Watching The World: Drug cartels hit Pemex

June 21, 2010
Mexico's oil and gas industry, as if it did not already have enough problems, is suffering from worries about abductions of workers carried out by members of the country's drug cartels.

Mexico's oil and gas industry, as if it did not already have enough problems, is suffering from worries about abductions of workers carried out by members of the country's drug cartels.

"A few of our workers, at more than one well, have been abducted," said a high-ranking official of Mexico's Petroleos Mexicanos after a drug gang reportedly seized a gas well and kidnapped several workers.

The report was later confirmed by another Pemex official who said, "It is true that several workers at that site, as well as at several other wells, have been seized recently by people we think are linked to organized crime."

Earlier this year near the town of Tierra Blanca, a city in the south-central part of the state of Veracruz, Mexican police found a secret oil depot with four underground storage tanks and hoses for filling tanker trucks with oil siphoned from the country's pipeline system.

Illegal pipelines

According to Pemex, the number of illegal pipeline taps has more than quadrupled since 2004, rising from 102 last year to 462. Altogether, Pemex said thieves stole 8,500 b/d of petroleum products in 2009.

Oil theft in the region around Tierra Blanca is controlled by the Zetas, a band that broke away from the Gulf Drug Cartel 2 years ago and quickly diversified into everything from pirated DVDs to kidnappings.

The Zetas pass the stolen fuel to their own gasoline stations or sell it to unscrupulous manufacturers, trucking firms, and even to foreign refiners operating on the international black market.

The scandal has reached into the US, too, with reports indicating that executives from five Texas firms recently pleaded guilty in US federal court to knowingly buying millions of dollars of gas condensate stolen from Pemex.

According to the US Attorney General's Office, one firm received 22 tanker trucks of the stolen condensate at a terminal in Brownsville, Tex., in January-March 2009.

Income stream

What does organized crime want with Pemex employees and wells? Reports indicate that the kidnappings represent a twist in Mexico's ongoing drug war, raising worries that cartels are infiltrating parts of the company in order to smuggle oil and gas products.

Analysts say that black-market smuggling of oil and gas products in Mexico is a big business, with Pemex losing as much as $1 billion/year in smuggled products stolen by criminal groups acting alone or in concert with Pemex employees.

Sometimes the theft takes place right under Mexican officials' noses. Officials were highly embarrassed last year when reports emerged that thieves were stealing diesel from an underground pipeline just a few blocks from Pemex headquarters in the nation's capital.

Meanwhile, the income stream from the stolen fuel has enabled the cartels to purchase weapons, bribe officials, and fund their continuing battle against the Mexican government.

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