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Mexico's illegal pipeline taps jump 50pc in 2017

13 Feb 2018 22:17 GMT
Mexico's illegal pipeline taps jump 50pc in 2017

Houston, 13 February (Argus) — Mexico is still grappling with growing fuel theft which has reached historic levels in 2017 with 10,363 illegal taps into pipelines, up 50pc compared with the previous year.

Illegal tapping, also known as "milking," grew six fold since the beginning of the current administration in 2012, according to data from Mexico's state-run Pemex.

The central state of Guanajuato had the highest number of incidents, with a total of 1,852 illegal taps last year, or over 150 a month.

The state of Puebla was second with 1,443 taps. Puebla is the home to Mexico's "red triangle," a stretch of the Minatitlan-Mexico pipeline where fuel tapping is exceptionally high. The nearby state of Hidalgo was third with 1,064 illegal taps.

Fuel theft is an increasingly profitable business for cartels in need to diversify their revenue streams. Pemex executives estimate that fuel theft costs Mexico over $1bn/year. Pemex's director of downstream operations Carlos Murrieta Cummings, in October 2016, said the company was losing up to 27,000 b/d.

Fuel theft has also generated a wave of violence in key states, contributing to making 2017 Mexico's most violent year since the beginning of modern data gathering in 1997, with 25,339 homicides.

In May 2017, following a deadly clash between fuel thieves and the military, Mexico's president Enrique Pena Nieto asked that Pemex work with the energy and finance secretaries as well as the attorney general's office and the military to find a more efficient strategy against illegal tapping.

"Pemex has a vested interest in slowing down fuel theft," the company said last week. "To steal from Pemex is to steal from Mexico," the statement read, calling authorities for help.

The "new" strategy includes doubling down on existing methods, such as using advanced technology to monitor pipeline activity and strengthening the presence of armed forces along highly targeted pipelines. Overall, Pemex says that in 2017 it retrieved almost 15mn liters of stolen fuel.

But energy officials say they are also seeking alternative ways to combat fuel theft, such as penalizing retail stations that are commercializing stolen gasoline and diesel. Pemex says it has shut down about 70 retail stations that were unable to prove the origin of the products they sold.

But station owners have said that they can be coerced into selling illicit products by members of violent organized crime groups. Pemex workers, who can provide key information about when exactly fuel is being transported in any given pipeline, have also said they are sometimes forced to cooperate.

Last month, the head of security at Pemex's Salamanca refinery in central Mexico was killed in an early morning attack, while driving his two children to school. Pemex did not say whether the murder was directly linked to the employee's position at the company.

Fuel theft and related gang violence have become particularly problematic for Pemex and energy officials, as the country is seeking private investment to update its aging refineries. And while private fuel storage terminals are booming, officials fear that insecurity might be an obstacle to the construction of costlier pipelines.


Illegal tap activity, 2017

Illegal taps on Pemex pipelines by month

Illegal taps on Pemex pipelines by year