There is plenty of profit to be made by investing in infrastructure to transport natural gas to underserved areas of Mexico. Los Ramones is one of the largest projects currently underway, but Mexico’s National Infrastructure Plan for the next several years calls for billions in investment in the country’s energy development.

Unfortunately, if you don’t share some of the profits from those investments with whichever cartel happens to control the area you are operating in, you may have a truck or two set on fire.

“In terms of the national picture, Mexico remains one of the most dangerous countries to operate in in Latin America,” Carlos Cardenas, principal analyst for IHS, said during a recent webinar on the topic. Extortion is only one threat among many operators could face in the country, with death or serious injury via cartel violence as well as kidnapping and hydrocarbon theft all figuring as threats in different states in Mexico.

Cardenas clarified that overall, things are improving for the country, with rates of murders, reported kidnappings and reported extortions all down in January and February of 2015 from the previous year.

“But this statement needs to be taken very carefully, because it always depends on where you’re basing your operations,” he said.

Foreign energy companies entering Mexico will face an “evolving challenge,” Cardenas said. Gangs vie for power with other gangs frequently, leading to changing hot spots in the country, while Mexico’s overstretched security forces are unable to deploy thorough strategies to combat organized crime in more than three states at a time.

Mexico is still a “complicated country” in terms of violence, Cardenas said. The official figures are likely underreported, with social media indicating that many violent incidents occur that don’t make it into the government figures.

Crime Hot Spots

As far as the risk of death and injury, the state of Tamaulipas is the most violent, Cardenas said. This is a major problem for the energy industry because, “This state is of course very important—critical to the hydrocarbon industry, with important logistics hubs.”

Violence in Tamaulipas is driven by fights between Los Zetas and the Gulf Cartel. Tthe two gangs clash with each other and the government, and in-fighting between cells of the Gulf Cartel increases the risk of being at the wrong place at the wrong time. Confrontations in Tamaulipas have involved shootings in broad daylight, violent roadblocks off key bridges and truck hijackings, making it difficult to completely avoid being caught in a violent situation.

The state of Tabasco is safer than Tamaulipas, primarily because control of the area by the Zetas mean there is no ongoing turf war. However, Tabasco is a major risk area for extortion.

“In terms of extortion risks, the most important thing that we want to highlight is that extortion in Mexico is typically enforced through arson or the kidnapping of company personnel or people connected to the facilities being extorted,” Cardenas said.

Trucks are frequent targets of violence in extortion attempts because they are visible and easy to access. While actual incursions into facilities in extortion attempts are rare, they do happen—most recently in March in Villahermosa, Tabasco.

The fear of kidnapping is common in Mexico, but according to Cardenas, “the majority of the victims are locals.” Still, foreigners working in the country or even just visiting are at risk.

“The longer you stay, the more time you give criminal gangs to potentially target you as a potential victim,” he said.

Cartels Diversify

In addition to diversifying their revenue through extortion of oil companies and kidnapping for ransom, cartels have found an even easier target: unprotected pipelines.

“The main problem with hydrocarbon theft is that the army is overstretched, focusing on cartels in three or four states,” Cardenas said. While the army is distracted trying to prevent violence, the extensive pipeline network in Mexico is open for the tapping.

“Because there is a huge black market for stolen hydrocarbons, this type of illegal tapping of the pipelines is growing exponentially in Mexico,” he said, with incidents more than doubling in 2014 from two years previous. Theft is increasing despite efforts from state-owned oil company Petróleos Mexicanos (Pemex) to curtail it through increased surveillance and a special unit meant to protect the pipelines. Some estimates calculate the cost of the theft is more than $1 billion.

To attempt to prevent theft, Mexico’s government and Pemex decided to change the transportation strategy by removing an important gasoline additive from products moving through pipelines, planning to instead blend it once it reaches storage facilities.

The concern this raises is that cartels will similarly switch strategies to target storage facilities or fuel trucks, something that has already been seen along one particularly dangerous Tabasco highway with more and more incidents of gangs targeting oil tanker trucks. Other gangs have instituted more sophisticated methods, setting up front companies with facilities and trucks of their own to steal hydrocarbons.

“This is a risk companies doing business in the country would face when looking for partner companies,” Cardenas concluded.

Contact the author, Caryn Livingston, at clivingston@hartenergy.com.