Background on the Issue
Fuel theft, known as “huachicol” in Mexico, has been a significant problem for years. The issue involves the illegal siphoning of fuel from Mexico’s pipelines, leading to substantial financial losses for Pemex, the national oil company. Recently, a Reuters investigation uncovered that US companies have been exploiting this situation for their benefit.
The Reuters Investigation
Reuters published a report detailing the case of the tanker Torm Agnes, which arrived at the port of Ensenada on March 8 carrying 120,000 barrels of diesel. The tanker docked at a port lacking the necessary infrastructure for such operations, typically used for cruise ships, luxury yachts, and container ships.
According to the article, the diesel was unloaded using vehicles that were filled via hoses connected to the tanker. A witness described the operation as precise and meticulous, with the team working rapidly and continuously, even during the night.
Ikon Midstream’s Role
The investigation revealed that Ikon Midstream, a Houston-based company and its CEO Rhett Kenagy, played a crucial role in the multimillion-dollar Ensenada operation. Ikon Midstream purchased the diesel in Canada, claiming it was for lubricants. They then leased the tanker to deliver it to a client, reportedly a front for one of Mexico’s most violent and powerful cartels.
Despite multiple requests for comment, Ikon Midstream and Kenagy did not respond. Their attorney, Joseph O. Slovacek, instructed Reuters to cease contacting their clients. The Port of Ensenada also declined to comment, and Torm, the Danish company managing one of the world’s largest fleets of oil tankers including the Torm Agnes, stated they ceased operations with Ikon Midstream shortly after the Ensenada incident.
Extent of Fuel Contraband
Based on five testimonies from current and former government sources, the Reuters report indicates that fuel smuggling is so rapid that legally imported fuel now accounts for only one-third of Mexico’s diesel and gasoline market.
The illicit fuel entering Mexico is valued at over $20 billion annually, according to one source who helped the Mexican government estimate the scale of this illegal trafficking. Law enforcement agencies on both sides of the border are alarmed by this situation.
Key Questions and Answers
- What is “huachicol”? Huachicol refers to the illegal siphoning of fuel from Mexico’s pipelines, causing substantial financial losses for Pemex.
- Which US company was involved in the fuel theft scheme? Ikon Midstream, a Houston-based company, purchased diesel in Canada, claiming it was for lubricants. They then leased a tanker to deliver the fuel to a client reportedly linked to a major Mexican cartel.
- How widespread is fuel contraband in Mexico? According to the Reuters investigation, based on government sources, illicit fuel smuggling accounts for about one-third of Mexico’s diesel and gasoline market due to its rapid pace.
- What is the financial impact of fuel contraband? The illicit fuel entering Mexico annually is valued at over $20 billion, highlighting the significant financial losses caused by this illegal activity.
