Oil Pilferage - A Big Threat To Nation

In the oil and gas industries, the cross country underground pipelines are considered as the lifeline in the entire world now. The pipelines are the most efficient way for transportation of petroleum products, crude oil, LPG, gases etc. in an environment friendly, safe, fast way of delivery at long distant points from the sources in the least possible time and a cost-effective manner. 

Presently, there is 35,00,000 km of pipeline in 120 countries in the world. Out of these, in India, we have approximately 42,000 km of pipeline network functioning 24x7. IOCL has the highest 15,000 km of crude oil, finished products, LPG, ATF and gas pipeline network.

The pilferage through pipeline system has been a major challenge to Pipeline operators particularly the liquid pipeline operator. The high cost of the transported fluid and moderate to low risk has been a key driver for the pipeline pilferage in India. In the early 90s, India commissioned then a largest Petroleum Product Pipeline, known as Kandla Bhatinda Pipeline passing through states of Gujarat, Rajasthan, Haryana and Punjab. After commissioning of the Pipeline, the quantum increase in the pilferage was observed even for the first time a question was raised in Parliament also. Subsequently, the Petroleum and Mineral Pipeline Act 1962 (PMP Act) was amended in 2011 and penal provision was substantially enhanced. In addition, pilferage offence was made cognizable and non-bailable.  However, even after making punishment quite stringent in India, the incident of pilferage could not be contained.

Incidents of pilferages from different pipelines have progressively increased over the period along with the growth of the pipeline industry, particularly after 2000, the phenomenon has witnessed a substantial increase. This oil product theft is a big menace. People involved in this job don’t realise that they cause oil leakage which could result in the fire leading to loss of lives, property and environment. The crude oil stolen from the pipeline is generally used in local factory furnaces which is dangerous to these factories as they don’t have the means to process the crude oil. The stolen crude oil also makes its way to illegal small refineries or brick kilns at different locations. The products like petrol, diesel etc. stolen from pipelines are mostly sold to various oil retailers who sell it through their retail outlets  


Since IndianOil (IOCL) has the major share in the pipeline network in India for crude oil, finished products, LPG, ATF etc., the company suffers a lot due to these pilferages in terms of throughput loss, financial loss, Imbalance in supply and distribution, as well as, environmental pollution. As per IOCL’s Sustainability Report 2019-20, the company was subject to 53 pilferage cases from pipelines with loss of 1000 kl of products. HPCL, which has the second-largest share of product pipelines in India, suffers on an average of 10 cases of pilferage in any given year. Similar is the case with both with  both PSU and other private pipeline operators.

In India, more than 140 cases of pilferages are recorded in any given year which is a matter of concern not only for precious product loss but also an unwanted release of the hazardous material, may cause contamination of underground water, surface contamination, fugitive emission and potential for fire and associated loss of property & precious lives. IOCL, BPCL and HPCL have together lost crude oil and finished products worth ₹ 450-500 crore in the last decade. Every quarter, they lose products worth several crores. However, product loss is only a tip of the iceberg compared to losses associated with such unwarranted shutdowns to oil companies as the leakage of products due to pilferage pose a big threat to the environment and also affect the reputation of the company.

Although Oil companies have undertaken a slew of preventive measures to check the pilferage attempts, this still shows an increasing trend. The measures taken are described as monitoring of operational parameters through the state of the art SCADA, Leak Detection System(LDS), physical monitoring/ patrolling of Pipelines ROW, village awareness programs, electronic surveillance, liaison with government authorities and implementation of reward schemes.

SANMARG, a leading company associated with Oil & Gas Pipeline O&M has attended over 26 pipeline pilferages that too about 19 in a single pipeline. The adoption of technical sophistication in their pilferage contraption being installed on the operating pipelines is a big challenge to the pipeline Operators. The contraption arrangement is generally installed with precision using two valve systems to minimise/eliminate the leakage during fitting and product stealing, even in case of failure of one of the valves. Further, to deal with high-pressure pipelines, they almost discarded the thread-based mechanism and relied on the flanged end single or twin valve system. The small diameter hot tap machine is invariably used for precision drilling of pressurised underground pipelines. The absence of any leakage becomes a challenge to pipeline operators and the same is not detected through Leak Detection System of tell-tale signs on the earth. In a few cases, an underground tunnel from substantial distance was made to approach the pipeline for installing pilferage fitting, to avoid attention to above-ground activities.

However, till now, team SANMARG has attended all these pilferages in products like kerosene (SKO), diesel (HSD), petrol (MS) as well as crude oil pipelines. Besides a few attempts of pilferage were made in  LPG Pipeline, which SANMARG team has successfully attended least affecting the throughput of the pipeline thereby eliminating dry-out situations in the delivery stations. Due to stringent safety measures adopted at the site, SANMARG has successfully completed the repair and restoration jobs in record time without any man-hour loss.

Fully equipped Mobile Maintenance Vehicle (MMVs with necessary tools, tackles and modern gadgets) with trained engineers and technicians of Sanmarg Team responds within minimum possible time to these often remote pilferage sites without any proper approach road, without local support and least affecting the environment, flora and fauna. The attending these field emergency which involves area clearing/oil removal, excavation, pipe cleaning removing the additional fixtures and fittings from the pipeline put installed by pilferers and restoring the pipelines by putting leak clamps, calls for strong determination, hard work, focussed approach, adoption of safety measures and regular training of the team. Needless to mention that it has certainly stopped the undue incentives long enjoyed by unscrupulous elements. SANMARG efforts for pilferage rectification often at odd hours of the night, inclement weather, hostile local environment, difficult to reach sites,  were very well lauded by clients as promptness on our part often reduced the downtime in restoration.

The methods adopted by Oil & Gas companies for elimination/minimisation of pilferage are summarised as under which includes, Technological, administrative and managerial methods:

Although,  the various mechanisms have already been put in place by various oil companies as mentioned above and stringent provisions of punishment to the pilferers in the PMP Act by the Government has been successful in controlling the pilferage to some extent but the menace of pilferage is not coming to an end.

While each measure described above are effective to a large extent, however, SANMARG is of the opinion that surveillance of cross country pipelines by drones, if largely adopted for flying at certain designated heights,  equipped with sensor mounted cameras, can not only have a deterrent effect among the fence-sitters but also would be in a position to recognise the culprits, create early warning signs etc. The country is expanding a vast network of gas pipelines, the sensors mounted in the camera can easily detect the methane leakage as an early warning sign too.   In addition to the OFC based method, the proposed method would also be a proactive approach rather than a reactive approach adopted by other methods like LDS, Line walkers etc. Hence if introduced, can contribute to reducing pilferages to a greater extent.

In the recent budget, the monetization of Oil & Gas Pipelines of PSU  has already been announced, so the country is aiming for Pipelines as a common carrier and backbone of a vital supply & distribution chain.  In the process,  the safety and security of these vital assets assume greater significance. The Government of India may consider the creation of a Pipeline and hazardous material safety administration (PHMSA) or DOT any empowered body in line with the developed world to examine the suitable technical and administrative means for protecting people, and environment for safe and reliable transportation of energy. A national policy, guidelines, standards and technological intervention may be framed up by such empowering setup.





Shri M M Mohanty

Deputy Director - South Eastern Region

Sanmarg Projects Private Limited