The energy business is crucial for Algeria. Oil and natural gas exports account for 60 percent of budget revenues and 30 percent of gross domestic product, and has long been a tempting target for those at odds with the government in Algiers.

French company Michelin evacuated the families of its employees after threats from the Algerian terrorist group al-Qaida in the Islamic Maghreb and after attacks on workers in September left two French nationals dead. The group, sometimes called AQIM, was renamed from the Salafist Group for Preaching and Combat -- often referred to as the GSPC after its initials in French -- after pledging its allegiance to international al-Qaida leader Osama Bin Laden last year. And in December of last year the group attacked a van carrying workers for a U.S.-Algerian joint venture involving a subsidiary of American engineering and construction heavyweight Kellogg, Brown and Root.

The recent targeting of French companies appears to be part of a larger policy by al-Qaida to attack French interests within France and abroad. The French counterintelligence chief warned earlier this week that France is facing attacks from al-Qaida on the same level as those by Islamists in 1995, which included several bombings in Paris.

Although the recent attacks have been aimed at foreign companies, Algeria's energy sector will likely remain healthy, according to Geoff Porter, a Middle East and Africa analyst with the global risk consulting firm Eurasia Group.

"Despite AQIM's targeting of foreigners, Algeria's energy sector is not likely to be severely impacted. In the face of Algeria's deteriorating security situation, oil and gas firms will likely revert to the rigorous security protocols they had in place during the 1990s," Porter said.

"The Bouteflika administration and the military are especially keen to protect Algeria's golden goose and will ensure that key oil and gas zones are well guarded," according to Porter.

Algerian security forces have been working hard to ensure that security.

The deputy chief and leading bomb-maker of AQIM, Hareg Zoheir, was killed at a security checkpoint, and in a separate incident this week 22 members of AQIM were killed by government troops, according to reports from the region. Meanwhile, the founder of GSPC, Hassan Hattab, surrendered in late September, according to reports by the Algerian government. He has been critical of the group's shift toward al-Qaida.

Violence engulfed Algeria beginning in 1992 when the sitting government refused to recognize an election that would have brought Islamist parties to power. More than 150,000 people were killed in fighting between Islamist groups -- including the GSPC -- and the government throughout the 1990s. A government amnesty in 1997 and the election of President Abdelaziz Bouteflika in 2004 brought some stability to the country, although the remnants of the civil war's opposition Islamist groups still attack government and business targets.

Aside from increasing security at oil and gas facilities, foreign firms have the option of simply isolating themselves.

"The development of Hassi Messaoud as a 'full service' energy hub over the last decade means foreign energy companies can minimize their profiles in Algiers and shift the brunt of their activities to London and Hassi Messaoud itself. Unlike oil and gas producing regions in Nigeria or Iraq, Algeria's key gas and oil fields are far from major population centers," according to Porter. Hassi Messaoud is an isolated town in northeastern Algeria, home to refineries and a pipeline hub. Direct flights connect the town to London.

With 12.3 billion barrels of oil, Algeria holds the third-largest oil reserves in Africa, after Libya and Nigeria, according to the Energy Information Administration, the data arm of the U.S. Energy Department.

Algeria exports 1.8 million barrels of oil every day, about a third of that to the United States in 2006, according to the EIA. That same year about 37 percent of its oil exports went to Europe.

Natural gas exports follow a similar trend. Algeria is the world's eighth-largest producer of natural gas and holds Africa's second-largest proven reserves, currently about 161.7 trillion cubic feet. Most of its exports go to Europe, while the United States, for its part, imports about 100 billion cubic feet of liquid natural gas every year. According to the EIA, this was 15 percent of U.S. LNG imports in 2005.

Algerian state-run petroleum company Sonatrach has a dominant presence in the country's energy business, but since 2005 the government has been encouraging foreign companies to operate there, including French energy company Total, as well as Royal Dutch Shell, BP, BHP Billiton, Statoil and Rosneft.

Algeria gained independence from French colonial rule in 1962 but has maintained close connections with the country. And French interest in Algeria as an energy partner is not limited to oil and natural gas. President Nicolas Sarkozy has said Paris in interested in selling Algeria nuclear technology.

(e-mail: energy@upi.com)

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