Pemex not liable for fuel theft damage: court

Mexico's supreme court for the second time this year sided with state-run Pemex on whether the oil company is legally responsible for environmental damage caused by fuel theft.

"When the hydrocarbon fuel theft is exclusively generated by the illegal tapping of a pipeline, meaning, by the perpetration of a crime, Pemex's responsibility is ruled out," according to a copy of the supreme court decision obtained by Argus. The exact date of the decision was redacted.

The supreme court's ruling was in response to Pemex's appeal of a 2016 decision from Mexico's energy safety and environmental agency (ASEA) that the oil company is responsible for the environmental damage caused by a fuel-theft inducedleak in the state of Chihuahua. As a result, Asea had imposed a sanction to Pemex, which had to remedy contamination at the site of the fuel spill.

But the court said that "the leak was the product of a clandestine tap, or a crime committed by a third party," establishing that Pemex was neither directly nor indirectly responsible for the environmental damage.

As fuel theft continues to grow exponentially in Mexico, the ruling is a significant win for Pemex, which could otherwise be held accountable for many other leaks throughout the country.

The supreme court had delivered a similar ruling in January, for another leak in the state of Tabasco, also due to illegal tapping.

The supreme court judge in charge of the case stressed that illegal tapping had reached record highs since 2014, accounting for about 4.2mn l of stolen products every day, the judge said.

According to data from Pemex, fuel theft in Mexico reached historic levels in 2017 with 10,363 illegal taps into pipelines, up 50pc compared with the previous year. The central state of Guanajuato had the highest number of incidents that year, with a total of 1,852 illegal taps, or over 150 a month.

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

Rising fuel theft comes as officials are looking to attract private investment for costly refinery upgrades and the construction of new infrastructure.

In May 2017, Mexico's president Enrique Pena Nieto asked that Pemex work with the military, local, state and federal police forces, as well as the energy and finance secretaries and the attorney general's office to find a more efficient strategy against illegal tapping.

The strategy included 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. But they are also now going after retail stations that are commercializing stolen gasoline and diesel.

Pemex said earlier this month that since January 2017, authorities had carried out 2,002 operations in the state of Puebla, secured 3,138 vehicles and 6mn l of stolen fuel, and made 781 arrests.