Pemex stops shipping finished products in pipelines

Pemex has announced it will no longer ship ready-to-use oil products through its pipelines. Instead, the company will use its extensive pipeline system to carry unfinished fuel.

The decision comes amid a January report that called the crisis a ‘national security issue’, an issue resulting from years of organized crime members stealing fuel through illegal tapping.

Thieves drill holes into the pipeline to fill tanker trucks then turn around and sell the fuel to industrial users, and even on occasion, to legitimate Pemex gas stations.

The state-owned oil company continues to find thousands of illegal taps along its network. Last year alone, Pemex found 4,127 taps averaging 11 new holes per day. In January of this year, illegal extraction holes increased to 13 per day.

Since the country is criss-crossed with tens of thousands of pipelines, it’s simply not possible for Pemex or its security forces to guard them all. In an attempt to curb thievery, Pemex will complete the fuel mixing process at the end of the company’s storage plants.

Pemex estimates they lost 17.4 billion peso last year from the illegal extraction holes, an increase of 70 percent from the 2013 and 137 percent increase from 2012.

Analysts say the move has been seen as an admission that Petroleos Mexicanos cannot stop the fuel thefts. They also noted that Pemex has acknowledged that some of its own employees are involved in the illegal extractions.
George Baker, publisher of the Houston-based newsletter Mexico Energy Intelligence says “This is a big admission of the vulnerability of Pemex.”

Although Pemex has not said which refining steps would be eliminated in the unfinished piped product, they did say the fuel will not be “usable in vehicles and industrial plants.”

They also said, “Customers should make sure that the fuel they buy has been delivered from Pemex terminals, and not buy gasoline or diesel from anyone other than gas stations or authorized dealers, given that … it could damage motors.”

Petroleos Mexicanos has been in the red since 2013 as oil production and oil prices continue to decline. Last year, the Mexican Congress approved President Enrique Pena Nieto’s energy reform, allowing foreign investments in the country’s energy sector.