RPT-Fatal oil blast spotlights Mexico’s fuel thieves

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* Fatal pipeline blast a reminder of fuel theft problem

* President Calderon promises full investigation

* Figures show few convictions from siphoning complaints

By Robert Campbell

MEXICO CITY, Dec 20 (BestGrowthStock) – Mexican thieves have long
had a lucrative sideline in siphoning fuel from the country’s
pipelines to sell on the black market and although authorities
have made progress in cutting the amount of oil diverted, few
of the accused end up behind bars.

Authorities are investigating whether a fuel tap gone wrong
was to blame for a pipeline explosion that killed 28 people
outside Mexico City on Sunday. The tragedy has highlighted the
prevalence of fuel theft. [ID:nN19172322]

The head of state oil company Pemex (PEMX.UL: ) said although
technical problems could not be ruled out, “another likely
cause is an illegal tap which got out of control.”

Juan Jose Suarez told local radio Pemex had detected more
than 580 illegal taps in 2010, including more than 100 in the
pipeline affected by the explosion.

President Felipe Calderon, who visited the site of the
blast on Sunday, called for an investigation and promised to
apply the full force of the law to those responsible.

Authorities believe fuel thieves steal hundreds of millions
of dollars a year in fuel. Thieves are rarely brought to
justice, and profits have attracted the attention of the
country’s vicious drug gangs.

Pemex, the world’s No. 7 crude oil producer, says it is
finding an increasing number of illegal connections to its
pipelines, although the amount of fuel stolen has fallen.

The company says stolen oil fell 38 percent to 3.1 million
barrels in 2009 — still worth $350 million at current pump
prices — even as the number of illegal connections it found on
its network rose to 439, compared to 2008.

But Mexico’s creaking justice system has made little
progress in smashing the gangs behind the thefts.

Since 2000, Pemex has made more than 2,600 formal
complaints over fuel theft. But as of August of this year, only
15 cases had resulted in convictions, according to data
obtained through a freedom of information request — less than
one in 170. Another 345 cases remained open. Mexican federal
prosecutors did not respond to requests for comment.

Corrupt Pemex employees are widely suspected of having a
role in the fuel theft rings as few other people have the
knowledge of where the pipelines are buried, the schedules for
which fuels are moving down the lines and the sophisticated
skills needed to tap into an oil pipeline as it is running.

Federal prosecutors even raided Pemex headquarters in July
2009, carting off computers and other evidence, but have not
announced any arrests in connection with the raids.

The most significant success against fuel theft rings in
recent years has been achieved in U.S. courts. At least five
people have pleaded guilty in an ongoing investigation into the
smuggling of stolen Mexican natural gas condensate — a
gasoline-like by-product of natural gas production used in
petrochemical plants.

Pemex received $2.1 million from U.S. customs authorities
in 2009 in connection with the investigation. The company is
pursuing further redress in U.S. federal courts from the small
companies that are alleged to have participated in the
smuggling and resale of condensate to major corporations who
unwittingly bought the stolen oil.

Yet despite widespread allegations in court papers of heavy
participation by Mexican drug gangs in the condensate
smuggling, including the claim that the gangs have ripped off
more than $300 million worth of condensate since 2006, Mexican
officials have not announced any convictions in connection with
the case.
(Editing by David Gregorio)

RPT-Fatal oil blast spotlights Mexico’s fuel thieves