Petrol smuggling: oiling the wheels of organized crime

Originally Published by the Global Initiative Against Transnational Organized Crime, Available Here.

As night falls the petrol smugglers on the Algerian-Moroccan border get to work. Moroccan villages that are languid by day now buzz with activity, as old Peugeots and Renaults roar down the dusty access roads that parallel the frontier. Closer to the border, long lines of donkeys—each loaded with twenty 30-liter jerry cans—are arriving from Algeria. The commerce is brisk, with petrol exchanged for food, goods, and cash. For those willing to risk crossing the border, the profits are enormous. By morning, the border is again dusty and deserted, as the smugglers wait for the darkness of night to reengage in their lucrative trade.

The theft and illicit sale of petrol is widespread.  Worldwide, organized crime syndicates and petty traders profit off the differences in the price of petroleum, buying petrol where it is cheap—or stealing it—and selling it slightly below market rates in areas where it is more expensive. There is no shortage of customers. Apart from its profitability, petrol smuggling is attractive to organized crime groups due to the ease with which they can procure the product. For most smugglers, their petrol comes straight from the pump at a local service station.  For some the product is procured directly from wholesalers, while in other places —notably Nigeria and Mexico—the petrol is stolen in bulk from pipelines. The sale of the petrol is as easy, either sold at the roadside, or fenced through unscrupulous service station owners. While smuggled petrol usually stays within the region it has been pilfered from, stolen crude oil can go global, fed into refineries half a world away.

Those involved in petrol smuggling are a diverse and divergent lot. The most numerous are local crime networks. These men—and occasionally women—tend to operate in defined areas along international borders, buying and selling in local markets. While these groups are typically small and locally situated, they can have a complex internal organization. As one smuggler along the Tunisian-Algerian border explained “a bunch of different groups function within our network – the buyers, the loaders, the drivers, and the leaders.” The barriers to entry are low, with the same smuggling noting that the major hurdle for him was coming up with enough capital to buy a truck to smuggle with. While some within the local smuggling networks get wealthy off the trade, for most it offers a comfortable though hardly extravagant livelihood.

At the other end of the scale, there are also highly organized, transnational networks active in petrol smuggling. Many of these groups started as local smugglers and evolved—through opportunity or necessity—into highly organized, large-volume smuggling networks. Nigeria’s smuggling networks offer a stark example of just how powerful, large, and sophisticated smuggling networks can become. Operating in the country’s Niger Delta, the smuggling networks reportedly siphon 150,000 barrels a day from the region’s pipelines. The vast majority of the oil—roughly 120,000 barrels—is exported, transported throughout West Africa and onto the international market. In some cases, the networks employ oil tankers to move their ill-gotten gains.

A third type of actor involved in petrol smuggling involves existent transnational organized crime group looking for new opportunities. For these groups, petrol smuggling is usually not their primary illicit business. Rather, it represents an opportunistic expansion by the group into a new business area that presents minimal risk and high-profits. In Mexico, the Zetas and other Drug Trafficking Organization are expanding rapidly into petrol theft and smuggling. In an interesting derivation, the Zetas reportedly both smuggle petrol and levy taxes on any small-scale smugglers seeking to work in areas they control.

Governments and industry are aware that they face a challenge. A number of oil producing countries have begun to combat petrol smuggling. However, in many locations where smuggling is rife there is more official noise than action—petrol smuggling is rarely perceived as existentially threatening to the state, in the same way that drug and arms trafficking may be. Frequently, government officials themselves are believed to be either involved or complicit in the trade. Nonetheless, petrol trafficking can have serious ramifications for those states that it touches. One need look no further than Syria and Iraq, where oil smuggling have helped to bankroll the operations of the Islamic State militant group. As the price of oil edges of up inexorably over the coming decades, it is likely that petrol smuggling will become more profligate and more profitable for the groups involved. International actors need to act soon, creating new forums to coordinate actions against such groups and mechanisms for identify and deterring their operations in order to mitigate the threats they pose.