Authentix uses its fuel authentication solution to uncover pervasive product smuggling and reduce smuggling losses by 80%.
The sole provider of petroleum products in its country, this Middle Eastern national oil company, one of the largest in the world, also manages the distribution of these products to major and remote bulk plants via pipeline networks, trucks, and marine shipments.
Through their internal monitoring process, the company suspected that some domestic use subsidized products transported to and from the company’s refineries and bulk storage plants by third-party-operated trucks were being diverted and sold to unauthorized entities to be used as feedstock or was being smuggled. In addition, it was alleged that:
- Product was being tampered or mixed with other products to alter and degrade specification for exporting purposes at higher profit margins
- Product that was sold to customers for their own use was being diverted and resold to unauthorized dealers
- Different products were illegally blended (low price low quality fuel/products) and sold for higher product prices
- Products were being stolen during delivery process in the supply-chain
- The average yearly revenue losses to smuggling and product diversion was in the hundreds of millions of U.S. dollars.
Since 2014, Authentix has been providing an advanced fuel authentication program to the national oil company. The program marks subsidized diesel fuel at multiple locations, in order to detect the smuggling and product diversion as industrial feedstock of the refined product, or its distilled extracts smuggled out of the country through border crossings. The major components of the program consisted of the following:
MARKERS & DEVICES
The amount of fuel to be marked requires large-volume production of the markers. This was readily achieved early into the program and the marker concentrate is now securely blended in country. The fuel marker is added to the diesel fuel at seven locations (refineries and a bulk tank farm). Auto-injectors are used to simplify the process.
Authentix MSX 2000 analyzer utilizes gas chromatography-mass spectrometry (GC-MS), which Authentix considers to be the ideal analytical technique for the unambiguous identification and quantification of markers in unknown petroleum samples. All diesel samples are analyzed directly via GC-MS. Four large independent labs are equipped by Authentix to conduct tests. Fuel specification testing is conducted using proprietary Authentix methods and established ASTM methodology are used.
SUPPORT & SERVICES
Fully-integrated lab testing system with over 15 MSX 2000 analyzers, a laboratory information management system (LIMS) to manage the lab workflow and web based management reporting dashboards were built and installed providing near real-time reports. Samples are taken at all borders, ports and suspected industrial sites and sent for testing and analysis at the 4- independent labs. Additionally, quality control tests are conducted on marked diesel at all marking sites to maintain correct marker dosing rates.
Once deployed in the field, the Authentix solution proved to be highly effective in detecting and measuring marked diesel. The authentication program revealed the losses to be far greater than originally conceived. Through limited enforcement efforts and ongoing monitoring, the oil company was able to significantly curb smuggling at the country’s border, with the estimated savings of over $1 million per day. This represents a program return on investment of over 10X. Additional positive results include:
- A substantial reduction in smuggling in the border area, due to 14 smuggling-implicated plants being closed by the nation’s government
- Several hundred million U.S. dollars in subsidies are saved every year
- A reduction in diesel demand with the reduction in smuggling and product diversion
- Revocation of the export permits of the companies involved in illicit activity
The sampling component of the program has also demonstrated great success. Over the course of the program, the number of samples that fail testing has decreased, as well as the volume of suspect samples. In fact, at this point, less than five percent of samples fail. The losses, measured in U.S. dollars, are now less than 20 percent of what they were before the fuel marking program was originally put in place. Based on the demonstrated success of the Authentix fuel authentication program, the oil company extended the program beyond the initial contract period and it is now a nationwide program which is extended every year due to the benefits realized.