Cartels Tap Into Mexico’s Oil Lines
ARROYO MORENO, Mexico - Mexico's drug cartels are getting into the oil business, tapping into underground pipelines and siphoning tons of crude oil and gasoline, some of which is sold in the USA, law enforcement officials say.
The stolen fuel has created a huge income stream, as much as $715 million a year, which cartels can use to buy weapons, bribe officials and bankroll their bloody battle against the Mexican government, according to the Mexican attorney general's office.
In late May, police found a huge secret oil depot near the town of Tierra Blanca with four underground storage tanks and hoses for filling tanker trucks. The thieves covered their equipment with blankets soaked with air freshener to hide the smell of oil, said Petroleos Mexicanos, the state oil monopoly better known as Pemex.
The number of illegal pipeline taps has more than quadrupled since 2004, from 102 to 462 last year, Pemex says. Thieves stole an average of 8,432 barrels of petroleum products each day in 2009 - enough to fill 39 tanker trucks.
"It's a big problem and a continual thorn in their side," said David Shields, editor of Energia a Debate, an oil industry magazine. "And the states that have drug trafficking have more problems with their pipelines."
Oil theft in this area of southern Mexico is controlled by the Zetas, a band of hit men that broke off from the Gulf Drug Cartel two years ago, the Mexican attorney general's office says. The Zetas have quickly diversified, dabbling in everything from pirated DVDs to kidnappings for ransom.
The thieves sell the fuel through their own gasoline stations; sell it to unscrupulous manufacturers or trucking firms in Mexico; use it to boost profits at front companies owned by the cartels; or sell it to foreign refiners on the international black market.
Pemex says the thieves use powerful drills and sophisticated valves to prevent any drop in pipeline pressure that the oil company might detect.
'I thought we were all going to die'
On the outskirts of Arroyo Moreno, a Pemex pumping station grinds day and night, moving tons of crude oil, diesel, gasoline and other fuels northward from Mexico's oil fields and refineries along the Gulf. On the night of Oct. 27, Isidora Sierra Guerrero was awakened by a sickening odor like the smell of burning tar.
"I smelled those fumes, and I thought we were all going to die," she said.
The smell was fresh crude oil. A mile from Sierra's house, thieves had botched an attempt to tap a high-pressure Pemex line, creating a 60-foot geyser of oil in the middle of a nearby sugar cane field. By the time Pemex stopped the leak, the oil had soaked 86 acres of farmland.
Veracruz, the Gulf Coast state where Arroyo Moreno is, accounted for 122 of the 462 illegal taps detected in 2009, more than any other state, Pemex says.
"Look at this," said farmer Cupertino Vazquez, dipping a stalk of sugar cane into a water well he uses to irrigate crops near Arroyo Moreno. The stalk came out dripping with black crude. "I can't water the crops now. These people are destroying our livelihoods."
Oil theft is a perfect business for the drug cartels because many have acquired gasoline stations and liquefied-petroleum suppliers as a way of laundering drug money, said George Baker, a Houston-based consultant.
Drug gangs may mix stolen fuel with legitimately purchased fuel for extra profit or sell it on the black market to other companies, he said. All it requires is a truck, and in oil-rich areas such as Veracruz state, the highways are full of private tanker trucks that can be easily rented.
There is evidence that the stolen petroleum is ending up in the USA.
Executives from five Texas companies pleaded guilty in U.S. federal court to knowingly buying millions of dollars of natural-gas condensate stolen from Pemex. Condensate is a liquid distilled from natural gas that can be used, like oil, to make fuels, plastics and other products.
One oil-purchasing company, Continental Fuels of San Antonio, received 22 tanker trucks full of stolen condensate at its terminal in Brownsville, Texas, from late January to early March 2009, according to the U.S. attorney general's office.
The Mexican government says it has tightened security at its pumping stations and stepped up aerial patrols in an effort to stem the theft. It uses an "instrumented pig," a device that moves through the pipelines, to map any leaks.
In 2008, fuel theft cost Pemex about $715 million, the company says. It has not released an estimate for 2009.
Even using the new detection equipment, it can take hours or days for authorities to track down leaks.
In a pasture near Tierra Blanca, where the illegal oil depot was found, ranch hand Lorenzo Perez said that by the time Pemex found the leak, thousands of gallons had soaked into the ground.
"These criminals don't care about the damage they do," Perez said. "They take as much as they can, then they disappear."