December 19, 2010 / 4:58 PM / in 7 years

UPDATE 5-Oil pipeline blast rattles Mexico town, kills 27

* Pipeline explodes before dawn in Central Mexico

* Illegal tap might have sparked explosion; now controlled (Updates with official quotes, casualties)

By Patrick Rucker and Armando Tovar

MEXICO CITY, Dec 19 (Reuters) - Fuel thieves tampering with an oil pipeline could have sparked a deadly blast in central Mexico that flooded streets with fire and killed at least 27 people before dawn on Sunday, officials said.

The accident occurred just before 6 a.m. (1200 GMT) when oil spilling from a breached pipeline quickly burst into a fireball that flattened homes and wrecked cars in San Martin Texmelucan, a small community in the state of Puebla about 50 miles (75 km) east of Mexico City.

“Several streets were flooded with fuel. With a spark, there was a river of fire,” said Valentin Meneses, interior minister of the state of Puebla.

Photos and video from the scene showed burned-out homes, charred vehicles and scorched ground around the moderately populated outskirts of the town.

Pemex PEMX.UL, the state oil monopoly that controls the pipeline, said fuel thieves could have touched off the deadly explosion that was quickly controlled after the initial detonation.

“We are not discounting mechanical problems but, on the other hand, we have had problems with illegal taps this year including along that stretch” of pipe, said Pemex chief Juan Jose Suarez.

Fuel theft is rampant in the Pemex network and hundreds of millions of dollars worth of fuel have been stolen in recent years, the company has said.

“President (Felipe) Calderon has ordered an investigation to determine who was responsible and apply the full weight of the law,” the president’s office stated, pointing to the early indications of an illegal tap.

Pemex was alerted to pipeline trouble when a pumping station reported a sudden pressure drop and halted the flow of oil, the company said in a statement.

“Minutes later, (we) detected a fire in two of those ducts,” Pemex said.

The explosion and ensuing oil fire kicked up a blanket of smoke that hovered over the town through the early morning hours as soldiers arrived to aid local firefighters and rescue teams.

Among the 27 dead are 12 children, officials said, while 51 people are injured. The explosion also destroyed 32 houses with about 70 more homes damaged, according to officials.

The explosion occurred in a residential neighborhood which is not near major oil refining or transportation facilities, according to local media reports. (Reporting by Patrick Rucker and Armando Tovar; editing by Mohammad Zargham)

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