Mexico And Energy Theft: A Rampant ProblemMexico is plagued by rampant energy theft. In the first eight months of 2014, 7.5 million barrels of oil went missing. Organized crime groups are behind much of the theft, which occurs along a network of pipelines that carry gasoline, diesel, crude oil, natural gas, and petrochemicals around the nation.
The problem in Mexico is that it is not considered a serious crime; they are trying to change this and establish terms of twenty five to thirty five years of prison for those involved in major energy theft.
The piracy may affect Pemex’s success in opening its energy sector to international investment. Foreign companies will have to budget security costs to deal with corruption surrounding stolen fuel and piracy.
The weak penalties for stealing oil in Mexico have exacerbated the problem. It is a big problem that is not considered a serious crime. Over the average year, it costs Mexico around one billion American dollars.
Energy theft is one of the worst crimes against Mexico; it hijacks revenues that otherwise would go directly into state coffers.
Prosecutions are difficult even against the people who are caught stealing oil. If you catch one of them, it’s difficult to prove that he/she stole it. Generally, they say that they obtained it elsewhere.
The chain of criminal involvement extends to local police, gas station owners, and distribution companies. It also goes into Pemex itself.
A ring headquartered in central state of Guanajuato was caught operating a huge energy theft ring that dealt more than one million gallons of diesel and gasoline a month.
What is impressive is that inside the ring was Petrobajio SA de CV, a company which held a concession since 2011 to transport gasoline for Pemex.
This company bought stolen fuel from an organized crime group that siphoned pipelines. The authorities seized 78 tanker trucks that transported stole fuel to the states of San Luis Potosí and Jalisco.
Petrobajio was under control of organized crime. They use firms to appear legitimate—a common practice in Mexico.
“The use of firms that appear to be legitimate by criminal groups is a common practice in Mexico,” IHS Inc., a Colorado-based global information company, said in a report Oct. 1. A foreign company that failed to properly vet its Mexican partners might find itself not only the victim of theft, but facing potential prosecution.
Other nations suffering from energy theft are Indonesia and especially Nigeria. The methods used by thieves range from installing valves to drilling pipelines to siphon off fuel dyer.
Pemex is installing a two hundred and eighty-two million dollar system which will alert their technicians when pressure drops in the pipelines Pemex operates; this allows the company to respond if there’s an illegal tap.
The major organized crime groups like the Zetas, the Gulf Cartel, and the New Generation Jalisco Cartel are believed to have diversified into energy theft.
2015 will be an introduction to Mexico’s security environment and its shifting constellation of cartels. One of their most lucrative enterprises has been the theft of hydrocarbon products besides extortion, cargo theft, money laundering, kidnapping.
Degradation of Fuel Security
There has been a degradation of public security in Mexico; thousands of homicides have taken place in the past decade. This has been a concern for foreign investors in the energy field. These criminal organizations are starting to focus more and more on the theft and resale of hydrocarbon products. This is a response to the increased competition they are encountering over drug trafficking routes into the United States.
It is estimated that large crime groups collectively receive more than a billion dollars in profit annually from hydrocarbon theft. Criminal organizations in Mexico now compete to exploit local businesses. This has proliferated into smaller turf wars not directly related to drug trafficking.
Crime groups have the capacity to organize hydrocarbon theft on a massive scale across multiple regions with a high level of efficiency. They focus on drilling into underground pipelines. In 2014 alone, these theft operations have cost Pemex more than a billion dollars.
The big crime organizations in Mexico have been in violent competition over territory needed for theft operations. There have been wars between Los Zetas and a rival in southern Veracruz state over the right to siphon from a Pemex pipeline in Veracruz.
The levels of criminal violence associated with fuel theft are far lower than those associated with drug trafficking, but it is increasing. The changes that Pemex made in their legal framework are also focused on reducing energy theft and to give a secure image to foreign investors. This is crucial since they are starting a new phase inside the company and are open to foreign investment for the first time in their history.