Is Mexico finally getting serious about fuel theft?
In recent months, President Sheinbaum’s administration has conducted significant seizures of illegal fuel linked to drug cartels. The series of blows against these groups started when authorities seized two large shipments in the states of Baja California and Tamaulipas in late March. The largest one, in Tamaulipas, was found in a large vessel transporting 10 mn liters of diesel, while the one in Baja California comprised 7.9 mn liters, found in a clandestine warehouse in the town of Ensenada. Since then, the largest hit took place just this week, as 15 mn liters of gasoline, fuel and other crude distillates were seized in Coahuila. According to press reports, this case is linked to Juan Manuel “El Mono” Muñoz, a businessman linked to powerful drug cartel Los Zetas.
This increase in hits against “huachicoleros”, as fuel thieves are commonly known in Mexico, follows the U.S. Federal Bureau of Investigation (FBI) dismantling of an illegal operation that smuggled crude from Mexico to the U.S., where it was refined and then sent back to Mexico, mislabeled so as to evade taxes. James Lael Jensen, his wife Kelly Anne Jensen, and their sons, were arrested inside a USD 9.1m mansion, while a company related to them, Arroyo Terminal, was seized in the city of Rio Hondo, Texas. The Jensen family would use storage facilities in Texas to carry out the operation.
It’s not clear at this point whether Mexican authorities are working entirely on their own or in part based on intelligence from the American government. What is clear is that the Sheinbaum administration wants to send the message that her government is fighting against huachicol directly – a sharp departure from the strategy followed during the López Obrador administration, which boasted about putting an end to fuel theft, despite evidence to the contrary.
Nonetheless, illegal fuel is still flooding the market. According to estimates by Onexpo, the largest trade group of fuel stations in Mexico, up to a third of the total fuel market in the country comes from illegal activities, including fuel stolen from illegal taps, and fuel smuggled in, mostly from the U.S., without paying excise taxes, which has surged.
“During 2024, we experienced an increase in theft of and illegal trade in the fuels that we produce,” wrote Pemex in its annual report filed with the Securities and Exchange Commission (SEC). The state-owned company estimates theft of fuel averaged 17,000 barrels per day (bpd) in 2024, 10.4% more than the 15,400 bpd in 2023. Pemex does not have records on illegally imported fuel that evades excise taxes.
In late June, the government said it arrested 32 people linked to a criminal group led by Cirio Sergio Rebolledo “Don Checo.” However, authorities have had a mixed record securing convictions of the criminals linked to this mafia in the past, and very few have been imprisoned. Don Checo’s gang tapped Pemex’s pipelines and openly sold it on the highway connecting the state of Queretaro —an important industrial hub— with Mexico City.
In other energy news…
- Pemex admitted it faced problems at its new refinery Olmeca, in Dos Bocas, Tabasco, with operations paused between December 2024 and February 2025. “In December 2024, the refinery halted operations due to issues with the crude oil’s quality parameters,” said Pemex in a document sent to the SEC late last month, without specifying the issue with the crude quality. “Operations resumed by the end of February 2025. It is expected that the two atmospheric distillation trains of the refinery will be operational by the second quarter of 2025.” The government acknowledged the issue in mid-February, however, it did not disclose for how long Pemex had to stop operations at its brand-new refinery. The problems with salt and water in the crude started in December, said Pemex chief executive in February, though he said the company was controlling it and that crude was close to specifications by then.
- President Sheinbaum has maintained the policy of sending crude and fuel to Cuba, a practice that in the past led to Pemex losing financing from a U.S. bank. Pemex subsidiary Gasolinas Bienestar exported an average of 19,600 bpd of crude and 2,000 bpd of refined products to Cuba between January to March of this year, with a total cost of MXN 3.1 bn (US$200 mn), according to the company. The amounts are lower than the average seen in 2024 when Pemex sent 21,100 bpd of crude and 2,700 bpd of refined products.
- Mexico’s crude production from contracts awarded in 2015–2018 rose by 6.5% in April from a year earlier, rebounding from a sharp drop earlier this year, according to the latest Mexican Petroleum Fund (FMP) data. Crude output from contracts rose to 180,020 bpd in April from 169,030 bpd a year prior, but declined 1% on a monthly basis compared to the 181,750 bpd in March. Condensate output from contracts fell by 44% to 1,570 bpd in April from a year prior and 8% month-over-month. Natural gas production was 167.4 mn cubic feet per day, down by 22% from a year earlier but up 0.6% from March. Data from the FMP is the only one available right now to track non-Pemex crude production after the government shut down the databases of the extinct National Hydrocarbon Commission.
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