Oil firms confront theft from pipelines

With a pipeline network of over 11,500 km, IOCL has been impacted the most from such pilferage


Indian Oil Corporation Ltd reported 59 cases of oil pilferage in 2014 and 42 in 2013. Photo: Reuters
Indian Oil Corporation Ltd reported 59 cases of oil pilferage in 2014 and 42 in 2013. Photo: Reuters

Mumbai: It was 12:30 in the afternoon when a guard patrolling an Indian Oil Corporation Ltd (IOCL) oil pipeline at Bailara village in Rajasthan noticed something strange. It was an unusual soil settlement at a location through which the pipeline runs and informed the in-charge of Bharatpur Pipeline Terminal.

“Our officials visited the site to find a contraption arrangement welded on the pipeline to draw crude derivatives from it,” a senior IOCL official says. The pipe welded on the mainline was connected through a tunnel to a factory 50 meters away.

The police were informed and a first information report was registered against the factory owner and owners of the land through which the tunnel passed. “We carried out repairs and rehabilitation works of pipeline in two days spending around Rs.700,000,” the IOCL official says.

This was one of the nearly 50-odd instances of oil theft that IOCL alone reported last year. India’s biggest refining company with the largest network of crude oil and product pipelines reported 59 such cases in 2014 and 42 in 2013.

IOCL’s pipeline network is spread all across the country and passes through various types of terrains like forest land, marshy areas, towns and villages.

With a pipeline network of over 11,500 km, IOCL has been impacted the most from such pilferage. Its pipelines transport petroleum product, crude oil and gas. Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL), two other oil marketing companies, also report cases of oil pilferage but they are a fraction of IOCL’s due to their smaller pipeline network.

“Since the year 2000 incidents of pilferage has significantly grown in numbers. In the last three years pilferage in IOCL pipelines are 143. Except Southern Region, in other regions of the pipeline networks are affected,” said an IOCL spokesperson in an email.

IOCL, BPCL and HPCL have together lost crude oil and finished products worth Rs.350-400 crore in the last decade. They lose products worth nearly Rs.2-3 crore every quarter. But the financial loss is not something that worries these companies.

“Crude oil or product theft is a big menace. People involved in this job do not realise that they cause oil leakage which could result in fire leading to loss of lives and property,” said the director, pipelines, of one of the oil marketing companies who did not wish to be identified as he is not allowed to speak to the media.

He explained that crude oil stolen through the pipelines is used in local factory furnaces which is dangerous for these factories as they don’t have the means to process crude oil. The stolen crude oil also makes its way to illegal refineries or brick kilns or steel re-rolling mills operating at different locations.

Products like petrol or diesel stolen from these pipelines are mostly sold to various fuel retailers who sell it through their retail outlets.

“Even a few litres stolen and mixed in the main petrol or diesel tank at retail outlets can make much difference to the total stored capacity at the retail outlets but many fuel retailers are hand-in-glove with the thieves,” added an ex-director of pipelines at an oil marketing company.

Fuel is also stolen from oil tankers which come in three capacities: 12,000 litres, 20,000 litres and 24000 litres.

An HPCL official said the company has only a 3000-km pipeline network and thus suffers no more than 10 cases of pilferage in any given year. “Our network is fairly small so we do not face as many pilferage cases,” said a senior official from HPCL’s pipeline division.

This April BPCL reported smuggling of 10,000 litres of base oil in nine months from its supply system at Sewri, Mumbai. Base oil is used to manufacture greases, motor oil and metal processing fluids.

OMCs say though they are relying on technology to check pilferage, there is much ground to be covered. “We have deployed a number of pipeline surveillance teams both during the day and night. Additionally, surprise checks are done by IOCL officials. Movement of Line Patrolmen is monitored through Global Positioning System (GPS) enabled devices,” IOCL said.

Apart from this, IOCL regularly conducts village awareness programmes, along the pipeline to sensitize villagers. Toll free numbers have been provided to enable villagers to inform any abnormality on the pipeline.

IOCL is also in discussions to deploy low range (around 4 km) Unmanned Aerial Vehicle or drones for surveillance of pipeline Right-of-Way in one pipeline on trial basis. IOCL said in the last three years, 270 persons have been arrested for stealing oil and products, leading to some convictions.

“As a part of technological intervention, monitoring of pressure and flow parameters are done continuously from nearby control rooms, unmanned facilities along the pipeline are monitored through Close Circuit Television (CCTV) based surveillance system,” the IOCL spokesperson said.

An analyst with a rating agency said because loss of fuel through such pilferage accounts for a very minor percentage of their entire oil refining capacity, the area is not one which is studied much.

IOCL said the company is also introducing optic fibre based third party intrusion detection system at its pipelines. Discussions are also on for surveillance of pipeline installation using Hawk Eye micro Aerostat, IOCL said.

“Above measures have helped in checking the menace of pilferage and during the last couple of months the number of pilferage cases has shown a decreasing trend,” said IOCL.

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