What you need to know:
Hijackings, siphonings, adulterations, and diversions are all possible
I’m worried that these bad habits will find their way into Kenya and turn our black gold into a black curse.
It’s almost guaranteed that there will be attempts to steal the crude oil.
- Crude oil is even more valuable than fuel. Crude oil can be transported and sold in the international markets.
Last Thursday, Kenya joined the league of Africa oil exporters after its first consignment of 200,000 barrels fetched $12 million.
If everything goes as hoped, Kenya will become a major oil producer earning billions of dollars from the “black gold”.
This windfall will then be used to fuel the country’s rise into developed nation status. The money will be used to not only make capital investments in such areas as infrastructure, healthcare, manufacturing and education, but will also be invested through the Sovereign Wealth Fund to provide for the welfare of current and future generations. That’s the hope. While hope is nice to have, reality remains an undefeated champion.
What is likely to happen was demonstrated to the nation just two days before the oil was sold. On Tuesday, staff at the National Assembly were shocked to find that a diplomatic package full of gifts from China was empty. The goods had been stolen by unknown individuals though the container was closed and its seals were intact.
It is not known who diverted the goods. It may be highway robbers or a forward-looking state agency trying to prevent devices with potential back doors from being connected to government IT networks. Or maybe even China’s geopolitical rivals afraid that their own ongoing snooping will be detected by the Chinese with these computers. It is a classic whodunit. The term of art for such an operation is “supply chain interdiction”.
Whoever it is, we have to wonder whether our oil is safe from them. If unknown people can steal the contents of a diplomatic package without breaking the seal and without being detected, then how hard would it be to steal oil being transported on slow noisy trucks across hundreds of miles of remote roads?
THE OPEC BOYS
This is not an idle question. Hijackings, siphonings, adulterations, and diversions are all possible. Throughout the world, the greatest risk to crude oil is not merely that corrupt politicians will steal the oil revenues. It is that the crude oil itself will be stolen long before it even gets to its destination.
Nigeria, for instance, loses about 150,000 barrels of crude oil every day through such interdictions. Out of this, 120,000 barrels are shipped daily to the international markets by ghost ships lurking around that country’s littoral waters. In Mexico, the theft of crude oil is so rampant that it has been reported as happening even in the drilling rigs themselves. Cartels such as the Los Zetas, which is composed of former Mexican Special Forces go to the extent of licensing crude oil theft franchises to other criminals. In Syria and Iraq, Isis has waged a brutal war financed by stolen crude oil. In Uganda, a shadowy criminal organisation known as “The Opec Boys” runs an oil theft ring across borders.
I’m worried that these bad habits will find their way into Kenya and turn our black gold into a black curse. It’s almost guaranteed that there will be attempts to steal the crude oil. We already know that pipelines transporting fuel to Nairobi are regularly tampered with and their contents siphoned. Crude oil is even more valuable than fuel. Because while fuel is mostly consumed near where it is stolen, crude oil can be transported and sold in the international markets.
Kenya must implement mechanisms to protect the physical oil as well as its revenues.
Other countries have attempted to solve this challenge by a variety of methods.
Nigeria and Mexico through violence, which has failed. Algeria has dug border trenches to try and stop Moroccan smugglers, which has failed.
Egypt, due to its location in a challenging neighbourhood, has securocrats in the General Intelligence Directorate running the energy industry. The Egyptian Company for Investment Projects (Ecip), which owns energy companies in Egypt, is widely known as a front for the GID.
In Kenya, the President can first ensure that state officers involved in crude oil are vetted and cleared by the various agencies at his disposal. That they do not have a whiff of scandal around them and that the oil supply chain is secured by all means necessary. He can’t delude himself into complacency. As the saying goes, the captain can deceive himself and his crew, but he cannot deceive the rocks that lie in his way.
Mr Kuria specialises in anti-financial crime. [email protected]