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. Last Updated: 07/27/2016

New Chechen Oil Cops to Fight Theft

The Chechen government is creating a separate police force of 500 men to fight the theft and illegal export of oil, a Chechen official said Thursday.

The force is to be established starting Friday, said Vasily Boriskin, head of the Chechen fuel and energy complex, in a telephone interview from Grozny.

"With this police force, we plan to put our oil business in order," he said. "Yes, by means of force."

Of the 1,000 to 1,500 tons of oil that is extracted daily in Chechnya, 30 percent to 40 percent is stolen, said Major General Nikolai Nino, head of the federal anti-organized crime squad, at a briefing Tuesday.

By putting a stop to the theft, the republic could produce 400,000 tons this year, earning $70 million that could be spent on restoring the Chechen economy, according to information distributed at the briefing.

But for many Chechens, illegal oil sales are the only source of income. At thousands of makeshift refineries within Chechnya and at dozens in nearby regions — Ingushetia, Dagestan, Stavropol, North Ossetia and Kabardino-Balkaria — people process oil stolen from pipelines or illegally extracted from wells only 5 or 6 meters deep, wells dug by local residents in oil-soaked Grozny and its suburbs.

In two five-day operations to crack down on the illegal oil operations, conducted April 20-25 and May 21-26, 764 tons of oil and 1,762 tons of motor oil were confiscated and 685 makeshift refineries and warehouses were destroyed, Nino said. More than 100 cases were opened against the suspected owners of illegal businesses.

Two towns in the Grozny region, Goryachevodsk and neighboring Tolstoi-Yurt, are famous for the large number of private makeshift refineries functioning there. People boil oil in huge tanks in their back yards to make gasoline. At night, the leftover waste is burned in huge bonfires, polluting the area and filling the air with bad fumes.

Homemade gasoline is then sold in 10-liter jars for 35 rubles a jar. The sellers alone can make 1,000 rubles a day.

The new oil police will have their headquarters in Goryachevodsk. Creation of the force has already begun, said Shaid Zhamaldayev, head of the administration in the Grozny region, which includes Goryachevodsk.

The illegal oil business has proved difficult to stop. Those who make the fuel say they pay protection fees to federal police manning local units. And neighbors are unwilling to tip off police, fearing revenge.

Zhamaldayev said he doubts a police operation alone can be effective. "What is needed is a set of measures, including explaining to people that what they are doing is illegal and affects their health," he said Thursday by telephone from his office. "They must be offered alternative jobs, they must feel secure."

Some, including Nino, believe the illegal oil operations should be legalized to allow people to work to feed their families.

"Let them extract that oil. Let them then pass the oil over to, say, Grozneftegaz," Nino said. "It will boost its volumes and revenues. And people will feel that they are participating in the restoration of the republic's economy.

"This business, it exists anyway. It exists illegally. We must do both at the same time — fight for order and legalize this business."

Even a Federal Security Service officer — a spokesman for its Gudermes branch, Ilya Shabalkin — said in an interview in April that the FSB had suggested to the federal government that it legalize the private oil business so that it can be taxed.

Boriskin, however, said there were no plans to legalize the private oil business. He said several state enterprises will be created to collect oil that is confiscated from makeshift refineries and that still remains in the underground pools.

"Any private oil business will be shut," Boriskin said. "Those who keep doing it will be prosecuted by law."

Grozneftegaz is 51 percent owned by the state oil company Rosneft and 49 percent owned by the Chechen administration. The federal government agreed that all revenue should go toward restoring the Chechen economy.

Grozneftegaz sells all of its oil outside Chechnya because the republic no longer has the facilities to process it.