| TAMPICO, Mexico, June 25
TAMPICO, Mexico, June 25 During Mexico's first
oil boom, Tampico was such a magnet for foreign capital that it
became the biggest oil-exporting port in the Americas and home
to grandiose architecture that inspired comparisons to Venice
and New Orleans.
A century on, Tampico is the country's kidnap capital,
racked by fear, murder and extortion that threaten to choke off
its bid to make a comeback as Mexico, the world's No. 10 crude
oil producer, opens up its oil and gas industry.
In December, President Enrique Pena Nieto ended state-run
Pemex's 75-year-old oil and gas monopoly in the hope that oil
majors will plow tens of billions of dollars into Mexico,
revitalizing an economy that has long lagged its regional peers.
Tampico, which hugs a cluster of crocodile-infested lagoons
in the northeastern state of Tamaulipas, should be well placed
to attract firms like Exxon Mobil Corp and Chevron
looking to invest in the oil and gas-rich region.
But as lawmakers finalize terms and conditions for the
energy reform, drug gangs have turned Tampico and Tamaulipas
into a maelstrom of gunfights and oil theft.
Among the atrocities on the streets of greater Tampico in
late May: seven corpses stuffed into the back of a car; a body
with all its limbs hacked off; and a man hung upside down from a
rope, with his own severed head nearby in a basket of
"The problem is so serious that the state and municipal
authorities can't cope," said German Pacheco, a federal
congressman for Tampico from the opposition conservative
National Action Party (PAN).
Murders in Tamaulipas have hit their highest level since
Pena Nieto took office 18 months ago, and the president has
sought to stem the violence by replacing corrupt local and state
police with federal security forces that now patrol the state.
But the problem has deep roots.
Federal prosecutors have investigated allegations that the
last three state governors all had links to organized crime. Two
were not charged, but one is a fugitive, wanted for trial in the
United States. The current governor, Egidio Torre Cantu, was
voted in after his brother, the favorite for the job, was
murdered by gunmen days before the 2010 state elections.
In 1914, U.S. writer Jack London likened Tampico to Venice
and described its oil fields as "unthinkably big and rich."
Today, the ornate, colorful blend of art nouveau and
neoclassical architecture in the heart of the city bears witness
to the early 20th century oil boom.
Although markets around the palm-lined squares of the center
still bustle with people during the day, the local economy is
reeling. Employers' federation Coparmex estimates that sales at
businesses in Tampico's metropolitan area of some 900,000 people
fell 20 percent to 25 percent from 2013 during April and May.
As night falls, residents used to living alongside
crocodiles scatter to avoid becoming statistics in turf wars
across Tamaulipas caused by splits within the Gulf Cartel and
its clashes with a rival gang, the Zetas.
The area is still packed with potential. More than half of
Mexico's prospective shale oil reserves are in the
Tampico-Misantla basin extending south from the port into
Veracruz state, said Gustavo Hernandez, head of Pemex's
exploration and production arm.
And more than half of Mexico's estimated deepwater oil
reserves in the Gulf of Mexico are in its northern section off
Tamaulipas, he added. The state is also home to much of Mexico's
One local retailer, speaking softly in his store not far
from where John Huston shot scenes for the 1948 Humphrey Bogart
film "The Treasure of the Sierra Madre," said energy reform
could make a big difference to the economy.
"But who in their right mind is going to invest here with
these headlines?" he said, asking to remain anonymous.
Estimating his sales were down by half from 2009, he said
some 50 people he knew in the area had been kidnapped in under
three years and that a gang had muscled in on his business with
clubs and bars, banning competitors on pain of death.
For army troops battling the cartels, death looms larger in
Tamaulipas than anywhere else in Mexico, where more than 90,000
people have died in gang-related violence since 2007.
Three in every 10 soldiers killed since Pena Nieto took
office have died in Tamaulipas, defense ministry figures show.
Oil theft is also rife in Tamaulipas, as gangs steal tanker
trucks and siphon off fuel from pipelines. By mid-May it
averaged two illegal oil taps per day, or one-fifth of the
national total, Pemex data shows. Locals in Tampico say gangs
sell gasoline for half the official price or less.
Tampico also leads Mexico in kidnappings with a rate 20
times the national average, a recent study published by Coparmex
and Germany's Konrad Adenauer Foundation showed. Up to 70
percent of businesses in Tamaulipas pay extortion to gangs, said
an official from a human rights group who requested anonymity.
The result, said congressman Pacheco, has been an exodus of
"easily 80 percent" of Tampico's top entrepreneurs.
Many of the wealthy have even stopped coming back to pay
respects to their dead, said Jorge Altamirano, 63, a worker at
one of Tampico's main cemeteries.
Five years ago, Altamirano was paid to look after about 40
tombs, earning 100 pesos for each a month in a graveyard
sprinkled with sepulchers of the city's old oil barons. Now
struggling to feed five others at home, he has only 11 tombs.
"Some were just abandoned," he said. "People don't want to
leave their homes."
Oil executives are reluctant to speak openly about the
lawlessness in Tamaulipas. Privately, they say it makes it hard
to operate and raises security costs, putting business at risk.
While Tampico's first oil boom ended decades ago, the
adjoining city of Altamira is a major petrochemical center and
Mexico's No. 4 commercial port.
Altamira has high hopes for the reform, and Mayor Armando
Lopez named Royal Dutch Shell and Singapore-based Keppel
Offshore & Marine among firms he said planned to invest there.
But Altamira is also suffering. Five people were killed in a
shootout this month when a gang blocked access routes to the
port by setting trucks ablaze.
Investors are paying close attention.
Pacheco of the PAN said the violence came up time and again
at a recent energy conference he attended in Houston with
executives from companies like Eni, BP and Total.
"Security in Tamaulipas was a general complaint among the
world's top international firms," he said. "(The reform) will
only offer hope if we end the lawlessness."
(Reporting by Dave Graham; Editing by Kieran Murray and Douglas