UPDATE 2-Statoil CEO says won't resign over Algeria attack probe
* 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 said he would not resign after an internal investigation by the oil major found management had failed to foresee and prepare for a deadly attack at an Algerian gas plant in January despite multiple warning signs.
Some 40 employees were killed when Islamist militants raided the gas plant deep inside the Sahara desert, near the Libyan border, taking foreign workers hostage in a four-day siege that ended 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 such unprecedented scale.
However, the Statoil report revealed that the plant had been going through an internal crisis: workers were on strike from mid-2012 until just days before the assault, and had threatened expatriate employees.
"Although unforeseen and unprecedented, an attack on In Amenas should not have been entirely inconceivable," the report said in a section titled "Failure of Imagination".
"Despite the turmoil in the region, the In Amenas joint venture operated on an unchanged threat level from February 2012 until the attack," the report said.
Statoil Chief Executive Helge Lund acknowledged the report and said he did not plan to resign. Chairman Svein Rennemo said the board had full confidence in Statoil's management.
However, the 78-page report concluded: "Security is generally not well understood within Statoil's leadership ranks, and as a result has not been prioritised, resourced or managed properly."
The crisis was especially worrying in the context of neighbouring Libya, which has become "a large ungoverned space" and Mali - which had "developed into a safe haven for jihaddists and terrorists".
Algeria's oil industry relies heavily on foreign investment and needs billions to revive stalled growth and keep supplying Europe with oil and gas.
BP and Statoil have yet to send back their expatriate workers. Algeria has not done enough to remove their concerns about security, they say.
"There has not been any high-level strategic security dialogue 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 divided into an internal layer, for which the joint venture was responsible, and an external one, guaranteed by the army.
Complicating the situation, security inside the facility was provided by an external contractor, and then some responsibility was transferred to the security unit of Algeria's state energy firm Sonatrach.
"In effect it meant that there were two parallel security organisations operating at the site, not always with a high degree of mutual respect, trust and collaboration," the report said.
Against this background, it would hardly be surprising if the attackers had benefited from some inside knowledge, the report concluded.
Finally, internal security had limited exchange of information with the army and relied too heavily on local authorities for protection, the investigation concluded.
"Neither Statoil nor the joint venture could have prevented the attack but there is reason to question the extent of their reliance on Algerian military protection," it said.
The plant usually employs around 700 people, mostly Algerians, and at the time of the siege BP had about 20 people on site while Statoil had 17. There were also dozens of foreign subcontractors on the site.
Responding to the report, BP said agreement on further security measures was still needed before its people could return.
"Because of the nature of the incident and the fact that the response was an Algerian military operation, there are many questions arising which BP is not in a position to answer, including how the terrorists were able to breach the military zone to attack the plant," the British oil major said.
Officials in Algiers could not immediately be reached for comment. One industry official close to the talks with the energy firms said a return of expatriate workers was close, but there were outstanding matters to resolve.
Algerian officials have in the past said they have met all security demands made by the companies.
The facility, operated by BP, Statoil and Sonatrach, was producing about 9 billion cubic metres of gas per year, some 11.5 percent of Algeria's total, but it continues to run below capacity as it sustained major damage in the attack.