Mexico sticks to truck strategy causing fuel shortages

Mexico will stick to an anti-fuel theft strategy of delivering more gasoline and diesel by tank truck instead of pipeline despite widespread shortages in at least eight central-west states and Mexico City, President Andres Manuel Lopez Obrador said today.

The government will continue to shift delivery of refined products to tank trucks from the most theft-prone pipelines until "little by little" fuel theft is stamped out, AMLO said. The government said that such theft cost it $3.3bn in 2018, higher than the previous administration's estimate of $1.7bn.

Other government measures to combat fuel theft include legislation to reclassify fuel theft as a felony, measures by the finance ministry's intelligence unit to freeze the bank accounts of those suspected of fuel theft and the monitoring of highways for tank trucks carrying stolen fuel, interior minister Olga Sanchez said today.

The attorney general's office has also opened investigations into people suspected of fuel theft, but can provide no further details, attorney general Alejandro Gertz said.

Pemex said in April that about 98pc of some 2,000 captured fuel thieves had gone free.

Mexico City's gasoline shortage will continue today following a second leak on the Tuxpan-Azcapotzalco pipeline last night, Lopez Obrador said.

"The pipeline was repaired, service was re-established last night and then the pipeline was blocked again," he said.

Fuel shortages have arisen across the country in the past two weeks following the government's decision to combat fuel theft by shutting down key pipelines that have been subject to repeated illegal taps. Authorities found 12,851 illegal taps in the first 10 months of 2018, according to data from state-owned Pemex.

The fuel shortage spread to Mexico City this week because of panic buying from citizens and a leak, which Argus confirmed was from an illegal tap, in the 103,000 b/d fuel pipeline connecting the port of Veracruz with the Azcapotzalco terminal in Mexico City.

The Tuxpan-Azcapotzalco pipeline was due to start operating normally as of 6am ET today but another leak was detected at around 11pm ET last night, Lopez Obrador said.

"There is sufficient gasoline in Mexico City and it is just a question of distributing it to the gas stations. We are returning towards normal in Mexico City and Mexico State," AMLO said.

Up to 103 of the about 400 retail fuels stations in Mexico City were closed yesterday, but that number fell to 85 by the end of the day, Mexico City mayor Claudia Sheinbaum yesterday.

AMLO confirmed this morning that 4,000 soldiers are in place as part of a previously announced plan to guard 1,600km (990 miles) of pipelines that include the six principal refined products pipelines across the country. The number of military personnel will likely increase, he said. He called on the general public to assist in pipeline monitoring efforts.

Mexico imports most of its refined products from the US, more than doubling imported volumes of gasoline and diesel in the last five years as its domestic production has declined. Mexico imported 586,000 b/d of gasoline and 251,000 b/d of diesel in November.

In order to reboot the country's refinery system, AMLO plans to invest Ps49bn ($2.4bn) in overhauling the country's six refineries and $8bn in the new 400,000 b/d refinery in Dos Bocas, Tabasco.

The president pledged to provide further statistical information on the government's anti-fuel theft plan on 14 January.