Pemex exec kidnapping rattles Mexico oil industry

Tue May 11, 2010 2:57pm EDT

* Kidnapping of Pemex manager unnerves oil industry

* Foreign investors nervous over security in Mexico

By Robert Campbell

MEXICO CITY, May 11 (Reuters) - Driving home along rough, poorly lit roads to the southern Mexican city of Villahermosa, an oil executive and his driver stopped at a roadside eatery for dinner when they were cornered by armed men.

The gunmen seized Nestor Martinez, who manages a production unit for energy monopoly Pemex in the oil-rich state of Tabasco, and sent his driver on to deliver the news he had been kidnapped, industry sources say.

Martinez was released a few days after his abduction last month but a spate of kidnappings of Pemex executives has shaken the oil industry in a country where drug cartels and organized crime gangs are increasingly spooking foreign investors.

"Everyone has heard about it but there has been no official statement. It's really frightening," said a Pemex employee in Villahermosa, who declined to be identified because he is not authorized to speak with reporters.

A Pemex spokesman declined to comment on the case, and the industry sources could not confirm local media reports that a large ransom was paid to free Martinez, also president of the national petroleum engineers' association.

Mexico is in the grip of a brutal drugs war that has killed some 23,000 people, mainly traffickers and police, since President Felipe Calderon took power in late 2006. The army crackdown launched by Calderon has fanned turf wars between rival gangs and battles against security forces.

Extortion of businesses and kidnapping is rife, although many abductions are not reported because of a widespread mistrust of Mexico's police, so numbers are hard to pin down.

Businesses often deal with private security experts rather than the police when executives are abducted and they usually try to keep cases quiet for fear of attracting more criminal attention.

Calderon's government has appealed to the public to report more crimes, and around 100 kidnappings a month were reported to authorities last year, a more than 80 percent jump on 2008, according to Mexican consultancy RRS y Asociados.

PEMEX A TARGET

Organized crime in Mexico is dominated by powerful drug gangs that hold sway in different areas, running everything from cocaine-smuggling routes to car thefts.

A majority of firms surveyed by the American Chamber of Commerce of Mexico said earlier this year they felt less safe than before. More than a quarter said they were reconsidering their investment plans in Mexico due to security concerns.

"We have clients that in the past year have spent a lot of money on physical security and many are now restricting the travel of their executives," said Fred Burton, vice president of intelligence at U.S. security consultancy Stratfor.

Burton estimates official Mexican statistics may only account for a third of all abductions. "It's not uncommon for a senior executive to fly into the country and leave the same day rather than take the risk of staying overnight."

Martinez is the fourth Pemex employee to be abducted from his production unit since March, according to a Tabasco newspaper. A fifth Pemex employee, who works in petrochemicals, was also abducted recently, the paper reported.

"This is not a good development for the oil industry and shows security is a growing concern," said a U.S. consultant who works with Pemex, asking not to be quoted by name.

Security concerns are unlikely to lead to an exodus of oil services companies from Mexico due to the lucrative work doled out by Pemex as it struggles to halt declining oil production.

But the abductions are one more headache for Pemex which already struggles with criminal gangs and corrupt employees pilfering some $750 million of fuel and oil from its pipelines each year and stealing valuable spare parts and equipment.

Calls have intensified to move Mexico's annual petroleum conference in June from the Gulf coastal city of Tampico in the drug-gang infested state of Tamaulipas to a safer location.

"Nobody wanted to go to Tampico before but now there is a lot pressure to change the location. Who wants to send their executives there?" said a person at a Pemex contractor. (Editing by Catherine Bremer and Kieran Murray)




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