DOWNSTREAM OIL THEFT

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Downstream Oil Theft: Global Modalities, Trends, and Remedies creditors including SOCAR Trading—the trading arm of Azerbaijan’s state-owned oil company—are sustaining losses from the ongoing closure of the refinery. SOCAR reported a $9 million loss in July 2016 relative to January through July of 2015. 212 As of June, the court gave Amoudi another six months to find a buyer to rehabilitate the refinery, but so far, there do not seem to be signs of success. 213 Facts and Figures on SAMIR’s Refinery Location: Casablanca, Morocco Website: http://www.samir.ma/ Established: 1959 Capacity: 8.25 million tons/annum & 220,000 billion bpd Products: 50 Parts per Million Diesel; Unleaded Gasoline; Jet A1; Fuel Oil; Propane; Butane; Base Oil; Bitumen (see figure 1 for breakdown). According to its website: SAMIR has storage facilities of nearly 280 tanks, with a total capacity of 2 million m 3 of crude oil, intermediate and refined products distributed in three sites: • Main site (refinery): 1.51 million m 3 • Mohammedia terminal: 309,000 m 3 • Sidi Kacem site: 180,000 m 3 SAMIR storage facility is connected to a pipeline network between the petrol terminal, the truck loading installations bays, the ONE power station in Mohammedia and the distributors’ various storage depots. Storage tanks are equipped with metering systems and gauging systems that enable optimal management of different movements (internal and external to the refinery) of petroleum products. 214 Oil and Gas Imports Morocco may be Africa’s fifth-largest consumer of oil, but it is extremely difficult to obtain clear data on the breakdown of products or their quantities. Despite its stability and reputation for good governance, Morocco is incredibly opaque with regard to its oil and gas sector, and even more so now that the SAMIR refinery has shut. Statistics provided by the Massachusetts Institute of Technology indicate that, in 2014, 8.1 percent of imports consisted of refined petroleum, 4.9 percent of LPG, and 6.5 percent of 212 “SOCAR Oil Production Drops 9 Percent in 7m; Gas Down 7.2,” Azerbaijan News Network, August 11, 2016, http://ann. az/en/socar-oil-production-drops-9-in-7m-gas-down-72/#. V7fKqpMrK1s. 213 “Moroccan Court Gives Oil Refiner Samir More Time to Restart Production,” Reuters Africa, June 21, 2016, http://af.reuters. com/article/investingNews/idAFKCN0Z71U2. 214 “Storage,” SAMIR, http://www.samir.ma/en/index. php?option=com_content&view=article&id=101&Itemid=229. Figure 1. Breakdown of Products Previously Produced at SAMIR JET A1 (10,29%) GPL (1,79%) Bitume (3,32%) HB (1,16%) SUPER (7,13%) FO (35,47%) Source: www.samir.ma Gasoil (39,72%) crude petroleum; the Moroccan Office des Changes put 2015 hydrocarbons imports as 57.9 percent refined petroleum, 23 percent LPG, and 19.1 percent crude oil—numbers that, once more, precede the shutdown of SAMIR. 215 Focusing exclusively on the legitimate market, it is possible to garner some information from trading partners. On the gas side, according to Trade Arabia: Morocco produces just 0.06 [billion cubic meters per annum (bcma)], and recent exploration efforts have been disappointing, yielding no significant discoveries from the 10 wells drilled since 2013. But the kingdom has been active in reforming its energy sector and in 2015 phased out all energy subsidies apart from those for LPG. In total, energy subsidies now account for 2 per cent of GDP compared with 7 per cent in 2012. Morocco currently imports 0.6bcma of pipeline gas from Algeria to feed its power plants but the construction of a 2.4 [gigawatt] combined-cycle plant in Rabat will require imports of 3.5bcma of [liquefied natural gas (LNG)]. Moroccan utility ONEE has issued a tender for the construction of a regasification terminal as part of its LNGto-power project. It has also issued tenders for the import of 2.7bcm in 2020 rising to 5bcma by 2023. Morocco’s reliance on renewables in the power sector makes its future LNG demand difficult to forecast and ONEE plans to purchase 20 per cent of its requirements on the spot market. 216 215 “Morocco,” The Observatory of Economic Complexity, Massachusetts Institute of Technology, 2016, http://atlas.media. mit.edu/en/profile/country/mar/; “Office des Changes,” 2016, www.oc.gov.ma/portal. 216 “MENA: LNG’s Top Growth Market,” Trade Arabia, August 3, ATLANTIC COUNCIL 35
Downstream Oil Theft: Global Modalities, Trends, and Remedies Figure 2. US Net Imports from Morocco of Crude Oil and Petroleum Products, Monthly (Thousand Barrels per Day) 30 20 10 0 -10 -20 -30 -40 -50 -60 -70 -80 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: US Energy Information Administration In terms of oil, Morocco has greatly increased its import of refined products since the middle of 2015. As reported in July 2016: “Asesa [a Spanish refinery] is also benefiting from the closure of Morocco’s 220,000 b/d refinery at Mohammedia, forcing the country to import 44,000 [tons] of Tarragona’s bitumen, up tenfold on the same period in 2015.” 217 According to one commentator, Morocco purchases 48 percent of its oil and gas imports from Saudi Arabia, 218 but that figure runs in direct contrast to recent trade statistics. According to data from 2015, Morocco purchased $1.1 billion of oil from Spain, $1.1 billion from Russia, $847.5 million from the United States, $476.6 million from Saudi Arabia, $235.1 million from Italy, $225.6 million from Portugal, and $199 million from the United Kingdom. 219 The US Energy Information Administration publishes useful data on its trading with other states. As figure 2 indicates, the United States has been exporting an increasing amount of oil products to Morocco over the last decade. The trajectory, however, seems unaffected by the closing of the SAMIR refinery in August 2015. 2016, http://www.tradearabia.com/news/REAL_311459.html. 217 “Tarragona Crude Imports at Six Year High,” Argos Media, July 4, 2014, https://www.argusmedia.com/pages/NewsBody. aspx?id=1268940&menu=yes. 218 “Is Morocco Set to Become an African Energy Leader in Solar Energy?” The Market Mogul, July 7, 2016, http:// themarketmogul.com/is-morocco-set-to-become-an-africanleader-in-solar-energy/. 219 “Top Morocco Imports,” World’s Richest Countries, 2016, http:// www.worldsrichestcountries.com/top-morocco-imports.html. Illicit Hydrocarbons Activity Morocco’s oil industry has long been opaque. Indeed, the nature of the illicit hydrocarbons activity in Morocco appears to further mitigate against transparency, even on seemingly simple data like import volumes. The illicit activity in Morocco falls into two main categories: illegal supply chain and smuggling. Illegal Supply Chain Informed sources allege that SAMIR is one of the refineries that was involved in the illegal supply chain of stolen crude emanating from Nigeria. Stolen crude would be laundered through Ghana’s Saltpond offshore oilfield and sold on to willing refineries—like SAMIR—to bring the illicit crude into the legitimate market. The Saltpond platform was, as of 2013, producing only 100,000 barrels annually, but at least 470,000 barrels were alleged to have been shipped from it in 2014, indicating that the platform has been used to legitimize stolen crude. 220 This practice would have potentially allowed the purchase of discounted crude, which was then sold as refined products into the local market at full market price, thereby generating considerable profit margins for those involved in the operation. While this information comes from what are believed to be reliable sources, official confirmation and further details are not available at this time. Additionally, since SAMIR’s refinery has not been operating for a year, this dynamic is no longer part of the landscape in Morocco, though it does provide a possible explanation for ongoing opacity concerning hydrocarbons in the country. 220 Benoît Faucon, “Tiny Ghana Oil Platform’s Big Output.” 36 ATLANTIC COUNCIL
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PART III Stakeholders and Recommend
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Atlantic Council Board of Directors
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DOWNSTREAM OIL THEFT

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