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ESAI Energy: AMLO’s battle against fuel theft

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World Pipelines,

Mexico’s new President, Andrés Manuel López Obrador, hoped to kill two birds with one stone: reduce theft from gasoline pipelines and diminish Mexico’s reliance on gasoline imports from the US. Instead, the recent pipeline closures and related explosion that resulted in the deaths of at least 96 people have caused a spike in gasoline imports from the US in January. This increase in imports, notes ESAI Energy’s recent Latin America Watch, comes even as supply shortages have dented demand for motor gasoline by as much as 40 000 bpd this month.

The Latin America Watch report describes how a combination of pipeline closures and refinery outages have caused Mexico’s gasoline supply to dwindle to a mere 100 000 bpd in the first half of January, or only one-eighth of the country’s total 790 000 bpd of demand. Of these two problems, the refinery outages will have longer term implications. The Madero and Minatitlan refineries will remain offline longer than the government initially expected in 2019, forcing the import of more gasoline from abroad, especially the US Gulf Coast.

While President López Obrador has announced that his administration has changed tact and will no longer close pipelines, some supply shortages are likely to remain as illegal taps continue. The situation is complicated further because much of the fuel theft appears to be managed by the cartels. “President Lopez Obrador has decided to take on a thorny problem by tackling fuel theft,” says ESAI Energy analyst Chris Cote. “If the cartels decide to hit back, this could be just the beginning of Mexico’s fuel supply problems.”

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South America pipeline news