LDN - Business

Top U.S. fuel pipeline remains days from reopening after cyberattack

[May 11, 2021] By Stephanie Kelly and Devika Krishna Kumar

NEW YORK (Reuters) -The biggest U.S. gasoline pipeline will not resume full operations for several more days due to a ransomware cyberattack blamed on a shadowy criminal network called DarkSide.

The attack on the Colonial Pipeline, which carries nearly half the fuel consumed along the U.S. East Coast, is one of the most disruptive digital ransom schemes ever reported.

While the impact remains to be quantified, the pipeline shutdown will reduce fuel availability in the near term, push up prices and force refiners to cut production because they have no way to ship the gas.

The privately owned company said on Monday it was working on restarting in phases with "the goal of substantially restoring operational service by the end of the week."

The FBI attributed the cyberattack to DarkSide, a group believed to be based in Russia or Eastern Europe. Its ransomware targets computers that do not use keyboards in the languages of former Soviet republics, cyber experts said.

President Joe Biden said there was no evidence thus far that Russia's government was involved.

'GOAL IS TO MAKE MONEY'

A statement issued in the group's name on Monday said: "Our goal is to make money, and not creating problems for society." Its statement did not mention Colonial Pipeline by name.

Ransomware is a type of malware designed to lock computers by encrypting data. The hackers demand payment to let the owner regain access. It is unknown how much money the hackers are seeking, and Colonial has not commented on whether it would pay.

Anne Neuberger, deputy national security adviser for cybersecurity, told reporters that the Biden administration is not offering advice on whether Colonial should pay the ransom.

Colonial on Friday shut its 5,500-mile (8,850-km) pipeline network, which moves fuels including gasoline, diesel and jet fuel, to protect its systems.

The episode laid bare the vulnerabilities of energy infrastructure to hackers. U.S. lawmakers responded with calls for stronger protections for critical energy infrastructure.

A spokesman for United Nations Secretary-General Antonio Guterres said the attack showed that U.N. member states needed to combat cybercrime to avoid a "devastating impact on the world that we all live in."

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Holding tanks are seen at Colonial Pipeline's Linden Junction Tank Farm in Woodbridge, New Jersey. Colonial Pipeline/via REUTERS

Colonial restarted some smaller lines on Sunday between fuel terminals and customer delivery points, releasing fuel stored locally to customers. On Monday, it also began manually operating its 700,000-barrel-per-day multi-product fuel line between Greensboro, North Carolina, and Maryland for a limited time while it has existing inventories.

But its main lines remained shut, and an alternative, smaller conduit operated by Kinder Morgan Inc serving the same region reached capacity.

The outage hit ahead of the summer vacation season, when gasoline demand and airline travel tend to peak.

PAIN AT THE PUMP?

Fearing shortages, consumers in the southeastern United States rushed to refuel. Gas stations in Georgia, North Carolina and Tennessee were seeing some panic buying, said Patrick De Haan, head of petroleum analysis at GasBuddy.

The American Automobile Association said the national average gasoline price climbed to $2.96 a gallon and could climb to its highest level since 2014.

In Georgia, trucking company owner Marcus Blash worried because his business cannot store fuel on site to hedge against price surges.

"We pay at the pump," he said. "It hasn't hit us yet, but this is going to hurt big time."

Florida resident Katina Willey went to several gas stations before she found one that had fuel available. "There were lines at three of the five stations I tried," she said.

If the disruption stretches on, fuel suppliers could ship by truck and rail instead. The Department of Transportation on Sunday lifted driver restrictions on fuel haulers in 17 states affected by the shutdown.

U.S. fuel importers are booking tankers to bring gasoline from Europe. U.S. refiners including Motiva Enterprises and Total <TOTF.PA> cut output at Gulf Coast plants on Monday because of a lack of transport.

(Reporting by Devika Krishna Kumar and Stephanie Kelly in New York; Additional reporting by Rich McKay in Atlanta, Raphael Satter and Steve Holland in Washington, and Laura Sanicola and Michelle Nichols in New York; Editing by Cynthia Osterman and Peter Cooney)

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