News Stream - Is your fuel at risk?
Should you be worried about manipulation of fuel in downstream oil and gas?
Fuel manipulation: a headline issue
With pipelines in Mexico haemorrhaging fuel at an unprecedented rate, dozens of retail outlets are suffering with fuel shortages. This is the state of fuel manipulation in the country – midstream tapping and serious organised crime putting a major stopper on the flow of product. With over 10,000 taps located in the year to August, the government is now deploying militia to remote areas prone to manipulation.
This is the image we all hold in our heads: fuel theft in the remotest of countryside, links to the cartel, and the deliberate theft of huge volumes of fuel from rusty pipelines. The reality for most companies is very different, however – especially in the downstream oil and gas industry.
Downstream fuel manipulation: not my problem
Following our recent survey conducted in partnership with Authentix, we found that from a sample of downstream oil and gas professionals working across every continent, 80 per cent felt their companies needed to improve the integrity of their supply chain – particularly with regards to fuel in transit. The reality for many of these companies is that haulers, terminals, and retail sites all struggle to account for issues with their fuel – with the vast majority unable to verify claims against them. Being referred from one person to the next, and having no consistent method of recording issues are just two such examples.
You might be interested in Authentix and downstream fuel manipulation.
So, is this your problem? In short, yes. Only one in four of our respondents were confident that they had the required data to assure the integrity of their supply chain against issues of adulteration. Even more unbelievably, less than a third are using digital solution analysis, and only 16 per cent are regularly testing for fuel markers. There is both a lack of data, and a lack of serious commitment to testing and assuring fuel integrity in the downstream.
Opportunists and dilution
Not every incidence of fuel manipulation is the result of high-level organised crime. Often, particularly in countries in Western Europe and North America, there are just so many people in the supply chain (or supply web) who see an opportunity to make a quick buck – be it a hauler with the remnants of a load selling to a retailer who doesn’t ask too many questions, or a gas station owner facing a shortage of premium who dilutes his fuel to meet demand. From Edmonton, Alberta to Nakuru, Kenya – fuel adulteration, theft, and dilution is on the rise, to the tune of $133bn of fuels stolen or adulterated every year.
Data availability, industry confidence, and digital solution uptake are also on the rise – but according to our data, at a rate far slower than required.
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This year in Nigeria, a fuel scarcity led to a spike in the sales of adulterated product – a massive issue compounded by a lack of information and an escalating blame-game between distributors, government, and retailers. Valiant attempts to blacklist retailers known to be selling adulterated fuel are short-term fixes to a global issue – and fail to acknowledge the need for a proactive and agile approach to dealing with ever-changing methods of disruption.
Downstream oil and gas is a consumer-facing business with an economic model based heavily on margins. The success of a downstream O&G business can be very easily affected by changes to oil prices, and should be therefore protected from additional disruptions as a matter of highest priority.
Digital solutions, marking, and tracking are all methods of ensuring fuel gets to its destination in the condition in which it left the terminal. We are expecting the use of such technologies to increase in the coming years, and the number of companies using solutions such as those offered by firms like Authentix to grow exponentially.
Find out more in this week’s News Stream video, and our exclusive report.