Small Wars Journal

Mexican Energy Reform: A Security Nightmare for Multi-Nationals Operating in Mexico

Tue, 08/18/2015 - 3:14am

Mexican Energy Reform: A Security Nightmare for Multi-Nationals Operating in Mexico

Gary J. Hale

The Security Ramifications of Mexican Petroleum Reform – Are There Enough Army, Navy, Privatized or Hybrid Forces to Secure the Foreign Oil and Gas Operators?

This article examines the current and emerging security situation faced by Mexico’s petro-energy sector. Specifically, it looks at the security landscape during the transition from a state oil monopoly dominated by Petróleos Mexicanos (PEMEX) to include multi-national corporate players.

Mexico and the Unforeseen Consequences of Hydrocarbon Reform

Mexico and the rest of the petroleum producing world are suffering from a global oil market in which over the last two years overproduction has gotten ahead of demand, leading many oil-producing nations to cut back on production. Not to be outdone, the industry is slowly forcing a correction to the petroleum glut by significantly reducing exploration and refining operations worldwide, as well as maximizing reserves in storage.

Many energy companies have begun to delay production in anticipation of higher prices in the future.  Notwithstanding the numerous wells already in operation, a number of companies in the U.S. have announced that they have deferred the completion of almost 900 new wells located in the Eagle Ford (located in south Texas,) Bakken (located in the northern U.S. with North Dakota being the most visible centerpiece,) Wattenberg (Colorado) and Permian (west Texas) basins, according to Genscape, a provider of real-time data and intelligence for commodity and energy markets.[i]

Yet, while others are slowing operations, cutting back and playing a waiting game, Mexico is clearly planning for the long term, both in terms of re-generating much needed revenues affected by the current slump, and by engaging companies that have developed the expertise to maximize recovery of hydrocarbons in the shale fields in order to exploit the Mexican side of the Eagle Ford Shale Play.

The state of Tamaulipas in particular has Mexico's largest fields of petroleum recoverable from shale, a hydrocarbon that is extracted by a process called hydraulic fracking, in which rock layers are subjected to pressure to release the gasses trapped within. Mexico reportedly has the world's sixth-largest reserves of shale gas, which is estimated to be the equivalent to 60 billion barrels of crude oil. That amount of gas equates to more than twice the total amount of oil that Mexico has produced by conventional means over the last century. Development of those fields is expected to bring tens of billions of dollars per year, in foreign investment to Mexico. Mexican officials recognize that their Achilles Heel in attracting foreign investment is providing viable security to those foreign investors.[ii] This security challenge has the potential to be a show-stopper.

Foreign Presence and Participation

Mexican petroleum reform is expected to increase the participation and presence of U.S. and other multi-national firms in the northern Mexican states, enabling the Mexican Secretaría de Energía (SENER – the Secretary of Energy) to offer access to untapped energy trapped in the shale fields adjacent to south Texas, while ultimately increasing revenues for the national treasury.

While such a proposition sounds feasible, implementation of fracking and other wildcatting operations in Mexico will be fraught with security challenges that will place significant stress on Mexican security forces responsible for securing petroleum infrastructure and personnel, already stretched thin by their active participation in counter-drug, public safety, civil defense and other missions that will limit their ability to protect foreign firms that will be extracting oil and gas from Mexican lands.

Mexico’s Petroleum Reform initiative has an ugly side and the security scenario could very likely look like this: American and other foreign Operators will get killed, kidnapped and disappear…if they ever hit the ground in northern Mexico.

As John P. Sullivan and Adam Elkus noted in "Open Veins of Mexico: The Strategic Logic of Cartel Resource Extraction and Petro-Targeting," the theft of hydrocarbons by tapping PEMEX (Petróleos Mexicanos) pipelines has created a revenue generator that rivals drug trafficking income for many Mexican cartels and causes alarming concern to the government of Mexico, which relies on PEMEX profits to fund a significant portion of the national budget.[iii]

Mexico’s El Universal newspaper reported that in 2013 PEMEX discovered 2,614 siphons on its pipelines, compared to 155 illegal taps discovered in the year 2000. Unauthorized pipeline extractions have been found in every single state where PEMEX lines are present, but tapping appears to be more active in states where cartel activity is more prevalent.[iv]

Logically, kidnappings of oil field workers run concurrent with the theft activity that siphoning brings.  Under this threat scenario, the smaller the foreign footprint, the easier it will be to protect those workers. The larger the footprint, the more difficult it will be to secure those personnel. Multiple, simultaneous drilling and completions operations will further divide and stretch military security forces and enable criminal organizations to conduct hit and run raids against the people and assets that will become an additional revenue source generated from extortion of oil & gas operators and from the re-sale of stolen goods. Specialized, expensive equipment will vanish. Storage depots will be raided and siphoned, petroleum products of all grades will be stolen. Security forces will be attacked and firefights will impede smooth or uninterrupted drilling and completion operations. The violence, disruptions to operations and thefts will continue until enough additional forces are deployed in support of securing operations.

Mexico will attempt to confront the threat by attempting to fend off attacks by criminal organizations, but they will likely not be fully successful. Some foreign companies will abandon their operations and leave Mexico.

The continued threat to U.S. companies could cause the conservative elements of U.S. government to use these events as another rallying call for Mexican cartels to be designated Foreign Terrorist Organizations, making them U.S. military targets and making Mexico vulnerable to U.S. intervention, a consequence they fear and loathe.

The security implications of petroleum reform in Mexico have the potential to stop multi-national exploitation of oil and gas reserves in the shale fields of the north, before they even start. Protecting foreign workers and the oil, gas and water they extract on behalf of Mexico will become another national security challenge that will be added to the already strained military forces of Mexico, responsible for securing national resources.   

An increase in Mexican Army, Navy, and Federal Police forces including the Gendarmería Nacional, as well as the possible structuring of Hybrid Military-Civilian Forces seconded to SENER, or even mercenary or private, local, security forces funded by the multi-nationals, will be needed to successfully protect the multitude of personnel who will be contracted to extract petroleum from an area of Mexico that is already a war zone, an area in which criminal organizations are waging non-traditional warfare, or in which military forces are involved in what could be defined as low intensity conflicts … the shooting, killing kind of engagements that those on the ground would otherwise liken to a war. Without a large, robust and heavily armed fighting force dedicated to providing physical security, those oil field workers are at risk of being kidnapped or killed, their equipment being stolen, destroyed or extorted; or the oil and gas at risk of being stolen and diverted from the Exploration and Development supply chain.   

The Eagle Ford Shale Oil Find – A Petroleum Boon … and An Evolving Threat Area

The Eagle Ford Shale Play is a shale rock formation located throughout South Texas where petroleum companies have found sizeable reservoirs of oil and natural gas. For example, oil has been be extracted in McMullen County, Texas while natural gas has extracted from the Eagle Ford formations located in La Salle County, both opposite the northern Mexico states of Coahuila, Nuevo León and Tamaulipas.

What is not readily visible to all but petroleum engineers on both sides of the border is that this shale formation extends south into Mexico and is of great interest to SENER, which is seeking U.S. know-how and technology to engage in fracking operations that have already been perfected in Texas and North Dakota, and which is being sought in a few other places, such as the Ukraine, in part defining Russia’s desire to annex that oil rich neighboring territory.[v]

The U.S. Eagle Ford Formation extends into northern Mexico's Burgos Basin (see maps-Figures 1-2 below) where it is known as the Boquillas Formation, and has an average thickness of approximately 200 meters and has estimated recoverable hydrocarbons of almost 343 trillion cubic feet of shale gas and 6.3 billion barrels of oil. The Mexican national oil company PEMEX first began small-scale exploration in the Boquillas in 2010 and, with the assistance of U.S. companies from Texas and elsewhere, continues exploration operations in the current day.[vi]

Figure 1: Northeast Mexico: ARI Shale Data Base & Evaluation, 2015.

In April 2013, PEMEX started producing the nation's first shale gas well, just south of the U.S. border, within the Eagle Ford formation as it extends into Mexico, however, the presence of criminal organizations, particularly the Zetas, have had a negative effect on operations stretching from Coahuila, opposite Del Rio, Texas, and south to Matamoros, Tamaulipas, opposite Brownsville, Texas.

U.S. and Mexican energy company workers have been assaulted, extorted or murdered and those type attacks have kept workers from servicing the wellheads, pipelines and drilling rigs in the Burgos Basin, which now provides up to 20 percent of Mexico's natural gas. At least eight PEMEX and contract employees vanished in May 2010 near a gas facility in the area of Falcon Lake, Texas a well-known drugs and aliens crossing point that has been under the control of the Gulf Cartel and Zetas, both organizations of which have had prolonged battles for domination of the region. In March 2009 two men working for a Mexican company doing contract work for Houston-based Halliburton disappeared outside Piedras Negras. "Many companies that were active in the areas have stopped until PEMEX or the government can provide security," said an employee of one Reynosa-based company. "In places where there have been incidents we don't operate anymore. When darkness falls, we stop (working) wherever we are.”[vii]

As indicated on the map below, further to the south and west of the U.S. border within Mexico, The Sabinas Basin also has recoverable shale gas resources that are contained within the Eagle Ford and La Casita shales, but the basin is not as conducive to exploitation as other areas due to difficult subsurface geology.

PEMEX envisions commercial shale gas production being initiated in 2015 and increasing by 2025, with the company potentially investing $1 billion to drill 750 wells. Mexico’s potential development of its shale gas and shale oil resources will likely be slow to develop due to several factors, chief among them public safety concerns in the northern border region.[viii]

Figure 2: Mexico: EIA/ARI Shale Oil Gas Assessment, 2013

The “Predators” - Threats in Northern Mexico

The Zetas

Notwithstanding their continued struggle against the Gulf Cartel for U.S.-Mexico border territorial dominance, and their continued presence along the border in significant numbers and military-style strength, the most significant competing rivals, or Zetas, have proved themselves to be more involved in violent criminal activities beyond the drug trafficking realm and therefore a more likely threat to multi-national petroleum firms that may be operating in the northern states of Mexico, than the Gulf Cartel.

The Zetas organization began as the internal security branch of the Gulf cartel, dedicated principally to the personal protection of its leader, Osiel Cardenas Guillen. The Zetas were established in the late 1990’s and were originally comprised of several dozen soldiers who deserted from their military service among Mexico’s Special Forces unit known as the GAFES. Subsequent to the extradition of Cardenas to the U.S. in 2006, the Zetas split from the Gulf Cartel and began to operate an independent organization, evolving from a single business-line Drug Trafficking Organization, to a more diversified Transational Criminal Organization (TCO) with a well-established franchise structure growing throughout Mexico.

In the past decade the Zetas membership and expansion throughout Mexico has grown exponentially and that growth can be attributed to two primary factors. One is the fact that the organization has diversified their criminal activities such that they are now active in numerous crimes beyond the stereotypical importation and exportation of drugs into and out of Mexico. These additional criminal activities include extortion, a principle revenue source, as well as liquor sales, prostitution, human smuggling, sales of pirated music and movies, theft of vehicles, involvement in the distribution of utilities and the theft and sales of stolen hydrocarbons and equipment.

The other is that the remaining Zeta leadership appears to have allowed other smaller and largely independent groups to operate under the Zeta name, as long as a percentage of whatever revenues gained by the new element, are returned to the Zetas. This practice has revealed the existence of what can arguably be defined as a franchise arrangement, an organizational relationship that no other Mexican cartel has developed or implemented.[ix] For the purposes if this paper, we will refer to this model as a “Zeta-franquicia.”  

In this model the franquicia is defined mostly by revenue sharing and the less by a required deference to a command and control structure, such as that which was well-defined and adhered-to in the legacy organization (prior to the extradition of Cardenas in 2006.)  

The breakdown of strict, hierarchical command and control is surely the result of the removal of the majority of the original Zeta membership, most of who were of a military mind-set and who have largely been captured or killed in the years after they separated from the Gulf Cartel.

The actions of Zeta-franquicia operators reveal that they are free to operate within the business line they have carved out for themselves, as long as they do not stray from their assigned or declared territory and as long as they generally remain within the activities of their defined business line. Numerous examples of this independent operational practice are the best explanations for the many criminal activities that have been conducted under the Zetas banner, but that are not traditionally considered a part and parcel of a larger, more organized Trans-National Criminal Organization. These franquicias are now the groups that were formerly known as the “Zetitas” or smaller Zeta units involved in smaller scale kidnappings, robberies, car thefts, or crimes that were confined to small towns or municipalities.

To be sure, the Zeta-franquicias represent a more dangerous element than the larger, more structured Zeta TCO. This danger comes from rouge independence in action, from a lack of more established or mature leadership figures and from a willingness to take more risks in furtherance of increasing revenues and territorial dominance. In 2010, for example, Zeta elements were believed to be responsible for over 90 percent of the abductions of PEMEX personnel, 30 kidnappings in that year alone.[x]

Thus, it is assessed that the threat to multi-national petroleum companies is northern Mexico and along the gulf coast states of Veracruz and Quintana Roo will surely emanate from the Zetas on strategic level, and more from the Zeta-franquicias, on a more tactical or local level. The secondary threat will come from the Gulf Cartel, which is less likely to threaten multi-nationals on a broader scale, save for targets of opportunity within their domain, that could be victimized by undisciplined traffickers who are operating outside their assigned roles and responsibilities.

The Gulf Cartel

The Gulf Cartel also represents a persistent threat to PEMEX activities. They are equally violent and have been known to siphon hydrocarbons from PEMEX pipelines for years before the Zetas split from the larger organization and the latter became independent. 

Kidnappings of PEMEX personnel have occurred concurrent to siphoning operations, wherein cartel operatives removed workers from the field while they were working on a particular pipeline. In the state of Tamaulipas, which is home for the Gulf Cartel and which is located opposite south Texas, siphoning reports totaled 8 in 2009 and climbed to 539 illegal taps in 2013. In the state of Veracruz further south along the Gulf of Mexico coastline, 25 taps were reported in 2000 and that number climbed by a factor ten, to 240 siphons in 2013.[xi]

On April 18, 2015 Mexican security forces arrested the most recent leader of the Gulf Cartel, José Tiburcio Hernández Fuentes aka ‘El Gafe’, describing him as responsible for much of the violence in the U.S. border city of Reynosa in the northeastern state of Tamaulipas. Subsequent to his arrest in Reynosa, members of the Gulf Cartel confronted federal security forces by establishing “narcobloqueos” or blockades, and engaging in firefights on several thoroughfares in the city.[xii]

The threat to multi-national petroleum companies operating in northern Mexico extends to the risk of tanker trucks hauling petroleum products being hijacked for use by traffickers conducting blocking operations, as well as theft and extortion being conducted at makeshift checkpoints where traffickers extort drivers to pay rights-of-passage, or “cuota” for being allowed to continue on their way. Many trucks have been burned and drivers kidnapped when the latter have refused or been unable to pay the criminal roadside “tax” that is required. This results in a loss of life, loss of inventory and a significant disruption of the supply chain. 

The Sinaloa Cartel

The Sinaloa Cartel, headed by Joaquin Guzman Loera, known as “El Chapo Guzman,” is the oldest organized crime organization in Mexico and originally enjoyed a monopoly on all drug trafficking activity throughout the nation. In the Late 1990’s the Gulf Cartel emerged and for the first time the Sinaloenses had the northern border territories taken from them by force. Subsequent to the loss of those northern plazas, the Sinaloa Cartel has tried, mostly unsuccessfully, to recapture their turf from the Gulf Cartel and also the Zetas. The Sinaloa Cartel has made alliances with various other cartels and factions, depending on the need and convenience to their operations.

In the current state of affairs, the Sinaloa Cartel enjoys dominance over the western portion of the northern Mexican states bordering the U.S., including Chihuahua, Sonora and Baja California Norte. Notwithstanding their continued representation, through alliances with others, the Sinaloa Cartel does not currently have domain over Coahuila, Nuevo León, or Tamaulipas which are located in the northwestern portion of Mexico’s border with the U.S.

The recent escape of Guzman from a federal prison in Almoloya, Mexico may be a game changer in that his resurgence to power could see a bid to regain territories previously usurped from them by the Gulf and Zeta Cartels.[xiii] It is anticipated that the Sinaloa Cartel will indeed engage and confront the Gulf and Zetas and this will lead to increased violence in the region. In a report published on July 13, 2015 by the James A. Baker III Institute for Public Policy at Rice University, Dr. Nathan P. Jones indicates that “Guzman may attempt to reassert control over areas previously taken over by rival factions and that could lead to internal conflict within the Sinaloa cartel.[xiv] Also, Chapo’s likely expansionism will draw increased governmental attention to the Sinaloa cartel networks.

The violence that comes from cartel warring may cause increased risk to multinational petroleum firms operating in the Burgos Basin and therein identify another potential predator to be wary of.


The fourth threat element comes from autodefensas groups that are part of the Mexican self-defense culture. Many of these groups have risen in response to a lack of government public safety action, but one group in particular declared its intent to attack any multi-national petroleum firms who partner with PEMEX given its mission to protect the national “patrimonia” or national resources. An example of this threat stream is found in The Fuerzas Armadas Revolucionarias Liberación del Pueblo (FAR-LP).

FAR-LP – December 2013 Communiqué

"Foreign petroleum firms that establish themselves in Mexico will be attacked" ... according to a communique published in the state of Guerrero, Mexico by the Fuerzas Armadas Revolucionarias Liberación del Pueblo (FAR-LP.) The FAR-LP, a self-declared, anti-government guerrilla group has incrementally begun to announce its plans and intentions, initially declaring war in October 2013 against the Government of Mexico and now by threatening foreign investors in the wake of President Enrique Peña-Nietos nascent energy reform initiative.

The FAR-LP also alleged that the provision of Mexico's national resources to foreign investors is being continued by the Enrique Peña-Nieto administration as an extension of the PRI party plans to privatize Mexico's energy holdings currently monopolized by PEMEX, as initially envisioned by the Salinas de Gortari presidency. The FAR-LP warned that: "any petroleum firm that intends on operating in Mexico shall be considered military targets" and further stated "we shall make examples of them because we know how to defend our sovereignty."[xv]

The mountainous region of Guerrero, and apparent home base for the FAR-LP, is heavily occupied by the Caballeros Templarios (Knights Templar,) an organized crime and drug trafficking organization that has been affecting commercial transportation through their area of operations, charging cuota on the highways and kidnapping truck drivers and others for ransom, all while clashing with other cartels trying to establish their own foothold in the Pacific Rim states. The Caballeros Templarios have asserted control of the state of Guerrero and have similarly been known to siphon fuel from PEMEX pipelines and hijacked PEMEX tankers.[xvi]

It is not known yet if the two groups (Caballeros Templarios and FAR-LP) are associated, or if they will clash, however, both groups are ostensibly challenging the government, albeit with differing motivations, so there may be some future collusion among them.

Southern Mexico, specifically including Chiapas and Guerrero have been home to "grass-roots" revolutionary organizations for decades. This includes the more recent emergence of "autodefensa" or self-defense/vigilante organizations. Some auto-defense groups are truly organized by concerned citizens; some are fake, front organizations being operated by rival cartels to exact revenge against competing cartels.[xvii]

Other pro-revolutionary groups have generally operated and remained in southern Mexico, primarily in rural, jungle areas that are not easily reached by government forces. The level of government response to the FAR-LP will likely be equal to the level of threat or violence in which they engage. Only time will tell if the FAR-LP will venture out of their safe-zone and conduct violent acts throughout the Mexican federation.

It is not known, but it is reasonable to expect, that the FAR-LP is the latest iteration of previous groups. This notion is based on similar language in their manifestos that alleges oppression and exploitation of the masses through government corruption.[xviii]

Previous Mexican insurgency groups have reached into the hundreds of personnel and are organized in paramilitary structures with Unit Commanders ("Comandante") that may be platoon sized (30-50 personnel) or company-sized (at least 100 personnel.) 

The FAR-LP has self-identified as having at least 3 leaders, or Commanders: Comandante Emilio, Comandante Camilo and Comandante Esperanza (this latter personage is ostensibly a female.) The assumption based on the existence of three Comandantes is that the FAR-LP currently consists of a minimum of 90 personnel, to a possible higher number of 300 personnel.

Threats to Multi-National Petroleum Firms Operating in Mexico

The FAR-LP may not be interested in attacking or blowing-up pipelines, since this would cause a conflict with other cartels, such as the Gulf and the Zetas, the latter of which are generating significant revenues through siphoning of petroleum products from PEMEX. In PEMEX’s annual 2011 report to its Congress, it was revealed that Mexican criminal organizations stole 55 percent more fuel from Mexican pipelines than in the previous year, as organized crime gangs sought more profits from stolen oil and gas.

In 2011, the company lost just over 3.35 million barrels of fuel, up from more than 2.16 million barrels stolen in 2010.[xix]  Only time will tell if the FAR-LP attempt to destroy this national revenue lifeline.

Nonetheless, the threats issued by the FAR-LP should be taken seriously and treated as a potentially viable and impending risk to life and property of any petroleum firms operating in Mexico, especially since one of their claims is that multi-nationals will be stealing national resources as a result of PEMEX privatization, a primary concern and complaint of the guerrilla group.

The “Prey” – Multi-Nationals Conducting Shale Oil Exploration/Exploitation

Critical Nodes & Threat Scenarios

Oil & gas operators and support personnel will be vulnerable from the time they arrive in Mexico and the threat they face will remain constant throughout their presence. There are several critical nodes in the operational chain, or the sequence of events that transpires once a location has been designated as a well site to be constructed for the extraction of oil or gas.

Critical Nodes

  1. That operational chain can be broken down into several critical nodes, including the following:
  2. Set-up operations (in-bound supply chain)
  1. Extraction operations (well-site operations; continuous re-supply of water, chemicals, equipment, food, removal of dirty water, etc.)
  1. Removal operations (Crude driven to tank farms; out-bound supply chain)
  1. Steady-State operations (drilling rigs and completion activities in continuous operation)

Threat Scenarios

A few of the threats to personnel involved in each of those phases can be defined as follows:

  • Theft of equipment being transferred into a well-site
  • Extortion or kidnapping of drivers hauling water and sand into and out-of a well-site
  • Extortion or kidnapping of service providers taking food and supplies into a well-site
  • Kidnapping of personnel working at a well-site
  • Extortion of personnel working at a well-site
  • Siege of a well-site or tank battery
  • Taking and holding of hostages
  • Firefights between security forces and criminals
  • Death of personnel resulting from firefights
  • Attacks and theft from tank batteries
  • Siphoning of petroleum products from pipelines leading away from tank batteries
  • Extortion of drivers as they remove crude from tank batteries (on nay roadways)
  • Hijacking of trucks for use in narcobloqueos (while transiting cities and towns)
  • Hijacking of trucks and destruction of inventory for failure to pay “cuota” (on any roadways)
  • Extortion of land owners for water rights and usage.

Using Eagle Ford operations as a template for what level of personnel would be need for a typical horizontal shale drilling and completion operation to occur in northern Mexico, a minimum of 60 workers are needed at a standard drilling operation or well-site:[xx] Added to this number are several dozen local third-party vendors and service providers who provision items such as drill bits, cement, sand, chemicals, water and other materials that are needed to sustain operations and that visit the well-site while activity is ongoing.

These numbers do not include food service, medical, temporary lodging or other similar support personnel that are typically also at a well site. When tallied, these numbers provide a rough estimate of at least 100 operational personnel who would be comprised of both Mexican nationals providing local resources, and foreign multi-nationals providing the know-how, that could be present and working at any given exploration/exploitation or well-site in Northern Mexico.

To protect such a large number of workers from kidnapping or extortion, and to protect their equipment from theft or destruction, it is estimated that Mexican government forces would need to deploy at least 1 soldier for every worker, during every working shift. These shifts include a day shift (07:00-15:00), an evening shift (15:00-23:00) an overnight shift (23:00-07:00) and a shift that is resting at any given time during the 24-hour period. Each of these shifts would need protection, and this then equates to a mirrored, minimum ratio of 4:1 (Security Forces: Operators) to effectively protect the multinational investment of human capital, equipment and eventual oil and gas extracted at each well-site. 

The number of Mexican service members needed under this hypothetical 4:1 ratio are calculated based on the expectation that each well-site would encompass at least 10 acres of surface area to be secured, requiring a combination of roving patrols, perimeter security, guard posts and support personnel (food, water, command and control facilities, etc.) for those troops. 

Using this hypothetical ratio, the Government of Mexico would need to deploy at least 400 military troops or police officers for every well-site to be developed. Using standard military unit configurations, 100 soldiers represent a company-strength unit, not including their above-mentioned requisite support elements. Thus, one well-site could require as many as 4 companies, or a battalion-strength unit, to adequately secure on a 24-hour basis through the life of the well bore operation.

These numbers of personnel are exponentially multiplied when PEMEX begins shale gas production this year (2015) with the intentions to drill and operate 750 wells.[xxi]

Thus, if 750 well sites were to be placed in operation as contemplated, some additional 1,200,000 troops would be required to provide meaningful and adequate security to Oil and Gas Operators. Even if the numbers of troops needed were conservatively reduced to half that estimate, or 600,000 elements, Mexico could not field that many units to guarantee that petroleum Operators could function without serious threat. At least not quickly.

Mexico’s Military Forces – The Army and the Navy

Secretaria de Defensa (SEDENA)

The Army

The Mexican Army or the Secretaria de Defensa (SEDENA) currently has approximately 280,000 active duty soldiers spread out over 12 Military Regions and 44 subordinate Military Zones. While there is no defined number of Zones within a given Region, military zones can be adjusted to meet changing requirements, with a corresponding increase or decrease in troop strength.

While the Army is displaced throughout the country, its legal mandate limits its ability to provide protection to foreign Operators, a mission that is already taken as a Navy responsibility. This is because the Army has the following mission sets which limit its ability or interest in acting against organized crime elements that would be a threat to foreign operators:

Mission Set 1: Repel external aggressions.

Mission Set 2: Protect the internal security of the country. This would include police actions against guerrilla forces and counter-drug operations.

Mission Set 3: Provide Relief during Natural Disasters. The Army provides food, shelter, medicine, and medical services to the people who need them. This also includes reconstruction of roads and communication services to affected areas.[xxii]

Other factors limit the Army’s interest and ability to confront organized crime. For example, U.S. State Department reporting in January 2010 revealed that there existed “considerable tension between SEDENA and SEMAR,” largely because SEMAR received more favorable public support than the Army in its war against criminal violence, its targeting and capture of High Value (criminal) Targets, and because of the Army’s perceived failure in its attempts to secure Juarez, Chihuahua, when that border town was so violent a city that it was known as the “Murder Capital of the World”.[xxiii]

U.S. State Department analysts reasoned that the more frequent that SEDENA’s actions were criticized; the more risk averse the Army would become in continuing or taking on new, public safety missions. Indeed, in the past decade the Army has quietly relegated itself to providing policing services, that is, cleaning up and securing a location after a violent event such as a narcobloqueo (narco-blockade) has transpired, as opposed to conducting preventive actions. Less yet, unless blatantly attacked, the Army has slowly ramped down direct actions against violent criminals while the Navy and Marines have actively sought to confront and destroy organized crime syndicates in Mexico.

Secretaria de la Marina (SEMAR)[xxiv]

The Navy

The Ministry of the Navy or the Secretaria de la Marina (SEMAR) operational forces are organized as two independent groups: the Gulf Force and the Pacific (West) Force. The Gulf and Pacific Forces are different from each other in organizational structure; however each is subdivided into regions. Naval Regions 1, 3, and 5 are located on the Gulf. Naval Regions 2, 4, and 6 on stationed on the Pacific Rim states.

Of primary interest among each group is their corresponding Marine Infantry Group and Special Forces Groups, since those units are the main fighting forces that are now leading the charge against organized crime in Mexico.

The Marines

The Naval Infantry, or Infantería de Marina, are the Marine Corps and amphibious infantry force of the Mexican Navy. The Naval Infantry Corps was reorganized in 2007–09 into 30 Naval Infantry Battalions, a paratroop battalion, a battalion attached to the Presidential Guard Brigade, two Fast Reaction Forces with six battalions each, and three Special Forces groups. The Naval Infantry are responsible for port security, protection of the ten-kilometer coastal fringe, and patrolling major waterways as well as to guarantee the maritime security of the country's ports.

This makes the Navy and the Marines the primary military force responsible for providing security to PEMEX operations, including petroleum rigs in the Gulf of Mexico, its pipeline infrastructure as well as any future fracking operations in the northern Mexico states.

Mexico’s Rural Federal Police – The Gendarmería Nacional

One of the many pressing issues that confronted President Enrique Peña Nieto when he took office in December 2012 was the unrelenting violence in most regions of the country. Peña Nieto stated that while he would fight organized crime with the same level of effort as his predecessor.

Mexico’s military was initially employed to combat the drug cartels’ growing influence during the tenure of President Vicente Fox shortly after he took office in 2000. Fox’s apparent reluctance to use regular Army troops was evident in the manner by which he deployed those soldiers.

It is also apparent that Fox and Calderón used the military as a federal “band-aid” to confront criminals while Mexico’s federal and state police forces were being improved, equipped and professionalized. In a simplified sense, Peña Nieto inherited federal and state police forces that are still short in numbers and lacking professionalism.

As a result, the establishment of a paramilitary force, the Gendarmería Nacional, was thought to serve as the middle ground between using quasi-military forces instead of civilian police forces to confront heavily armed criminal gangs.

Peña Nieto’s proposed paramilitary police force would be larger than the current federal police, originally projected to number approximately 40,000 troops, would ostensibly increase intelligence gathering and patrols in conflict zones and would be composed of soldiers who had already been tested during the Calderón administration.

Some 20 months passed before Mexico fielded a much smaller force of 5,000 gendarmes in August 2014 and its mission set had been tightly focused on confronting industrial, farm and business crime, given that many cartels had begun to stifle economic growth by extorting, kidnapping and stealing from the mining and agricultural sectors, as well as from fishing, banana and tourist industries among the many “business lines” that organized criminals in Mexico are now engaged.  The Gendarmerie was designated as a subordinated division of the federal police and was designed to be deployed to parts of the country where there is an organized crime presence and where economic activity was being depressed by criminal organizations.

"The officers of the new gendarme force ... are trained to serve the population on foot, and on horseback, in rural, urban, tourist and border zones," President Enrique Pena Nieto said.[xxv]

Federal Forces Assessment

It is estimated that the combined federal forces of Mexico will be not be able to secure foreign oil and gas fracking operations, if activities proceed as projected. This assessment is based on several factors:

  1. The Army is already responding to the numerous mission sets that are not reducing in numbers and that require additional troop deployments on a cyclical schedule, concurrent with seasonal hurricanes, occasional earthquakes and other natural disasters/extreme weather events. The mission parameters under which the Army operates also detract from their institutional desire to confront violent organized crime, activities of which have long been considered law enforcement roles and responsibilities, as opposed to military missions.
  1. The Navy clearly is the higher among equals when compared to the Army and especially when it’s mission is to protect PEMEX operations is considered. The Navy and Marines are already stretched thin and have been unable to prevent or stop illegal pipeline tapping by the cartels. In fact, those activities are actually increasing in numbers. The Navy’s counter-drug, counter-violence activities have been more focused on capturing High Value (counter-drug) Targets, which defines their strategy as one with a more tactical focus, than that of a long-term plan to protect the national petroleum infrastructure. Like the Army, the Navy can’t do much more with the resources it has, considering the scope of the security needs that foreign operations represent.
  1. The Gendarmería was unable to field the 40,000 troops that it originally envisioned in 2012 and was only able to train and deploy 5,000 troops instead.  That demonstrated inability to recruit, train and field troops is a harbinger of the future and does not bode well for meeting significant future security force needs represented by foreign operations, especially when held up against their inability to secure the agricultural, fishing and tourism sectors, on a wholesale basis, since they deployed as a new force in August 2014. Of the three military-style organizations, the Gendarmería has the least combat experience and has not yet been engaged in any meaningful combat operations.

In summary, it is believed that the combined federal forces will not be able to recruit, screen, train and field the number of troops required to secure foreign fracking operations in the 10 year period (2015-2025) that PEMEX intends on increasing production to 750 well heads.

Alternative Solutions – Supplemental Forces

State Government - Seconded Forces

Another solution to meet this security challenge is to add additional forces by using the security model first employed in Chihuahua and subsequently employed in Tamaulipas by wealthy entrepreneurs interested in surviving to live another business day.

“Grupo 13”

In the case of Chihuahua, businessmen in that state formed the “Grupo Trece” or “Group of 13” in 2008, sponsored by a consortium of like-minded business owners who took matters into their own hands and struck a deal with the state of Chihuahua to obtain a security force dedicated to their protection and survival.[xxvi]

In this case, the “Grupo 13” owners worked with the Attorney General of the state to acquire a number of state police officers that are assigned to each business owner as their private security force.

Each member of each individual owner’s security force has full law enforcement authority, is authorized to carry weapons, is fully trained and is fully dedicated to the business owner they serve. In return, the business owners reimburse the state of Chihuahua for the cost of training the police officers, the cost of their salaries, and that of their equipment.

A consortium of 31,000 businessmen in the state of Chihuahua agreed to pay a self-imposed tax of 5% of their revenues to establish an operational security force backed by an analytical team to provide intelligence regarding the threat.

The initial funding generated from this tax allowed the Grupo 13 to collect some 75 million Mexican Pesos (roughly 5 million dollars) with which the Observatorio Ciudadano de Prevención, Seguridad y Justicia de Chihuahua was created to collect information and use those analysis to influence public safety Policy.

To the current day, the Grupo 13 continues to provide armored car and armed guard protection services to the most important and wealthy businessmen in the state of Chihuahua, resulting in reduced crime and violence, as well as a more secure business environment for foreign investors operating in that state.  

Fuerza Civil

A similar business-led security consortium was also formed in the state of Nuevo León, much the same as in the State of Chihuahua. In a report published by the Wilson Center, Mexico Institute, at the University of San Diego, Lucy Conger writes provides a review of the creation of the group, which evolved from public protests in 2008 under the banner of “Illuminate Nuevo Leon,” to revitalization of an older group called the Consejo Civico (Civic Council of Institutions of Nuevo León) which was re-instituted in early 2010 and began operating as a central point for coordination among many of the businesses and manufacturers. One association among the council was assigned responsibility for coordinating with the state attorney general’s office in reform public safety institutions and policies in the state.

Like the Observatorio Ciudadano in Chihuahua, the Consejo of Nuevo León served as a watchdog that provided oversight and accountability to the state’s public safety efforts. In late 2010, the Fuerza Civil was created as a new police force that was funded by a 3 percent payroll tax on businesses.

Conger stated that “the support provided by businesses to the creation of Fuerza Civil demonstrates the potential of business-government cooperation. A Monterrey-based phone company, Axtel, created a call center for the recruitment process, and Super Seven convenience stores made space available for the recruitment posters. The transportation company, Senda, offers discounts for home visits made by the police now in the Monterrey force. Corporations donated equipment including patrol cars.”[xxvii]

The Fuerza Civil model was so innovative and promising that the U.S. Embassy in Mexico City adopted the concept and provided additional funding for training and equipment in what was known as the “422-Units” or “Policía Creditable” program. The 422 Units were named as such due to the number of personnel that was identified by Nuevo León as being an optimum number of police officers needed to perform the various critical functions required, including policing and police intelligence analysis duties.[xxviii]

State Government - Hybrid Forces

A hybrid security force has emerged in the northern state of Tamaulipas in the past year which appears to be a mixed breed of autodefensas and a well-equipped, militarized, public safety unit. 

Grupo Hercules

The Grupo Hercules made its public appearance in September 2014 when Matamoros Mayor Lety Salazar announced the formation of the tactical group.[xxix]

In a highly publicized event, Salazar stood in front of the group that was equipped much like a military fighting force, wearing black berets and tactical gear. The mayor stated that Grupo Hercules was created to provide public safety to the citizen of Matamoros, however, the president of the state chamber of commerce said that the unit was simply a personal security detail for the mayor and her secretary of social welfare

In response Mayor Salazar stated that the mission of the unit was to fight crime; that its members were former Mexican marines and soldiers, but she did not elaborate on the amount and source of funding allocated to their operations.

While the unit appeared to have the tacit approval of the federal government, officials from the state of Tamaulipas initially noted that the unit was organized without a legal basis and that they did not meet the vetting and screening standards common to other police forces in Mexico. Later, the media reported that the State had indeed vetted the Hercules force.[xxx]

Corporate Security Forces

The “Seconded Forces” model could be privatized, and Mexican civilians could be “deputized,” following the authorities already conferred to autodefensas by the Mexican government, that is to carry weapons in the interest of self-defense, instead of having a quid pro quo arrangement with any given state (as in the Grupo 13 model) in which oil and gas operations would occur.

This model may hold some merit, especially when individual landowners have their royalties stolen or extorted by criminal groups in northern Mexico. Once a number of northern Mexico land owners is stripped of this new source of revenue, or denied access to their own ranches by traffickers, they will likely organize into bands of vigilantes much like the autodefensas groups have formed in Guerrero and elsewhere.

It is not without precedent that civilians have taken the law into their own hands to secure their properties, valuables and lives. It is also not without precedent that the Mexican government has allowed these loosely organized groups to operate under the banner of federal authority, given some limitations. This has been seen in a smaller scope with autodefensas in Guerrero and in a broader, starker approach, with the Grupo Hercules in Tamaulipas.

Multinational petroleum firms could develop a separate consortium to fund the development of a security package that includes the initiation of specified intelligence gathering and analysis capabilities that are responsive to the threat scenarios throughout the supply chain (much like the Grupo 13 or Fuerzas Civil models.)

However, once the threat was defined, the development of a Quick Reaction Force would be required to provide for the protection of the individual elements, such as vessels, trains and trucks and of the intermodal conveyances that are used to move goods, services and products along the petroleum supply chain.

Funded by the foreign petroleum consortium but operated by Mexican civilian security units, the QRF could be operated much like the autodefensas and be placed under the supervision of the military or the federal police. This would provide both entities needed relief by decreasing the pressure on its already overtaxed resources, yet still allow the Army to retain its oversight role of any commercially-operated security forces, and provide relief to the combined federal forces.


On Wednesday, July 15, 2015, the Mexican government auctioned off the first of its oil fields, beginning a years-long process that is slated to stimulate Mexico’s energy industry by inviting foreign firms to bid on the opportunities. Given the very small number of participants, the response was embarrassingly low.

Nine companies signed-up for the auction and included Hunt Overseas Oil, Norway’s Statoil, Arkansas-based Murphy Oil, the Italian oil company Eni, and India’s Oil and Natural Gas Corp.

14 fields were available for bidding in the Gulf Coast areas between Veracruz and Campeche, but when the auction ended only two blocks were successfully bid out as many companies opted out for various reasons. The two companies that were selected represented a consortium of companies from Mexico, the U.S. and England and included Sierra Oil & Gas in Mexico City, Talos Energy in Houston and Premier Oil in London.

Juan Carlos Zepeda, president of Mexico’s National Hydrocarbons Commission, said in a news conference that the government would analyze the results, would look at other factors and also consider amending contract terms before the next auction, scheduled for September 30, 2015.”[xxxi]

Security would wisely be among those other factors since without adequate security, foreign investors and Operators will abandon activity in Mexico and SENER could lose the sorely needed capital that the shale oil gas fields can bring to Mexico’s treasury. Adequate security must be defined as a permanent, dedicated security force that will be at the side of the Operators the entire time they are operating in Mexico. This security force must be authorized to prevent kidnapping, extortion or other crimes and equipped to repel criminal attackers with full, in-kind, military force.

The Government of Mexico must provide war-risk insurance to foreign operators to provide for relief of stolen goods, petroleum products and to compensate families for the loss of life and limb, not only during oil and gas-related accidents, but also as a result of organized crime victimization. The insurance protection clause should be a policy requirement of any contracts between PEMEX and foreign petroleum firms, so as to provide an additional measure of commitment on the part of the Mexican government.

Given the likely inability of the Mexican government to field the required number of forces needed, such an arrangement of “Seconded Forces” or civil engagement by corporations in cooperation with state governments could be a feasible augmentation to the security challenge and could function effectively in this time of critical need.

As an alternative security solution, SENER could work with U.S. energy companies to install underground pipelines to send crude oil and gas from northern Mexico to the U.S. side of the border for storage, refinement and eventual shipment to Mexican customers throughout the world. Taking crude out of the northern Mexico shale oil fields as soon as possible negates the ability of criminals to steal the petroleum products and ensures the viability and survivability of the production and supply chain. This provides the Mexican government a secure method by which to increase its profit margin, while maintaining control and accountability over its supply line.

Failure to provide a robust security system to foreign operators will create liability for both Mexican and U.S. energy companies. The petroleum world will be watching and waiting to see if others should go to Mexico and operate in the fact of such overwhelming threats. The more secure the workers and operations become, the more investment Mexico will enjoy. That will lead to increased revenue for Mexico’s coffers and eventually benefit the people of Mexico.

Additional Reading

Technically Recoverable Shale Oil and Shale Gas Resources: An Assessment of 137 Shale Formations in 41 Countries Outside the United States; June 2013; U.S. Energy Information Administration.

John P. Sullivan and Adam Elkus, "Open Veins of Mexico: The Strategic Logic of Cartel Resource Extraction and Petro-Targeting," Small Wars Journal, 3 November 2011.

Register of the Armed Revolutionary Organizations in Mexico; Mandeville Special Collections Library 0175S University of California, San Diego;

End Notes

[i] Technically Recoverable Shale Oil and Shale Gas Resources: An Assessment of 137 Shale Formations in 41

Countries Outside the United States; June 2013; U.S. Energy Information Administration.

[ii] “Mexican cartels' illegal taps stealing billions from oil industry as Pemex hopes to grow:” September 25, 2014; Associated Press;

[iii] John P. Sullivan and Adam Elkus, "Open Veins of Mexico: The Strategic Logic of Cartel Resource Extraction and Petro-Targeting," Small Wars Journal, 3 November 2011.

[iv] “Major Increase Of Illegal Oil Siphoning In Mexico Leads To Losses In The Millions,” 5 February 2014; Fox News Latino;

[v]  “Meet The Oil Shale Eighty Times Bigger Than The Bakken,” Forbes; 03MAR14;

[vi] Northeast Mexico: ARI Shale Data Base and Evaluation, 2015; Advanced Resources International. Used by Permission.

[vii] Dudley Althaus, “Zetas gang poses daunting threat to Mexico's shale gas output,” Houston Chronicle, 25 September 2012;

[viii] Technically Recoverable Shale Oil and Shale Gas Resources: An Assessment of 137 Shale Formations in 41 Countries Outside the United States; June 2013; U.S. Energy Information Administration; pg. 139.

[ix] “Mexican Drug Cartel Los Caballeros Templarios launch terrorist attacks,” The Examiner, 6 November 2013;

[x] “Elements underscoring Cartel involvement in Pemex pipeline blast;,” European Strategic Intelligence & Security Center, 23 December 2010;

[xi] Mexico: IA/ARI Shale Gas/Oil Assessment, 2013; Advanced Resources International. Used by Permission.

[xii] “Leader of the “Gulf Cartel” arrested in Tamaulipas,” Yucatan Times; 18 April 2105;

[xiii] Nathan P. Jones, “El Chapo escape predictions’” Houston Chronicle/James A. Baker III Institute for Public Policy; 13 July 2015;

[xiv] Ibid, endnote xiii.

[xv] “Empresas Que Exploten PEMEX Serán Objetivo Militar: FAR-LP,” Origen, 31 December 2013;

[xvi] Ibid, endnote vii .

[xvii] Auto Defensa: Rough Justice in Mexico’s Lawless Mountains; Auto Defensa: Imposing Order in Mexico’s Lawless Mountains – Time LightBox; February 12, 2013;

[xviii] Register of the Armed Revolutionary Organizations in Mexico; Mandeville Special Collections Library 0175S, University of California, San Diego;

[xix] Theft on Mexico Fuel Pipelines Jumps 55Percent –PEMEX; Chicago Tribune; April 23, 2012;

[xx] These personnel figures were provided to this researcher by a multinational petroleum company, on the condition of anonymity, in order to protect the identity of companies who are bidding on the opportunity to operate in Mexico.

[xxi] Ibid endnote, viii.

[xxiii] “US embassy cables: Mexico is losing drug war, says US,” The Guardian, 2 December 2010;

[xxv] “Mexico creates special force for economic crime.” Associated Press, 22 August 2014;;_ylt=AwrBEiKuBw9U_V8Aq5nQtDMD

[xxvi] “Empresarios en Chihuahua pagan observatorio anticrimen,” Excélsior, 4 January 2013

[xxvii] Lucy Conger, “The Private Sector and Public Security: The Cases of Ciudad Juárez and Monterrey,” Wilson Center, March 2014;

[xxviii] Gary J. Hale, “422 Units,” Law Enforcement-Intelligence Program Coordinator; Merida Initiative, U.S. Embassy Mexico City.

[xxix] “Mexico’s Murderous SWAT Teams” Borderland Beat, 11 November 2014;

[xxx] “Mexican police shoot US teen near border,” Associated Press; 11 November 2014;

[xxxi] “As Mexico makes history, oil industry largely stays away,” Bloomberg News; 15 July 2015;


Categories: El Centro

About the Author(s)

Gary J. Hale is a law enforcement and intelligence professional who retired from the federal government in 2010 after a 37-year career with various intelligence community and federal law enforcement agencies. His last assignment was as the Chief of Intelligence in the Houston Field Division of the Drug Enforcement Administration (DEA). Hale also served with the Army Security Agency from 1972-1978 throughout Europe. He joined the DEA in 1979 while serving as a Task Force Agent and Narcotics Officer detached from the Laredo, Texas Police Department where he served from 1978-1979.  While at DEA he served at the El Paso Intelligence Center (EPIC), La Paz, Bolivia, Bogotá, Colombia, New Orleans, Boston, and Washington, D.C. Hale was also assigned as the DEA intelligence chief at the U.S. Embassy in Mexico City where he participated in the hunt for Amado Carrillo-Fuentes, the “Lord of the Skies.” In 2011 and 2012, he served as the Law Enforcement-Intelligence Program Coordinator for the Mérida Initiative at the U.S. Embassy in Mexico City.  Hale has a Bachelor of Science in Computer Science (Franklin Pierce University), a Master’s Degree in Judicial Policy (Universidad de Almería, España), and is an alumnus of the Harvard University Kennedy School of Government and the University of Virginia’s Darden School of Leadership. In 2010, Hale was appointed as a Drug Policy Fellow at the James A. Baker III Institute for Public Policy at Rice University in Houston, Texas.