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Hackers and pipelines

Energy systems need unannounced stress testing

Hackers and pipelines

The first half of May saw a hacker attack on the fuel pipeline infrastructure of the United States, a truly high profile incident that could affect the global oil market. On May 7, the Colonial Pipeline system operation was disrupted, which eventually not only yielded natural adverse effects to the economy of a number of the country's eastern states (initially, industry enterprises and firms related to the oil industry were affected), but also got a social projection. The shortage of fuel at gas stations has unnerved citizens queuing for gasoline that became way more expensive; there were scuffles for a place in the rows of cars for a portion of fuel, which could easily trigger mass riots with pogroms at gas stations.

In order to prevent the spread of the fuel crisis and social unrest, on May 10, the US Department of Transportation declared a regional emergency in 17 states and the metropolitan District of Columbia, where pipeline fuel supplies were disrupted over a cyber attack against the Colonial Pipeline. The department ordered to eliminate the newfound shortage of petrochemicals at the expense of alternative supplies – in tankers.

The Colonial Pipeline supplies fuel (gasoline, diesel, aviation kerosene, and petroleum residue) from GOM coast refineries to consumers in Texas, Louisiana, Mississippi, Alabama, Georgia, South and North Carolinas, Tennessee, Virginia, Maryland, Delaware, Pennsylvania, and New Jersey. According to the company, the system pumps a daily 100 million gallons of fuel, which is about 45% of all the fuel consumed on the East Coast, and provides it to 50 million Americans. The length of the company's pipelines reaches 8800 km.

The issue was resolved within about a week – on May 15, the Colonial Pipeline company announced a return to normal functioning. But this is only due to the hackers' having received a ransom right away, without any cut-and-dry well-adjusted counter-action algorithms by organizations and authorities under force majeure circumstances of this kind. The Colonial Pipeline management paid the cybercriminals $5 million in crypt currency, Bloomberg reported with reference to its sources. However, this information appeared on the news lines as early as on May 13, while the payment, according to Bloomberg, dates back to May 7 which is the very day of the cyber attack that entailed pipeline suspension.

Needless to say that the American authorities immediately pointed to the "Russian trace", saying that the cyber attack was allegedly initiated by certain people located in the territory of Russia. Not all that much surprising. The stranger thing is that during a May 13 briefing, American leader Joseph Biden said there was no need to officially accuse the Russian authorities. He also promised to discuss the issue of criminal cyberspace actions with President Putin.

The "case" with a cyber attack on the Colonial Pipeline should greatly alert and invigorate the management of all the major oil and gas transportation companies, oil and gas processing enterprises, nuclear power plants and other major energy infrastructure facilities across the globe. It is a good practice to conduct exercises and unannounced stress tests regarding such hacker interventions in the automated control systems of large strategic energy facilities and infrastructure networks.

The mere attack on the Colonial Pipeline is more of a domestic narrative with the supply of petroleum substances, than a global one (unlike, for instance, the massive drone attack on the Saudi Aramco oil plants in September 2019, when the world was facing a global oil shortage). For this reason the event proved all but neutral to the world oil market, with its volatility remaining very moderate both in April and in May. And passing the bar of $70 per barrel is not yet possible for the bulls. And the speculative zeal alone is not enough – the demand for oil is still restrained by negative news on coronavirus infections in India, with its rampant pandemic and over 300,000 new cases per day.

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