Addressing the Concerns of the Oil Industry: Security Challenges in Northeastern Mexico and Government Responses

The December 2013 Constitutional Reform and August 2014 secondary legislation to permit private investment in Mexico’s oil and gas sector represents significant opportunities for private oil and gas companies. While overall geopolitical risk landscape in Mexico is low, cartel-related violence and other criminal activities continue to draw concern from international oil companies and other foreign investors. Homicide, kidnapping, extortion, attacks on facilities and organized public unrest challenge regional governance and have the potential to impact a number of stages of the oil and gas value chain. As foreign energy companies prepare to bid on Round One contracts, the Mexican Government, state security entities, and civilian security organizations have begun to put in place the elements of a more secure operational environment.

This case study analyzes the Mexican Government’s response to recent threats to and attacks against energy infrastructure and personnel in Tamaulipas and Veracruz. The government is addressing the issue of cartel-induced violence in Tamaulipas and Veracruz by mobilizing security frameworks for newly established and existing state law enforcement entities and the Military. The security arrangements, that include policing of major ports and protecting Pemex facilities and operations, should help the oil and gas industry to better absorb the financial risks to its business operations.