Fuel theft in Mexico has evolved from an impromptu illicit activity carried out by small-time criminal crews, to a sophisticated operation linked to some of Mexico’s main criminal organizations. It is widely suspected that Los Zetas – considered by the US government to be the most technologically advanced and sophisticated cartel operating in Mexico – is the organization responsible for numerous of the 2,614 illegal taps found during 2013 in PEMEX’s pipeline systems, with other organizations also profiting from the sale of stolen hydrocarbons.

“Currently, the most important concerns within the industry revolve around safety,” reveals Manuel Cervantes, Founding Partner of MCM Abogados. “Tampico, Reynosa, and the states surrounding them suffer heavily from the drug cartels and the ensuing criminal activities they conduct.” While fuel theft is not geographically delimited and has expanded throughout the entire country, it has grown more rapidly in the northeast region. According to information inquiry SISI 1857600079613, answered by the Federal Institute of Access to Information, Tamaulipas went from having eight registered incidents in 2000 to 540 in 2013, while Veracruz’s illegal taps went from 25 to 242, and Jalisco’s from seven to 230 in the same time span. Sinaloa, Puebla, and the State of Mexico are the next in rank when it comes to the number of fuel theft activities during last year. This, however, is not a quandary that revolves exclusively around cartels; in sum, Mexico has seen a total of 6,480 recorded cases of fuel theft in the past five years. For 2013, PEMEX calculated that 5.63 million boe went missing, either due to leaks, illegal taps, or evaporation. This number represents a 28.04% increase year-on-year since 4.40 million boe were missing at the end of 2012. Under the 300-93000-PO-SASI-06 procedure and using an average sale price, these lost products cost MX$10.27 billion (US$788 million) to PEMEX.

“PEMEX has continuously suffered from vandalism, and there are many illegal activities happening within its facilities that usually culminate in fuel theft,” says José Aguilar, Director General of C&C Technologies Mexico. “Organized crime sees an easy opportunity to attack PEMEX and make money without much effort: they target pipeline tapping and component theft to turn an easy illegal profit.” The problem, in the eyes of Cervantes, lies in the fact that the infrastructure is not properly supervised. “The occasion for perpetrators surfaces due to the long pipe segments that are fairly abandoned and not invigilated by PEMEX. Illegal organizations have taken advantage of the human and budgetary restrictions that PEMEX suffers from in pipeline surveillance and have ramped up fuel theft operations in the past years.”

Cervantes believes more work is yet to be done on reporting, monitoring, and developing additional strategies, including allocating additional budget to implement new control measures at given checkpoints along the pipeline infrastructure. Given the seriousness of the issue and the fact that PEMEX cannot assign lookouts to each section of its pipelines, several companies are offering their pipe monitoring solutions to help PEMEX detect possible leak points. “MCM Abogados can help in this respect by securing new contracts and achieving a fair negotiation with companies to achieve top-end technology within PEMEX’s existing budgetary restrictions,” Cervantes claims. With PEMEX having to attend so many different activities within the hydrocarbons value chain, it is evident that its reach is somewhat limited; pipeline integrity and the surveillance of midstream facilities are not near the top of its list of priorities. Companies such as NDT Global, C&C Technologies, and Schneider Electric provide PEMEX with real-time control and monitoring solutions that can detect whenever there is a leak, whether due to natural wear-andtear or manmade taps.

Óscar Luis González, Regional CEO of NDT Global, suggests that the solution to the problem could start in the country’s yet-to-be-developed infrastructure, while also slowly upgrading the SCADA systems across the entire network. “It is not feasible for us to monitor the entire network, due to the sheer size it represents,” he says. “The only realistic option is offering detection technology solutions that can help minimize the problem.” Luis Rancé, Senior Director of Institutional Affairs of Schneider Electric and former CEO of Telvent, elaborates on the kind of solutions that his company currently provides to minimize the number of thefts. “We provide PEMEX with sophisticated solutions that help the company to pinpoint the exact location of leaks through a series of algorithms. The main emphasis of these solutions is to detect and locate the precise spot of the leak: it is different to identify a leak in a 150km pipeline segment, than to accurately determine its exact position.” The accuracy of this system could be the difference between catching perpetrators red-handed and letting them get away.

While Aguilar stresses that service companies are not PEMEX’s watchmen, he points out that some of their solutions could help in focalizing the problem and contributing to solve it. “We already have many things to care for, and our main responsibility lies on taking care of the physical integrity of the pipelines,” he comments. “However, we deliver prompt reports whenever we see any anomalies in our monitoring service.” NDT Global also provides a magnetic illegal tap detection technology that has helped in locating manmade leaks. “Even though ultrasonic technology could be more advanced than magnetics for pipeline detection analysis given its direct measuring method, the improved processing software for magnetic surveys is best suited to rapidly and accurately pinpointing illegal taps,” he adds.

According to González, the key to dissuading criminal organizations from engaging in illegal tapping operations lies in constant monitoring. “This makes life more difficult for thieves and eventually deters them from continuing on their attempts to steal hydrocarbons from pipelines.” The matter of contention for Rancé, is that to effectively minimize fuel taps the government needs to exert more blunt measures to punish the perpetrators. “We deliver the technology as a countermeasure. With it, we can discourage some of the smaller criminal groups from participating in these illegal activities,” he says. “However, forthright corrective actions by the police or the army have to be taken against these criminal groups. If the law punishes this act as a major felony and we address the current impunity, criminals will think twice before attempting to do it again.” Currently, fuel theft in Mexico is punishable by imprisonment of between three to ten years, qualifying as a minor felony