Oil Theft Grows More Sophisticated
Friday, February 27th, 2009A very interesting piece on oil bunkering by my colleague Benoit Faucon:
LAGOS, Nigeria (Dow Jones) - Saboteurs are driving oil industry jobs out of the Niger Delta but some of the criminals are on a hiring spree of their own. While oil thieves have long tapped Nigeria pipelines, their operations are becoming increasingly sophisticated and profitable, imposing heavy losses on oil majors and the government.
The Nigerian government estimates the amount of oil stolen countrywide is as much as 100,000 barrels a day - worth about $1.5 billion a year at current prices. Oil theft has contributed to a cycle of violence and disruption that has led to shrinking job opportunities. Last year, Royal Dutch Shell PLC (RDSA), Nigeria’s largest oil producer, cut 1,300 jobs. But some Shell managers have received offers to join what locals call “illegal refineries,” cement shacks where petroleum goes through a raw distillation process in metal drums.
One young chemical engineer, speaking on condition of anonymity, was hired at an illegal plant owned by local gunmen and fed by petroleum stolen from a Shell plant. He had been made redundant from a foreign oil-services firm after a wave of unrest.
His career shift underscores the increasing size and ingenuity of petroleum theft - known locally as “bunkering” - which can have far-reaching consequences for global energy supplies.
Originally focused on stealing from pipelines, “bunkering” has developed an integrated supply chain where petroleum can be stolen straight from the wellhead, distilled and sold at gas stations.
Here’s a