DTO's Turning Mexican Oil Business Deadly

Posted by Yaqui for Borderland Beat from: Business Insider

Mexican drug cartels are preying on a multibillion-dollar industry and taking a deadly toll on the workers who run it. Oil theft has become increasingly common in Mexico.

By: Christopher Woody
February 1, 2018

As organized-crime groups have pursued oil theft, oil workers have become targets for bribes, intimidation, and violence. There is little sign local, state, or the federal government in Mexico are able to mount an effective response.

Mexico's oil industry has gotten increasing attention from criminal organizations, including powerful groups like Los Zetas and  Cartel Jalisco New Generation.

The number of illegal taps found on state oil firm Pemex's 14,000-kilometer pipeline network has surged, rising from 132 in 2001 to 3,348 in 2014. In 2017, Pemex reported 9,509 such taps — an all-time high.

Oil thieves have siphoned away billions of dollars from Mexican state coffers. But their enthusiasm for Mexico's energy industry is also taking a deadly toll on the workers who keep it running.

"They said they knew who I was and where I lived," Alberto Arredondo, a pump technician at an oil refinery in the central Mexican city of Salamanca, told Reuters of the first call he received from the La Familia Michoacana cartel in February 2015. "They wanted information."

He hung up, but they called back, demanding to know when fuel would be pumped and through which pipelines. He would be hounded, kidnapped, pistol-whipped, and stabbed so severely that surgeons removed his gall bladder before he finally left the country in December 2016, heading to Canada, where he is seeking asylum.

        A sign at Mexican national oil company Pemex's refinery in Salamanca, in Guanajuato state      
                                       September 19, 2017. Photo Reuters /Edgard Garrido

Criminal groups "go in and they get some of these Pemex employees, and they intimidate them into giving them information as to the routes that some of the petroleum is going to be taking, the timelines, how many people are working at these refineries, the amount of crew members ... they get all the details," Mike Vigil, former chief of international operations for the US Drug Enforcement Administration, told Business Insider.

Fuel theft is not new, nor is it limited to organized criminal groups. Rural residents, known as Hauchicoleros, have often pilfered fuel, using it for their own needs or reselling it locally. Many locals are happy to buy cheap, illegally obtained fuel, as national energy reform has gradually increased prices at the pump. (Higher prices have also drawn in more criminals.) In some places thieves are praised for boosting economies in impoverished areas.

But competition between criminal groups, and their brutal tactics, has added to the violence plaguing much of Mexico.

In Salamanca — site of Mexico's second-oldest refinery — the number of homicide cases opened by authorities has risen each year since 2013, President Enrique Peña Nieto's first full year in office.

In Guanajuato state, where Salamanca is located, authorities opened 1,096 homicide cases in 2017 — a 14% increase over 2016 and 71% more than in 2013.

The state's homicide rate has increased each year since Peña Nieto took office, rising from 11.21 in 2013 to 18.55 last year.

There were also 1,696 illegal fuel taps in Guanajuato last year — the most in the country, according to Pemex.

Reuters found press records of at least seven alleged murders of Pemex employees around Salamanca since 2012. The state attorney general's office said it had records of three suspected murders of Pemex employees in recent years.

In 2016, as Arredondo, the pump technician, faced continued attacks and threats from oil thieves, two colleagues at the refinery were killed. Family members of the victims told him they had contacted police about threats from those thieves.

In October that year, Arredondo was stabbed outside a bar. After recovering for two months, he returned home and again found gang members there. "I realized that this was never going to end," he told Reuters. That night, he left for Canada.

Gangs and fuel thieves "kidnap some of these employees and then they intimidate them, and they tell them their either going to kill them or they're going to kill their families," Vigil said. The employees "go along with it because they're fearful for their lives and the lives of their families."

One day after Reuters published its report in January detailing Mexican criminal influence in the oil industry, Capt. Tadeo Lineol Alfonzo Rojas, the head of security at the refinery in Salamanca, was shot and killedwhile driving in the area. One of his sons was wounded in the attack.

Pemex, the state oil firm, condemned the attack, but authorities have made little headway against the gangs. Police there frequently seize vehicles — delivery trucks, ambulances, even school buses — rigged to carry stolen fuel.

''Some people use drugs, but everybody uses petroleum''

     Pemex's oil refinery in Salamanca, in Guanajuato, Mexico, Feb 8, 2016. Photo: Thomson Reuters

For major cartels, Pemex's oil dealings — which generated revenue of about $52 billion in 2016 and provided about 20% of government income — are an appealing target.

The illegal oil trade doesn't have the same risks as moving illegal drugs through Mexico and over international borders, Vigil said. "Keep in mind that only some people use drugs, but everybody uses petroleum, and so it's become a very lucrative business."

The illegal fuel trade could not function without official complicity. Between 2006 and 2015, 123 Pemex workers and 12 former employees were arrested for suspected participation in fuel theft, according to documents obtained by El Universal in early 2017.

"A lot of Pemex employees are in collusion with these cartels," Vigil said, "and they become affluent as a result of that."

Workers clean up oil leaked into the San Juan River after thieves ruptured a pipeline, in Nuevo Leon state, Mexico, August 22, 2014. Photo: Reuters/Daniel Becerril

Illicit proceeds also enable payoffs — graft among police in Salamanca became so rampant that the state fired the entire local force and replaced it with state officers.

State and local governments are often unequipped or unwilling to address fuel theft and organized crime. The federal government has stepped in, often relying on the military, which is not equipped for law-enforcement duties.

In spring 2017, it deployed about 500 troops to an area in Puebla state called the "Red Triangle," through which a major pipeline passes and where oil theft is common. In May, videos emerged appearing to show military personnel executing suspected thieves.

Clashes between the Mexican Military and Protesters after Video surfaces showing Military personnel executing suspected oil thieves.

The recent announcement that more  troops would be deployed around the country in response to record violence in 2017 indicates the government has not backed off this militarized approach, and national elections this summer are likely to draw lawmakers' attention away from security policy in the near-term.

"The revenue that's being generated by the petroleum theft is making a lot of these cartels much more powerful" and is likely to bolster many smaller groups, Vigil said. "Petroleum theft is becoming more and more prevalent as time progresses."