Published On: Sat, May 13th, 2017

Deadly fuel theft problem in Mexico worries foreign oil companies

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Foreign companies looking to supply gasoline to Mexico are taking a hard look at planned investments after a series of fuel thefts escalated into a bloodbath last week in the state of Puebla, Bloomberg News reported.

A gun battle May 3 between soldiers and huachicoleros, the local nickname for fuel thieves, left 11 people dead and many more injured and triggered protests in Puebla, where pipelines are often tapped to steal gasoline. Companies looking to import fuel into Mexico from the U.S. like Howard Energy Partners and BioUrja Trading LLC are concerned about the uptick of the problem.

“It’s part of a worrisome trend that investors will take a look at and price into the offers that they make and the amount of investment that they decide to put into Mexico,” John Padilla, managing director of energy-consulting firm IPD Latin America, said by phone from Bogota.

Soldiers stand in front of the flames generated by a fire in a clandestine fuel valve May 7. Photo: Jose Castanares/AFP via Getty Images

Soldiers stand in front of the flames generated by a fire in a clandestine fuel valve May 7. Photo: Jose Castanares/AFP via Getty Images



Mexican fuel thefts have escalated in the past year, as the government abolished subsidies. The policy known as “gasolinazo,” or fuel-price slam, pushed up pump prices by as much as 20 percent in early 2017 and led to riots and blockades at some fuel terminals. Petroleos Mexicanos has covered the cost associated with the thefts, but it’s unclear whether the state oil company will try to pass them on to private importers in the future.

“Fuel theft is a significant concern for many companies going into Mexico and we don’t know that the government is doing anything in order to help alleviate that risk,” Rajan Vig, BioUrja’s head of Origination for Mexico, said by phone from Houston. BioUrja is seeking to import fuel into Mexico and is in talks with the government and banks to address the fuel-theft issue, but “we need the government to be on our side,” he said.

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Source: bloomberg.com

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