Oil Pipeline Supply Chain Breached by Major Theft in Africa, India

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--"Supply chain" as a term, has a dry, objective ring to it and covers a multitude of industries. Major pipelines crossing rough terrain, coal and gas being shipped to power stations on a continuous schedule, and auto parts being delivered "just-in-time" to the manufacturer are all part of their particular sector "supply chains."

Security along these chains is generally high and, to a large measure, discreet. So unless you make a living along a specific chain, you are not aware of the range of threats that they are constantly under.

Reports of the organized pillaging of crude oil in the Niger Delta of Nigeria, which is Africa's largest oil producer, reveal an "industry" that is reported to skim off 7.5% of the country's daily oil production. It is having a very negative impact on the industry's development and on government revenues. The "Wild West" conditions in the region are well known, and are believed to condoned and patronized by people in government and in the oil industry.

Oil theft just reported in India has more of a "privateer" flavor, but still measures the illicit benefits to the thief in tanker-loads on a regular basis.

Ramesh Yadav, known in India as a "history-sheeter"(someone with a long criminal record) has been accused of stealing about $1.2 million worth of crude oil over the last three years. His area of operation was the network of Oil and Natural Gas Corporation (BSE:500312) (ONGC) (Dehadrun, India) pipelines in Gujarat, Rajasthan and Uttar Pradesh.

Out on bail after being arrested for oil pilfering, he went straight back to his chosen trade. Joint commissioner of police A.K. Sharma told The Times of India: "Yadav used to earlier work at ONGC as a security guard. This stint helped him to know the pipeline network and location. He used this knowledge for illegal means after resigning from his job."

Yadav told the police about the three-year period when he punctured an underground pipeline running near Shertha village in Mathura district of Uttar Pradesh. In the space of one month, he had stolen 50 tankers of crude oil. In the same district, he had punctured another pipeline and had drawn 20 tankers of oil. In another Rajasthan district, he filled 14 tankers in eight days.

The end began when police arrived at one of his pilferage sites and he made an escape. Another operation went wrong and when a tanker burst due to excessive oil pressure and he escaped again.

Yadav claims to have stolen 2.3 million liters of crude oil worth about $1.2 million, but he says he sold the oil at a "subsidized" rate of 12 Rupees per liter, when the market rate was 30 per liter.

Maybe the "Robbing Hood" of the Indian oil industry will be offered a security job, again, by ONGC when he gets out. Stranger things happen everyday.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.