Rising Oil Theft in Mexico Points to Collusion with Foreign Businesses

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Fuel theft along Mexico state oil firm Pemex’s oil and gas pipelines is increasing rapidly, raising questions over the extent of organized crime’s cooperation with foreign businesses in this billion dollar trade.

Nationwide Pemex identified and sealed 3,278 illegal breaches last year, up from 1,744 in 2012, reported Proceso. Financially this has translated into $1.15 billion of stolen fuel loses between 2012 and 2013 — around 4.5 percent of sales — according to Pemex’s statistics.

The state firm is responding by converting its decommissioned 18 de Marzo oil refinery in Mexico City into an anti-fuel theft command center. The center will provide Pemex with real-time intelligence, communications and logistics services for targeting fuel theft activity, reported El Universal.

The command center is scheduled to being operations in March 2015.

InSight Crime Analysis

The exponential growth in fuel theft in recent years is part of a pattern of criminal diversification in Mexico and has been linked to the country’s most powerful criminal organizations, in particular the Zetas, as well as low-level criminal groups.

For this trade to function, it requires the cooperation of legitimate foreign businesses. In most cases fuel thieves are stealing unrefined oil, including Mexico’s hard to process heavy crude known as Maya. Turning these ill-gotten hydrocarbons into a useful product requires refining infrastructure and know-how. As Pemex owns all refining assets in Mexico, criminals mustlook to foreign refiners and fuel suppliers to buy their stolen goods.

While criminals may be duping some of these foreign buyers it is unlikely the quantity of oil stolen could be sold without many refiners and fuel suppliers being aware of their purchase’s origin.

Indeed targeting the criminal-to-buyer stage may be more effective in curtailing the stolen fuel trade than patrolling thousand of kilometers of pipeline. However much of the success of President Enrique Peña Nieto’s initial term will be determined by energy reforms and their ability to revitalize Mexico’s stagnating oil and gas industry, so he may find applying more scrutiny to international hydrocarbons firms politically unpalatable at this time.

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