Mexico's energy risks make uneasy allies

The last in Argus' series of articles on the security risks associated with Mexico's energy sector focuses on the federal government of President Andres Manuel Lopez Obrador and his at times difficult relationship with some state governors.

Reducing crime that has flared against energy investment in Mexico's northeast and southeast may demand more political detentes such as one that recently emerged in the center of the country, with some results.

A joint effort between federal and state law enforcement agencies led to the capture last week of the leader of a fuel-theft ring — Jose Antonio Yepez, also known as El Marro — in central Guanajuato state.

Yepez is head of the Santa Rosa de Lima cartel, which gained influence by stealing fuel from pipelines connected to the 220,000 b/d Salamanca refinery. Guanajuato has traditionally been one of the states with the largest number of fuel pipeline taps and is home to the only pipeline in the country that is being reinforced with concrete — the 38,000 b/d, 240km Tula-Salamanca line, which has become a frequent target for criminals.

The win for law enforcement came only after President Andrés Manuel Lopez Obrador visited the state in mid-July to improve communication between federal and Guanajauto state officials that has faltered amid political disputes.

"We, the authorities, have a responsibility to the people and in this case instead of blaming each other, we have decided to combine forces to give security to the people of Guanajuato," Lopez Obrador said at the time.

Relations had deteriorated in recent months following a series of high-profile disputes over public policy. The government of Guanajuato is governed by the opposition national action party (PAN), which represents the far right of the political spectrum, in contrast to Lopez Obrador's Morena party on the far left. PAN is the second-most dominant force in domestic politics, after Lopez Obrador's dominant left-wing Morena party.

Hugs amid bullets The co-operation in Guanajuato offers a possible template for other regions suffering from criminal violence that is often centered on oil and gas infrastructure. Tamaulipas faces a violent turf war between criminal groups that surged after the president took office, while Lopez Obrador's home state of Tabasco has to deal with an infiltration of increasingly violent criminal groups into local unions, now possibly also drawn by the flagship 340,000 b/d Dos Bocas refinery construction.

And while law enforcement agencies have had a long history of some cooperation — along with US agencies in the fight against illegal drug trafficking — Lopez Obrador's public policy of "hugs not bullets" had strained relations amid the already complicated political outlook. At the same time, the president has used the military to take over functions typically handled by police or other civil agencies, such as security at the country's ports.

The result for safety in Mexico has been dire, with the country recording record-high murder rates along with an increase in crime against energy companies.

Tamaulipas faces a similar political dynamic as Guanajuato, as it is governed by right-wing PAN's Francisco Garcia Cabeza de Vaca. He has been the face of an opposition group of eight governors that — among other actions against federal policies — aim to stop the president's plan to use more polluting fuel oil in state power company CFE's plants.

Federal health, energy and security policies are also points of conflict between the president and the Tamaulipas governor. The governor claims there are not enough resources to combat crime and more should come from federal taxes.

Garcia Cabeza de Vaca wants to strengthen regional entities in communication and preventative security, in contrast to the president's agenda that leans toward centralization and militarization.

The president has often publicly held up what he called failures in the Tamaulipas security, such as when gangs appeared to be threatening fuel retailers into shutting down.

Tabasco Test In Tabasco, an alliance between federal and state forces would appear easier as the governor is aligned with Morena.

But the picture is not entirely rosy there either. The risks in Tabasco are greater politically and economically. The planned Dos Bocas refinery is the face of the president's energy and economic policy. Allowing crime to penetrate its construction would be a major failure for the president.

Lopez Obrador says he holds a daily 6am meeting in Mexico City with his security advisers, which include both state and city officials as well as national authorities.

Yet the private sector has described the government's actions to combat crime as only reactive — simply "dealing with incidents as they arise," Mexico's oil and gas producers' association Amexhi said. Enhancing co-operation between the federal government and the states is only part of the solution, which requires much broader action to address energy investors' security concerns, the association says.

By Sergio Meana

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