Mexico fuel theft continues to rise: Pemex

Incidents of fuel theft from Mexican pipelines and terminals rose 68pc in the first quarter of 2017, according to Pemex, as the country took its biggest steps toward liberalizing fuel markets.

The state-run energy company recorded 2,704 instances of illegal tapping into pipelines in the first three months of 2017, according to company data reviewed by Argus. That is up from 1,610 incidents in the first quarter of 2016 and 2,046 in the fourth quarter 2016.

The central state of Guanajuato topped Puebla as the state with the highest number of fuel theft incidents, with a total of 459 illegal taps in first quarter, or a little over 150 a month.

Puebla was second with 402 taps. Puebla is the home to Mexico's "red triangle," a stretch of the Minatitlan-Mexico pipeline where fuel tapping is exceptionally high. The eastern state of Veracruz was third with 362 illegal taps.

Fuel theft is not new in Mexico, but it has become particularly troublesome for the government as it continues to implement its sweeping energy reform and seeks to attract fresh investment to build much-needed fuel infrastructure.

In 2012, when the current administration took power, Pemex registered a total of 1,635 taps. By 2016, fuel theft had shot up by more than 320pc to 6,873 reported instances.

Based on the first quarter results, 2017 could far exceed last year's activity. This most recent uptick coincides with a recent spike in fuel prices. On 1 January the government introduced a new formula to cap fuel prices in unliberalized states, leading gasoline and diesel prices to increase by 14-20pc.

In the past Pemex has shared the number of fuel theft incidents with the press, but lately the company made it harder to access such information, requiring formal requests.

Pemex executives are reluctant to share detailed information on the volumes of fuel stolen or its cost to the company, but on at least two occasions since 2014, officials have estimated financial losses between $1bn and $1.5bn/year.

In October 2016, Pemex's director of downstream operations Carlos Murrieta Cummings said in a radio interview that the company could be losing up to 27,000 b/d.

Following a deadly clash between fuel thieves and the military last month, Mexican president Enrique Pena Nieto called for a more aggressive approach to fuel theft, asking that Pemex work together with the energy, finance and tax ministries, police forces and the military.

Pemex recently acknowledged that its own workers might be involved in fuel theft. It has cancelled a handful of contracts with retail fuel stations because of irregularities in the stations' accounting.

Illegal taps on Pemex pipelines by month

Illegal taps on Pemex pipelines by year

Illegal taps activity this year