Brazil's black market
pipeline: Gangs hijack Petrobras' oil, fuel
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[April 04, 2017]
By Rodrigo Viga Gaier
RIO
DE JANEIRO (Reuters) - In September, police investigating a wave of
killings in the northern Rio de Janeiro suburbs followed a tip to the
isolated scrubland near the massive Duque de Caxias oil refinery.
Police presumed the killings were linked to turf battles between
criminal gangs in the run-up to municipal elections the following month.
They found a different explanation buried beneath the grass: a system of
tubes to siphon fuel from underground pipelines leading from the
refinery, owned by state-run oil company Petrobras <PETR4.SA>.
Some of the killings, police said, were part of a power struggle between
rival gangs earnings millions of dollars a year from stealing crude oil,
diesel and gasoline and selling it on a thriving black market.
The discovery highlighted a fast-growing criminal enterprise in Brazil's
oil heartland, between Rio de Janeiro and Sao Paulo. From just one
recorded incident in 2014, the number of thefts and attempted thefts
from Petrobras rose to 14 in 2015 - before jumping five-fold to 73 last
year, the company told Reuters.
The racket is part of a larger crime wave in Brazil, and especially Rio,
amid the country's worst recession on record.
![](http://archives.lincolndailynews.com/2017/Apr/04/images/ads/current/lincolntheatre_sda_031016.png)
Investigators believe the oil and fuel thefts were masterminded by the
city's powerful militias - often made up of retired or off-duty cops -
as they seek to move away from terror and violence to lower-profile
crimes following a crackdown by authorities in recent years.
The thieves' methods range from hijacking tanker trucks to tapping the
company's more than 11,000 kilometers of pipelines - and processing
stolen crude at their own secret refineries.
"Not even Petrobras knows exactly how much is being stolen," said
Giniton Lages, the Rio police chief who led the investigation at Duque
de Caxias. "It's a huge business, moving millions of reais."
INSIDE JOB
While oil theft - often with environmental damage from the accompanying
spills - is commonplace in regions like the Niger Delta of Nigeria, it
has not traditionally been a problem in Brazil.
The thefts add to the steep challenges facing Petroleo Brasileiro SA, as
the Rio-based firm is formally known. Amid weak oil prices, the company
is scaling back under new CEO Pedro Parente and trying to emerge from a
$100 million pile of debt.
For the past three years, the state-run company has been hit by a
sprawling investigation into corruption and political kickbacks in its
dealings with construction firms.
Police suspect corruption in the oil thefts as well. The taps and pipes
near the Duque de Caxias refinery were so precisely engineered that
investigators concluded the thieves must have had help from inside
Petrobras.
"They knew what type of fuel was inside each pipe and what was the ideal
point to place a tap without the change of pressure in the tube raising
the attention of the company's security system," Lages said.
Petrobras, whose production of about 2.8 million barrels a day makes it
one of the world's top 10 oil companies, said it was working with police
to identify any employees or ex-employees that may have been involved in
the crimes.
"In 2016, there was a startling increase in theft from our pipelines,"
said Rodrigo Spagnolo, head of pipeline maintenance at Transpetro,
Petrobras' transport subsidiary.
The company, however, said the robberies had no material impact on its
earnings. Petrobras reported revenues of $81 billion last year.
![](http://archives.lincolndailynews.com/2017/Apr/04/images/ads/current/mcentire_sda_FLYERS_2016.png)
RUTHLESS GANGS
The militias in Rio de Janeiro emerged to combat drug gangs in the
city's violent hillside favelas. But they evolved into criminal
organizations preying on those impoverished communities, controlling
everything from real estate and electricity to cable TV. Some of the
leaders entered local politics.
In the wake of high-profile killings at the end of the last decade -
prompting a government crackdown - the militia have maintained a lower
profile, said Ignacio Cano, a professor at the state university of Rio
de Janeiro and a member of its Laboratory for the Analysis of Violence.
"Stealing fuel was not typically a crime associated with militia, but
they must see an opportunity for making millions," he said. "It's
unusual for them to operate outside the territory they control."
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![](../images/040417pics/busine36.jpg)
A man sits on a beach with the Petrobras fuel tanks in the
background in the Guanabara bay in Rio de Janeiro, Brazil March 13,
2017. REUTERS/Pilar Olivares
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Most
oil and fuel thefts reported by Petrobras in 2016 took place on the populous Sao
Paulo-Rio de Janeiro axis, which groups five of the company’s biggest
refineries.
In Rio
de Janeiro, thefts tripled last year to 33. Five of the incidents caused oil
spills, Petrobras said.
Police arrested 13 people for the Duque de Caxias refinery scam, including two
military police officers. A judge has issued warrants for 26 others.
The gang, set up in June 2015, stole 14 million liters (3.6 million gallons) of
fuel last year, worth an estimated 33 million reais ($11 million), prosecutors
said.
Police believe the Rio branch of the gang was headed by Caxias Denilson Silva
Pessanha, a former city councillor in Duque de Caxias and the owner of illegal
gasoline stations. Such service stations, operating without a license or a
distribution contract with a fuel supplier, have become more common in Brazilian
cities in recent years.
Pessanha, a fugitive, is wanted for torture and attempted homicide. Reuters
attempts to locate an attorney for him were not successful.
Transpetro said it was investing in more security, but Rio de Janeiro police say
the company remains an easy target.
"The company's security officials who we have spoken to admit there is little
they can do," Lages said. "This involves armed gangs, and private security can
do little about it because they are afraid."
A SECRET REFINERY
While Brazil's high unemployment and deep recession could be driving the thefts,
Lages said, another motivation is the low risk of capture and punishment.
Convictions are unlikely to result in imprisonment because Brazil's jails are
chronically overcrowded.
![](http://archives.lincolndailynews.com/2017/Apr/04/images/ads/current/xamis_lda_SFARM_2017.png)
"You might get a bit of community service time, so this is profitable and not
much trouble," Lages said.
Police are trying to classify the robberies as environmental crimes, which can
carry up to five years in prison in cases where the pollution threatens humans
or animals.
The 13
people arrested in the Duque de Caxias refinery thefts were charged with forming
a criminal enterprise, which also carries stiffer penalties.
The scale of the crime has surprised police. At the end of last year, they
uncovered a secret refinery in Boituva, Sao Paulo state, one of the
installations used to process stolen crude.
Video images show a large complex, with four giant storage tanks surrounded by a
complex mesh of pipes, and a vast forecourt filled with unmarked tanker trucks.
"The gang was stealing oil from Petrobras' pipelines in Rio de Janeiro, filling
trucks and taking it to these secret refineries," said Sao Paulo police chief
Emerson Martins.
The fuel would then be sold to illegal service stations and to small-scale
vendors in rural towns or city slums, police say.
The criminals sometimes use water trucks to transport the stolen cargo without
drawing suspicion. In reaction, Brazil's Federal Highway Police have increased
roadblocks on highways between Rio and Sao Paulo.
"The militia has rushed headfirst into this business," said Jose Helio Macedo, a
spokesman for the police agency. "We are trying to curb it."
(Additional reporting by Daniel Flynn; Writing by Daniel Flynn and Stephen
Eisenhammer; Editing by Brian Thevenot)
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