BusinessDay 30 Jan 2018

Tuesday 30 January 2018
BUSINESS DAY
Energy Report
C002D5556
19
Oil & Gas Power Renewables Environment
Hackers in Europe, pump cheats in Nigeria put oil companies on edge
ISAAC ANYAOGU
Oil companies
operating
in the
downstream
sector have a
difficult task on their hand
to turn in profit, after operating
expenses, as margins
continue to plateau.
The task is made harder by
execrable policies and the
activities of cheats.
In Nigeria, the government
insist on a regulated
pump price for Premium
Motor Spirit which makes
downstream operations
unprofitable for big oil
companies. While they
won’t touch Nigeria’s
downstream sector, in
other countries, they are
actually leading operators.
Shell Malaysia has over
900 filling stations in the
country and opened 20
more in 2017.
Oil marketers who operate
in the regulated regime
struggle to stay afloat
in a market where the cost
of importing the commodity
is higher than the
regulated price. NNPC is
left with the task of solely
importing fuel, something
it is incompetent at handling.
The marketers, who
buy PMS from the NNPC
for sale, cannot increase
the pump price without
attracting the wrath of
the regulators hence are
left to struggle with thin
margins. Some of their
attendants short-change
Oil marketers who operate
in the regulated regime
struggle to stay afloat
in a market where the
cost of importing the
commodity is higher than
the regulated price
customers by rigging their
meters to dispense less
than what was paid for.
In a slight of hand manoeuvre,
attendants apply
various tricks including
using the recall function
on the machine to display
previous sale as current
one and failing to hang the
nozzle to continue reading
from a previous sale.
This causes reputational
challenges for their petrol
stations.
In Europe the problem
assumes a different tenor.
Russian security services
said they have arrested a
local hacker who planted
malware at gas stations
across Russia’s southern
regions that had been
cheating drivers out of the
gasoline that they pumped
in their cars in a major
fraud scheme that later
resold the stolen fuel.
Denis Zayev, who created
the malware was ar-
rested by Russia’s Federal
Security Service (FSB) after
having gas stations employees
work with him to
trick the software systems
into selling less fuel to the
customers, while reselling
the fuel that was stolen.
The scheme extended
to almost all regions in
the south of Russia, with
dozens of gas stations infected
with the malware.
Zayev has created a “perfect
virus” that couldn’t be
detected by either security
controls that oil companies
have used to remotely
monitor gas stations, or by
specialists at the Ministry
of Internal Affairs, according
to the police source
who spoke to the local
media.
The virus planted in
the systems allowed the
hacker and his accomplices
to steal up to 7 percent
of the fuel according to
reports. Zayev acted not
only as the “seller” of the
malware at some stations,
but also as co-owner of the
channel to steal fuel, and
received a cut from the
proceeds from the re-sale
of the stolen fuel.
But this is by no means
the first scheme targeted
at petrol stations. In early
2014, 13 people were indicted
in the U.S. for allegedly
using small Bluetooth-enabled
skimmers
to steal more than US$2
million from credit cards
that customers used at gas
stations in Texas, Georgia,
and South Carolina in
2012 and 2013.
According to the Manhattan
District Attorney,
the four main defendants
had attached skimming
devices at gas pumps at
Raceway and RaceTrac to
steal credit card informa-
‘Why freeing gas for local investors is pivotal to FG’s 2018 projection’
KELECHI EWUZIE
The projection by
the Federal Government
to boost
domestic gas demand
in 2018 to outstrip gas
supply to export can only be
achieved when indigenous
players are incentivise to
invest in the sector. Industry
players have advised.
Experts who understand
the sector are optimistic that
with the right indigenous
investment, it will set the
tune for a sustainable commercial
framework underpinned
by credible and
enforceable gas contracts
backed up by a price regime
which is commercially
driven and affordable across
different buyers.
Maikanti Baru, group
managing director, Nigerian
National Petroleum Corporation
(NNPC) has consistently
maintained that gas
is imperative for economic
development.
Baru opines that for the
2018 gas projection to be
realised, there is need for an
aggressive development of
gas resources along with the
gas infrastructure to deliver
the gas to end users.
According to him, “We
intend to leverage on NNPC
equity and dominance in
the industry to fast track gas
development to meet both
our domestic demand and
export commitments”.
Dada Thomas, managing
director, Frontier Oil
Limited however insists
that government needs to
do more in freeing gas for
local investor because 85
percent of the gas in the
country is locked up with
the International Oil Companies
leaving indigenous
companies starving for gas.
Thomas observes that
the only incentive for indigenous
company willing
to continue to invest
in gas for domestic use is if
government addresses the
problems they have.
He reiterated that the
only way to make gas project
profitable and bankable
is when there is a willing
buyer willing seller market.
Government should not
be prescribing price of gas
between two profit making
entities.
On his part, Bolaji
Ogundare, Chief executive
Officer, Newcross Petroleum,
opine the reason we
have low gas penetration
in Nigeria is because we do
not have the distribution
network in place adding
that such projects require
significant investment to
accomplish.
Ogundare is of the opinion
that only when the right
incentives are put in place,
can Nigeria see indigenous
investors come to executive
gas projects.
According to him, “These
incentives can come in form
of tax breaks; a legitimate
legislation has to be in place
and security has to be provided”.
He further observe that
for Nigeria to maximise the
use of the gas province we
have for electrification, a
lot of significant investment
has to take place as there
need to be a public private
partnership to further grow
this infrastructure
Olusola Bello, Team lead, Analysts: Kelechi Ewuzie, Isaac Anyaogu, Graphics: Joel Samson. Email: energyreport@businessdayonline.com, Tel: +234-8023020011; +234-7037817378; +234-8036534708