– Blogs

Countering global oil theft: responses and solutions

Mar 30, 2022

Oil & Gas Industry

By Etienne Romsom

This is the second of two papers delivered to UNU WIDER to address the global issue of global oil theft. This paper evaluates recent trends and commonalities of oil theft, describes potential actions and solutions to prevent oil theft, and mitigations against its consequences.

This second of two papers on global oil theft discusses ways to reduce oil theft, misappropriation, and fraud. At US$133 billion per year, oil is the largest stolen natural resource globally, while fuel is the most smuggled natural resource. Oil theft equates to 5–7 per cent of the global market for crude oil and petroleum fuels. It is so engrained in the energy supply chain that thefts are priced in by traders and tolerated by many shipping companies as petty theft.

Oil theft and related insecurity have substantial negative economic effects on developing countries, whether they produce oil or not. In 2012, non-oil-producing Benin saw a 28 per cent drop in taxable income after a spate of oil tanker hijacking incidents in the Gulf of Guinea in 2011. In Nigeria, the oil capacity shut-in and amount of oil deferred is more than twice the amount estimated as stolen, with a US$20 billion annual loss in petroleum profit tax—63 per cent of total government tax revenue in 2019.

Organized oil crime syndicates are often transnational and conduct theft and fraud professionally, exploiting gaps in jurisdiction and adapting their practices when law enforcement becomes more effective. They evolve from ship piracy to stealing tanker cargoes to kidnapping tanker crews; from physical ransom of assets to digital hijacking via ransomware. The proceeds of oil theft often finance other organized crime, and it triggers violence against the community and in crime-on-crime activities.

Twelve commonalities in oil theft and fraud have been identified that can direct international solutions, in three target areas: stolen oil volumes, stolen oil transport, and stolen oil money. Prosecution for acts of bribery offers opportunities for action: transport of or payment for illegal oil could constitute a bribe under the US Foreign Corrupt Practice Act if government officials were involved in the transaction or shipment. Bribe charges could be raised for paid ‘services’ that facilitate oil theft (through action or non-action).

 

The full paper can be accessed and downloaded at:

https://www.wider.unu.edu/publication/countering-global-oil-theft-responses-and-solutions# 

Share this article

Read Other Blogs

Opportunities to reduce methane emissions from oil and gas operations

Feb 29, 2024 • Oil & Gas Industry

  EnergyCC is working to reduce wasted gas emissions from oil and gas operations. It participated actively in COP26, COP27 and COP28 in collaboration with UNU-WIDER, to support the Global Methane Pledge. An overview of deliverables from publications, projects and events.   Context EnergyCC is

Read More
Global oil theft: impact and policy responses

Feb 21, 2022 • Oil & Gas Industry

This is the first of two papers delivered to UNU WIDER to address the global issue of global oil theft. This paper evaluates the impact of oil theft and describes why the international community should take a stronger stance against oil theft.

Read More
A Practical Proposal on Methane for 2022: From Climate Pledges to Action

Feb 15, 2022 • Policy

Generating swift action on climate change in 2022 faces great challenges, yet one initiative—methane reduction in the energy sector—provides an unusual and attractive opportunity. It combines significant contributions to the global public good of emissions reduction with significant benefits to the local public good in many developing countries. Moreover, action to realize these benefits can be taken quickly. 

Read More