibility of cyberattacks that could threaten the economy, worker safety, the environment, or national security.

As a new year begins, the energy industry is now facing the prospect of new regulatory oversight of its cybersecurity efforts in maritime operations. The past year revealed a series of indicators that maritime cybersecurity regulation is imminent. Six months ago, the United Nations International Maritime Organization published Interim Guidelines on Maritime Cyber Risk Management, which were drafted with input from representatives of 44 member states, including the United States Coast Guard (USCG). Six months before that, the US House of Representatives sent a bill to the Senate that would require USCG to enforce cybersecurity standards at US ports and in maritime operations. Meanwhile, the two federal agencies with primary jurisdiction over industrial maritime operations—USCG and the Bureau of Safety and Environmental Enforcement—have been speaking out publicly about the need for regulatory involvement in maritime cybersecurity. In 2017, maritime operations are expected to emerge as the next frontier of cybersecurity regulation affecting in the energy industry.

Houston Chronicle | 18 January 2017

Neglect the Basics at Your Peril, Cybersecurity Strategist Says

Hackers have gotten smarter and bolder in their recent attempts to steal coveted oil company data. Mario Chiock has worked for years to keep them at bay. Chiock joined Schlumberger in 1980 as a field engineer, but his traditional oil industry career took a turn in the mid-1990s when he began researching a new threat to corporate security, one that emerged alongside advanced computers and the internet. At the time, most in the oil industry had never heard of cybersecurity, much less practiced it.

Schlumberger Chief Security Officer Mario Chiock stands for a portrait on 20 December 2016 in Houston. Credit: Michael Ciaglo/Houston Chronicle.

Schlumberger Chief Security Officer Mario Chiock. Credit: Michael Ciaglo/Houston Chronicle.

Over the years, Schlumberger’s top cybersecurity adviser founded industry groups dedicated to educating oil companies on securing computer systems and sharing information between firms about cyber-incidents, as a way to learn how to guard against attacks.

The initiatives he began at Schlumberger aim to teach employees that they’re key to its cybersecurity. For example, Schlumberger sends its employees test phishing emails to see how many click on a link or email attachment.

“We need to make sure we’re always a few steps ahead of them,” Chiock said. He spoke about his experience and Schlumberger’s cybersecurity efforts.

Andrews Kurth via Mondaq | 22 November 2016

Cybersecurity Due Diligence Is Crucial in All Mergers and Acquisitions, Including Energy Transactions

A Cautionary Tale in Cybersecurity Due Diligence
Can a single data breach kill or sideline a deal? Perhaps so. In October, Verizon signaled that Yahoo’s disclosure of a 2014 cyberattack might be a “material” change to its July USD 4.83 billion takeover bid, which could lead Verizon to renegotiate or even drop the deal entirely. Concern over cybersecurity issues is not unique to technology or telecommunications combinations. In a 2016 NYSE Governance Services survey of public company directors and officers, only 26% of respondents would consider acquiring a company that recently suffered a high-profile data breach, while 85% of respondents claimed that it was “very” or “somewhat” likely that a major security vulnerability would affect a merger or acquisition under their watch (e.g., 52% said it would significantly lower valuation).

Bottom Line: Cybersecurity should play a more meaningful role in the due diligence portion of any potential merger and acquisition (M&A) deal. Certainly this is so when a material portion of the value in the acquisition comes from intangible assets that might be most vulnerable to hackers. Financial information comes to mind. Personal information of employees does as well. But companies also need to be concerned about their trade secrets, know-how, and other confidential business information whose value inheres in its secrecy. Therefore, a merely perfunctory approach to cybersecurity can become very costly. The union of companies today is a union of information, malware and all.

Energy M&A Is Not Immune
To weather the plunge in prices, many oil companies have sought out new innovations to reduce the cost of extraction and exploration. Investments in digital technologies will likely only increase. A 2015 Microsoft and Accenture survey of oil and gas industry professionals found that “big data” and the industrial internet of things are targets for greater spending in the next 3 to 5 years. Cybersecurity threats were perceived in the survey as one of the top two barriers to realizing value from these technologies.

Rigzone | 16 November 2016

Column: Changing Passwords Frequently Ineffective Against Cyberattacks

With so many things on my mind these days, I hate having to remember all the passwords I have. Not only do I have to remember passwords for my work computer and home computer but also a myriad of other accounts ranging from my bank, credit cards, and public library accounts. Having to change passwords every 60 days on my work computer is a particular pain. Not only do I have to remember a new password, but I frequently have to change the password when I’m in the middle of something and don’t want to be bothered.

The conventional wisdom has been that computer passwords need to be long, complex, and changed frequently. This practice has been required to protect work computers to maintain security against cyberattacks.

However, this practice is ineffective, said Stuart Wagner, director if information technology security and compliance with Enterprise Products, at the American Petroleum Institute’s Oil and Gas Cybersecurity Conference last week in Houston. Wagner not only believes that the requirement for character composition in passwords should be nixed but also the frequency at which passwords are changed.

Wagner is not alone in this belief. He pointed to research conducted by the University of North Carolina and Carlton University that supports the idea. Even Microsoft has changed their advice on the subject, Wagner noted.

Oil & Gas iQ | 10 November 2016

Digital Trenches—On the Front Lines of the Cyber War

In 2016, the weapons of mass destruction that stock the arsenals of the world powers make the machinery that killed so many millions during World War I look tame. Yet weapons of physical destruction are not the only ones that menace peace in our times.

The 21st century has witnessed the exponential development of cyberwarfare as an existential threat to the modern civilization. And the parallels between the actions of the First World War a century ago and the Cyber War in 2016 are glaring.

This report looks at the current state of the industry and uncover some alarming results:

  • 39% of professionals are not confident their current defense mechanisms can handle/detect cyberthreats
  • 65% of those surveyed are not confident that their defense mechanisms can handle/detect state actors/advanced persistent threats
  • One in five oil and gas companies still do not have a network integrated diagnostic system, even after all of the serious incidents, from Stuxnet to Shamoon
  • 61% of organizations do not use digital forensics to interpret digital traces

Rigzone | 8 November 2016

The State of Cybersecurity in Today’s Oil, Gas Industry

The convergence of digital technology with existing supervisory control and data acquisition (SCADA) infrastructure has increased the oil and gas industry’s risk to cyberattacks, industry insiders say.

Oil and gas companies are lucrative targets for cyberattackers motivated to perform industrial espionage, steal intellectual property, or cause critical infrastructure disruptions, Todd O’Boyle, cofounder and chief technology officer of Percipient Networks, said. Attacks are typically part of an ongoing attempt by individuals and interest groups worldwide—in some cases, government agencies and nation-states—to disrupt the oil and gas market and damage the financial standing of these companies, said Jessica Cooper, lead marketing manager for Check Point Software.

The oil and gas industry not only faces cyberthreats that are commercial in nature but also cyberthreats from activists such as environmental groups. These threats, if successful, “could have severe threats not just on the industry but also on the environment, public health and safety, and even national security,” according to March 2016 report by The Boston Consulting Group.

The oil and gas industry’s value chain not only offers many potential points for entry of attack but also leaves the industry vulnerable to multiple types of attacks. The Boston Consulting Group found that upstream data was the most vulnerable to cyberattacks. This is due to data often being transmitted from old or unsecured equipment and without standard protocols or security precautions.

Reuters | 1 November 2016

Niger Delta Leaders Want Army Out and Oil Firms To Relocate to Region

Leaders from the Nigeria’s Niger Delta called on 1 November on President Muhammadu Buhari to pull the army out from the oil hub, order oil firms to move headquarters there, and spend more on development to end militancy in the region.

Buhari met leaders from the southern swampland for the first time since militants started a wave of attacks on oil pipelines in January to push for a greater share of oil revenues.

At the meeting in the presidential villa in Abuja, Niger Delta leaders, joined by representatives of militant groups, gave Buhari a list of 16 demands to pacify the impoverished region where many say they do not benefit from the oil wealth.

The list “includes the withdrawal of the military in oil producing communities in the region,” King Alfred Diete-Spiff, a Niger Delta leader leading the region’s delegation, said after the meeting, adding, “We don’t want the communities militarized.”

Buhari sent in army reinforcements in May to hunt down militants, a move that stoked anger as residents complained of rape, looting, and arrests of youths unrelated to the militants, charges denied by the military.

The delegation leader also said oil firms should move headquarters to the region so unemployed youths—who often work for militants—could get more jobs. Foreign firms active in Nigeria are often based in the commercial capital Lagos.

Rigzone | 26 October 2016

Industry Should Hire Hackers to Boost Cybersecurity

The oil and gas industry should hire hackers in order to boost cybersecurity, said Eric Knapp, chief engineer for cybersecurity solutions and technology at Honeywell Process Solutions.

The oil and gas industry should hire hackers in order to boost cybersecurity, said Eric Knapp, chief engineer for cybersecurity solutions and technology at Honeywell Process Solutions.

The oil and gas industry should hire hackers in order to boost cybersecurity, said Eric Knapp, chief engineer for cybersecurity solutions and technology at Honeywell Process Solutions.

Speaking at the EMEA HUG conference in The Hague, Knapp urged delegates to shed their negative perceptions of these people and offer them a place in the sector.

“We have to stop thinking of hackers as evil … . The truth is hackers are people. They have a curiosity, they have an interest, they have a skill, and a skill isn’t good or evil. A person isn’t good or evil. The circumstances you put them in dictate that,” Knapp said.

“If we hire them, and we put them on the good team, then they’re our heroes. If we don’t hire them, they’re going to find some other way to make money off of their skills … . If they’re on our team they help, if they’re on the other team, they hurt. They’re not going to just go away,” he added.

Knapp’s comments followed a stark warning from Laura Pilia of energy company SARAS and Jos Oelers of petrochemicals firm SABIC, made during the opening speech of the third day of the conference, which outlined a growing spate of cyberattacks in the industry.

Eighty-two percent of oil and gas industry respondents have reported an increase in successful cyberattacks over the past 12 months, Pilia and Oelers told conference participants. Looking at the influence of cyberattacks in the wider community, the conference leaders outlined that these occurrences cost businesses as much as USD 400 billion per year.

In a further warning to the sector, Honeywell’s Global Cyber Security Business Leader Jeff Zindel said that cyberattacks on oil and gas facilities are bound to increase over the next year.

“I think it will certainly increase,” Zindel said.

“The hacker community is increasingly focusing on industrial plants … . It’s a multibillion-dollar market that’s out there, and that’s growing, and we’re certainly seeing an increasing focus on critical infrastructure in industrial,” he added.

Rigzone | 14 September 2016

Directive Seeks To Coordinate Response to Oil, Gas Cyberattacks

A US presidential policy directive will treat companies targeted by cyberattackers as victims of a crime—and not automatically at fault—as the government looks to create an environment conducive to sharing information on cyberattacks, according to a former official with the US Federal Bureau of Investigation (FBI).

A new presidential directive aims to establish guidelines for a significant cyberattack against US companies, including oil and gas.

The Presidential Policy Directive 41 (PPD 41) on United States Cyber Incident Coordination, signed 26 July by President Obama and now in effect, establishes guidelines for how the US federal government will respond to cyberattacks launched against the public and private sectors.

This includes US companies across a number of industries, including oil and gas. The cybersecurity risks that oil and gas companies face continue to grow, according to the 2016 BDO report Oil & Gas Risk Factor. Risks associated with data breaches have grown from just 12% in 2012 to 74% in 2016, with cybersecurity proving to be a rapidly moving target as bad actors evolve and leverage increasingly sophisticated hacking methods, BDO stated in the report. BDO is an accounting and consulting firm that provides services to more than 400 publicly traded domestic and international clients.

“Cyberincidents are a fact of contemporary life, and significant cyberincidents are occurring with increasing frequency, impacting public and private infrastructure located in the United States and abroad,” the White House said in a 26 July press statement. “While the vast majority of cyberincidents can be handled through existing policies, certain cyberincidents that have more significant impacts on an entity, our national security, or the broader economy require a unique approach to response efforts,” the White House stated.

Rigzone | 6 September 2016

Dealing With Cyberthreats in the Middle East

Since the 2010 discovery of the Stuxnet worm targeted at industrial programmable logic controllers, the Middle East has been central to the increased profile of cybersecurity threats facing industrial enterprises worldwide.

While the threats have continued to evolve, the Middle East remains a key target for attackers. In early 2015, for example, cybersecurity firm Symantec identified a new information harvesting malware—dubbed “Trojan.Laziok”—targeting energy companies worldwide. The most frequent target for these attacks, according to Symentec, were the UAE (25%), Saudi Arabia and Kuwait (10%), and Oman and Qatar (5%).

With attacks increasing both in terms of numbers and sophistication, for most it is not a question of if they are attacked, but when. Whether from enemy states, terrorists, “hacktivists” criminals, or insiders, the risks facing oil and gas producers in the region are ever changing and ever growing.

A survey conducted for Honeywell by researchers Ipsos shows this message has been heard—more than two thirds (69%) in the UAE, for example, fear cyberhackers breaching the defenses of major sectors of the economy, and 64% say oil and gas producers are vulnerable to attack.