Two years into Mexican President Enrique Pena Nieto's six-year term, the premier has managed to pass contentious energy reform legislation that will allow foreign energy firms to operate independently inside the country. The government will award the first of these contracts in the opening half of 2015, marking the start of an ambitious effort to revitalize Mexico's lagging energy sector.
For foreign energy companies, 2015 will be an introduction to Mexico's complex security environment and to its shifting constellation of transnational criminal groups, commonly referred to as cartels. Mexico's state-owned energy company, Petroleos Mexicanos, or Pemex, and its various contractors are already keenly aware of the risks these groups pose. These risks have intensified in recent years as organized crime groups have sought to diversify their operations beyond drug trafficking, expanding into fuel theft.
Crime groups have the capacity to organize hydrocarbon theft on a massive scale across multiple regions with a high level of efficiency. Although these fuel theft operations are ongoing along virtually every pipeline route, the territories in the east have seen the greatest uptick since 2010. This area is largely within the domain of the Tamaulipas-based organized crime groups, including Los Zetas and the various Gulf cartel gangs. In 2013, at least half the illegal pipeline taps discovered were inside this territory. The theft and resale of gasoline in Tamaulipas state serves as one example, highlighting the potential profits for organized crime. According to a June 2014 report by Milenio, organized crime now controls approximately 15 percent of gasoline sales in Tamaulipas state and earns roughly $268 million per year. Crime groups in Tamaulipas also receive revenue from other products, including crude oil. In September, police dismantled a Guanajuato-based crime ring that had been purchasing 25,000 barrels of oil per month from a Gulf cartel gang in Tamaulipas state and reselling it to companies in Guanajuato, Jalisco and San Luis Potosi states. This represents only a small portion of the nation's hydrocarbon theft problem.
Fuel theft will not disappear in the coming years. If anything, it will likely increase. Any slowing of this trend will require effective intervention from Mexican authorities, a difficult task in itself because of competing priorities. As foreign companies enter the energy sector, they will be affected by hydrocarbon theft organized by local crime syndicates. The extent of the damage will depend on the ability of Mexico City to control or at least curtail criminal activities.
