New system hoped to stem oil smuggling

New system hoped to stem oil smuggling

Leony Aurora, The Jakarta Post, Balikpapan

As the crude oil theft in Lawe Lawe unfolds, state oil and gas
firm PT Pertamina is set to improve its oil monitoring by
installing a real-time online system of automated tank gauges
(ATGs).

Balikpapan will accommodate the pilot project for the system,
which will involve 23 ATGs in the initial phase, general manager
of Pertamina's processing unit V Syahrul Arifin said in
Balikpapan, East Kalimantan, on Sunday.

Seven of the meterings will be installed in Lawe Lawe, he
said.

"We hope to have these gauges calibrated by the Ministry of
Industry and in place within two months," said Syahrul.

Pertamina's head of public and government relations Djauhari
Kunsetianto said that even if the agency could not calibrate the
gauges, they would be used to compare the records of manual
metering -- the standard operation used currently to determine
the amounts of crude coming in and out.

Many of the ATGs already installed in Lawe Lawe were not
working properly and could not be monitored in the storage
facility's control center on Sunday.

At present, Pertamina officials check the gauges every morning
at 6 a.m. and report the amounts by phone to Balikpapan. With the
new system, officials will be able to check the amounts of crude
or products anytime.

"If (the system) works, we will expand it to the other
refineries and storages," said Djauhari.

Pertamina expects to spend up to Rp 5 billion (US$500,000) to
lease the system for five years.

All eyes are on Pertamina as a major ring of oil theft was
discovered two weeks ago.

In Lawe Lawe, the storage facilities are connected to tankers
by pipelines, which run seven kilometers onshore and 10
kilometers underwater.

Tankers have to use floating hoses to connect with a single
point mooring, which channels oil through subsea hoses to the
pipelines.

Although the modus operandi of the suspects remains hazy, the
company believes that the proprietors tampered with the oil,
keeping the shortfall no higher than the tolerable difference of
0.5 percent -- for evaporation and different metering methods
used -- between the amount of oil stated by sellers and that
entering the storages.

The proprietors may have recorded slightly-less than the
actual amount on paper, but still kept the shortfall at below 0.5
percent. After a period, the oil was stolen during the flushing
process, which is conducted with light crude after the loading of
heavy crude, by pumping the light crude into small vessels
instead of letting it pass back to the storage.

The suspects in the Lawe Lawe smuggling admitted to having
conducted the illegal activity five times, stealing between
12,000 barrels and 13,000 barrels at a time.

Syahrul said that Pertamina was considering lowering the
tolerable loss to 0.3 percent.

"We are studying the proper tolerable loss based on our
statistics," he said, arguing that the figure was determined in
the 1980s.

"Gauging systems were different back then," he added.

The implementation of such a policy, however, may prove to be
difficult as it will require the consent of sellers, as well as
of international oil organizations.