Transneft Fights 27,000-Ton Oil Theft as Violence Surges

[phantom power]

Sept. 2 (Bloomberg) -- OAO Transneft, operator of the world’s largest pipeline network, is struggling to combat oil theft in Russia’s Caucasus as attacks on police strain security and federal funds fail to lift the region out of poverty.

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State-run Transneft, building pipes to supply Europe and China, needs to show it can enforce security as Russia attempts to regain control of a region rocked by war and terror. Assaults on police in the republic, where inter-clan tensions have grown since the collapse of the Soviet Union in 1991, have surged in the past month and now occur almost daily.

“It will be impossible for Transneft to eliminate the problem,” said Chris Weafer, chief strategist at UralSib Financial Corp., who has followed the Russian market from Moscow for 11 years. “There’s something of a Robin Hood element to the theft. People feel they are being short-changed by Moscow and so are taking their share directly.”

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Thieves tap the pipeline by drilling a hole and filling oil drums they transport by car or truck. Investigating sites can be difficult because at times there are no roads or the pipe goes through farms or private land. Transneft’s security has found “hot taps” in the pipe where it runs under houses and offices.

“Someone with a car needs only about half an hour to take 2 tons of oil,” Nasirov said in an interview in Kaspiysk.

http://www.bloomberg.com/apps/news?pid=20601072&sid=aUx_l6Cs6M48