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Mexico oil theft reaches crisis proportions

09 May 2017

In Mexico, thieves are now stealing gasoline and diesel fuel from pipelines at record rates, usually by drilling taps into pipelines. Such activities have resulted in the deaths of dozens of people in recent years, both from gang involvement and explosions at the tap sites, and are diverting more than a billion dollars a year in revenues from the federal government.

Stock image
Stock image

On May 4, at least four soldiers and six suspected oil thieves died in a battle in the central Mexican state of Puebla after the army launched a major operation against organised criminals siphoning fuel from pipelines. Some 600 soldiers were involved in the initial operation, the state government said, with another 400 backed by helicopters and truck-mounted weapons joining them.

Television images showed locals blocking a nearby highway with burning tires in the wake of the attacks. Reuters said local media reported that the protesters blamed the army for starting the incidents.

The clash is the latest chapter in a growing problem for the Mexican government. State-run oil company Petroleos Mexicanos (Pemex) says it is losing a record 27,000 barrels (3.68 million litres) per day of gasoline and diesel, with the states of Puebla, Tamaulipas, Guanajuato and Veracruz the worst affected.

The following day, Telesur reported that the death toll in the Puebla incident had risen to 15, with another alleged oil smuggler killed by police the same day in the eastern state of Veracruz.

Some have attributed the increase in thefts to the recent 20% gas price hike in Mexico, with low-income families struggling to buy fuel through official fuel distribution networks, and there have been widespread protests across Mexico against the price increase.

Against this background, some see the oil thieves, known locally as ‘huachicoleros’, as Robin Hood figures, helping the poor to fight back against government-imposed austerity.

Pemex has seen its finances turned around after the price hike, reporting profits of US$17.4 billion during the first three months of 2017. The company suffered significant losses during the same quarter last year.

In an April report, the New York Times highlighted the increasing involvement of Mexican gangs in large-scale oil theft, which is seen by some as an easier alternative to the drugs market. The best organised and most ruthless criminal organisations are using bribery and violence to co-opt officials at all levels of government, it said, including workers at Pemex, the state-owned energy company.

Other than drilling into pipelines, the gangs also hijack tanker trucks, taking between 1% and 2% of the total volume transported every day, according to the NYT.

But the main target is the 5,600 miles of pipeline carrying gasoline from refineries to distribution points. The pipelines are mostly buried at a shallow depth and can be perforated with high-powered drills, after which taps are installed and the fuel diverted through hoses to stolen tanker trucks.

These taps can be deadly. In 2010, at least 27 people were killed, scores injured and numerous homes destroyed when a pipeline blew up in San Martín Texmelucan de Labastida, a city in Puebla State. Smaller scale incidents since then have led to many other deaths and injuries across the country.

In 2009, the authorities discovered 462 illegal taps on the nation’s pipelines and estimated that fewer than 580,000 litres a day were being lost. Last year they discovered 6,873 taps — a nearly 15-fold increase.

In Mexico, the stolen oil products are sold in village markets, on roadsides, door-to-door or to smaller gas station owners. Some stolen gas has also found its way into the United States and south into Central America, the NYT says.

The epicentre of oil theft in Mexico is in the so-called ‘Red Triangle’ of Puebla state, through which a major pipeline carries gasoline and diesel fuel to Mexico City from a refinery in the adjoining state of Veracruz.

In Puebla, the authorities discovered more than 1,500 illegal taps on pipelines last year, nearly double the number found in 2015 and nearly a quarter of the national total, Pemex officials said.

The surge in criminal employment and its proceeds has brought a sharp rise in income for many households in this impoverished region. The NYT quotes an anonymous top municipal police official in the Red Triangle saying that local loyalty to the thieves was so deep that his officers were often impeded from entering certain neighbourhoods even when responding to problems that had nothing to do with fuel theft.

Profits from oil theft and smuggling are such that many local officials and police have been corrupted by the gangs, and the federal government has deployed about 500 security personnel to the Red Triangle in recent weeks to combat the problem. Scores of arrests have followed, but the theft has not abated.

The mayor of the town of Atzitzintla has been detained along with 86 other people in connection with the kidnapping and murder of three government investigators by a criminal group. Earlier this year, the regional press reported that several other Puebla mayors were under investigation for possible links to gas theft.

This comes at a time when the Mexican government is seeking to attract private investors into the country’s oil sector. Industry observers say the government’s failure to control oil theft will make investment in the sector considerably less attractive to those foreign companies with the expertise the country needs.


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