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Pemex Lawsuit Targets U.S. Firms in Smuggling Ring

A Mexican Army guard stands at a post near the Pemex, Petroleos Mexicanos, plant in Mexico City. Photographer: Susana Gonzalez/Bloomberg
A Mexican Army guard stands at a post near the Pemex, Petroleos Mexicanos, plant in Mexico City. Photographer: Susana Gonzalez/Bloomberg

June 7 (Bloomberg) -- Petroleos Mexicanos, the state-owned oil company, has accused BASF Corp., Murphy Energy Corp. and three other U.S. companies of knowingly buying stolen natural gas condensate from Mexican bandits, according to a lawsuit filed in Houston federal court.

Pemex Exploracion y Produccion, the company’s production unit, accused the U.S. companies of facilitating a black market in natural gas condensate it claims is being stolen from Pemex’s Burgos Field in northern Mexico. As much as $300 million in liquids have been smuggled across the U.S. border in hijacked tanker trucks since 2006, Pemex said in its suit.

The complaint also named Trammo Petroleum Inc., Valley Fuels and U.S. Petroleum Depot Inc., along with six people allegedly involved in the ring. Five of the individuals, none of whom works for BASF or Murphy, have pleaded guilty to U.S. charges linked to the smuggling scheme and await sentencing.

Pemex seeks to recover damages from BASF and Murphy for allegedly having “directly assisted and encouraged” an organized criminal enterprise, Pemex attorney James Teater said in a statement today.

“As long as they see a market for stolen Pemex condensate, they will find a way to steal it,” Teater said in court papers, referring to Mexican criminals who’ve hijacked tankers at gunpoint and eluded Mexican Army helicopters and troops summoned to defend the oilfields.

Transportation Firm

“The company was unaware that it was stolen material when the company acquired it,” said Frank Zeller, a spokesman for BASF, in an e-mailed statement. Zeller said the company is cooperating with “competent authorities and courts.”

He declined to comment on the lawsuit.

Matt Murphy, head of Murphy Energy, a petroleum-products transportation firm based in Tulsa, Oklahoma, didn’t respond to telephone or e-mailed requests for comment.

Mexico’s attorney general and federal police have been investigating fuel theft for the past three years. Pemex, as the Mexico City-based company is known, said last year the cost of fuel theft climbed to 9.3 billion pesos ($722 million) in 2008, from which roughly a third, the equivalent to 3.5 billion pesos, was linked to stolen condensate.

As of August 2009, Pemex had filed 1,587 police reports over fuel thefts, and none of the cases have led to a conviction in Mexico, according to Reforma newspaper.

“These illegal enterprises remain viable because end-users and distributors like BASF and Murphy purchase the stolen product,” Teater alleged. “The only way to stop the theft is to shut down the market. That won’t happen as long as end users are buying stolen property.”

The case is Pemex Exploracion Y Produccion, v. BASF Corp. et al, 10-01997, U.S. District Court for the Southern District of Texas (Houston).

To contact the reporters on this story: Carlos Manuel Rodriguez in Mexico City at carlosmr@bloomberg.net and; Laurel Brubaker Calkins in Houston at laurel@calkins.us.com.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

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