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Weekly Report - 24 September 2015 (WR-15-38)

MEXICO: Fuel theft compounds Pemex’s difficulties

The double whammy of lower production and a declining world oil price have impelled Petróleos Mexicanos (Pemex) to make budget cuts this year, but the State oil company’s problems have been exacerbated by a surge in fuel theft. In the first eight months of the year, there were 3,547 illegal taps, up 50.6% on the same period in 2014, amounting to losses of M$13.2bn (US$783m), or more than M$50m a day. At the present rate losses will top US$1bn by the end of 2015.

The number of illegal taps along Pemex’s sprawling network of ducts in the first eight months of 2015 has already exceeded the 3,348 taps for the whole of 2014. And the figure for 2014 was more than 25% of the total number of illegal taps registered between 2000 and 2014: 11,872. Last February Pemex announced changes to its nationwide supply methods in an attempt to combat rising fuel theft: using pipelines only for unrefined fuels; and tightening controls to prevent leakage of pumping times (Pemex employees are suspected of tipping off drug trafficking organisations [DTOs]). It does not appear to have acted as much of a deterrent.

The state with the greatest number of illegal taps in the first eight months of 2015 was Tamaulipas, with 561 cases, up 15% on the same period in 2014. This despite the state governor, Egidio Torre Cantú, repeatedly stressing his intention to crack down on the practice. There were admittedly more dramatic increases elsewhere. The second and third placed states on the list, Guanajuato and Puebla, saw increases of 131% to 555 illegal taps and 172% to 511 respectively over this period. Next on the list were Jalisco, up by 82% to 362, and the Estado de México (Edomex), up 78% to 293.

In total there were an increased number of illegal taps in 23 of Mexico’s 32 federal entities. Even in the Distrito Federal (DF) there might have been only eight taps but this was up from just one last year. The most noteworthy declines in the nine states which saw falls were Sinaloa, down by 17% to 151 taps; Nuevo León, down by 20% to 85; and Zacatecas, down by 88% to four.

It is not just a matter of the financial cost sustained by Pemex for the loss of fuel but also the cost of closing and repairing its pipelines, which has resulted in fuel shortages in some states at various points over the course of the year. Once detected, an illegal tap takes in the region of 12 hours to repair and to build up sufficient pressure to resume pumping. There is also the issue of public safety. Pemex has been increasingly prone to leaks and explosions, some of which could be explained by the frequent illegal taps rather than purely poor maintenance.

This all goes to explain why the federal congress is keen to draft legislation to punish fuel theft from Pemex pipelines as a serious crime. A bill to this effect was debated during the last congressional session but failed to advance because of constitutional concerns (should this be a matter for individual state congresses?) and because a number of legislators argued that it required greater definition to ensure that it targeted the actual culprits.

  • ‘El Chapo’

The dismissed director of the maximum security prison, Altiplano I, in the Estado de México, has been imprisoned in his own jail on the orders of a Mexican judge on 21 September for his possible role in the escape of the drug kingpin, Joaquín ‘El Chapo’ Guzmán Loera, last July. A total of 20 arrest warrants have now been issued in connection with Guzmán’s escape. In addition to the fired prison director, Valentín Cárdenas Lerma, the then national coordinator of the federal prison system, Celina Oseguera Parra and the legal director at Altiplano I, Leonor García García, have also been placed under arrest, as well as two members of the national intelligence service (Cisen) and two prison officials in charge of the audio and video surveillance system in the prison.

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