Mexico Fuel Theft Remains Lucrative Despite Oil Price Drop

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The cost of oil theft for Mexico’s state-owned oil company Pemex continues to increase year on year, suggesting rock-bottom prices have done little to deter oil thieves.

During the recent International Congress on the Prevention of Emerging Crimes (Congreso Internacional sobre Prevención de Delitos Emergentes), representatives from Mexican oil company Petróleos Mexicanos (Pemex) estimated organized crime steals 23,500 barrels of oil per day from its pipelines, representing losses of 21 billion pesos (roughly $1.17 billion), reported Proceso.

As global oil prices have fallen (following their 2014 peak oil prices have dropped over 70 percent), the reported incidence of oil theft in Mexico has continued to increase.

Pemex officials estimated losses due to oil theft during 2014 at 19 billion pesos (roughly $1.2 billion at the time), and the company’s most recent approximation suggests 8.5 million barrels are stolen per year — up from its 2014 estimate of 7.5 million.

Fuel theft has proven a consistent challenge for Mexican officials, with criminal groups such as the Zetas establishing sophisticated and lucrative oil theft rings in recent years.

InSight Crime Analysis

During a discussion on the issue of fuel theft at the International Congress, Pemex representatives struck a positive note, expressing optimism recent legal reforms in Mexico toughening penalties for oil theft would help combat the problem. However, as InSight Crime has previously noted, more severe penalties are unlikely to provide an effective deterrent to fuel smugglers, as chances of being apprehended and prosecuted remain low.

SEE ALSO: Coverage of Oil Theft

Neither does Pemex appear able to tackle the issue itself. The company’s ongoing anti-tapping measures are costly — one such measure, the improvement of its surveillance systems, was projected to cost 2.9 billion pesos ($161 million) across 2015 and 2016. Yet, with the drop in oil prices, Pemex reported its biggest quarterly loss in company history in October 2015, and plans to cut $5.5 billion from to its 2016 budget.

Given previous struggles at reducing the incidence of oil theft, future budget cuts raise serious questions about Pemex’s ability to adequately fund anti-tapping strategies moving forward, thereby rendering its pipelines increasingly vulnerable to organized crime.

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