Mexican federal authorities have dismantled a massive clandestine oil refinery used by organized crime to process stolen crude oil into illegal fuel products. It remains unclear which criminal organization controlled the facility.
The facility, located in the port city of Coatzacoalcos, was operating without any government authorization and could refine hundreds of thousands of liters of hydrocarbons, according to a joint report from Mexico's Attorney General's Office (FGR), Pemex, and the Ministry of Energy (SENER).
The refinery was camouflaged within a site that appeared to be for processing industrial waste. According to authorities, it contained approximately 500,000 liters of crude oil, stored in multiple tanks and equipped with separation units and heating systems that were installed without licenses or environmental safeguards.
Derivado de labores de inteligencia de campo y vuelos de reconocimiento, se identificó una operación clandestina, ubicada en Coatzacoalcos, Veracruz, para producir diésel artesanal o alternativo, nafta ligera o solventes y aceites tratados o combustóleo ligero, que operaba sin… pic.twitter.com/kUASRb7SoM
— Omar H Garcia Harfuch (@OHarfuch) June 18, 2025
Omar García Harfuch, head of Mexico's Security and Citizen Protection, wrote "As a result of field intelligence work and reconnaissance flights, a clandestine operation was identified in Coatzacoalcos, Veracruz, to produce artisanal or alternative diesel, light gasoline or solvents, and treated oils or light fuel oil. This operation was operating without the proper permits and posed a risk to local ecosystems."
Harfuch also disclosed that the site's location was confirmed through drone surveillance operated by Mexico's Secretaría de la Defensa Nacional and Secretaría de Marina. This intelligence enabled authorities to identify and act on suspicious fuel-related activity. The site was secured without arrests, and federal forces have retained control while forensic teams collect samples and trace the crude oil's origin.
Known as "huachicol," fuel theft is a major source of income for cartels. The process involves tapping into pipelines owned by the state-run oil company, Petróleos Mexicanos (Pemex). Thieves, often with the assistance of corrupt officials, siphon off fuel to sell on the black market, disguising it as waste oil or other legal cargo. The oil is mixed into a semi-refined fuel that causes damage to vehicles, as well as causing fatal explosions.
The U.S. Department of the Treasury recently imposed sanctions on two Mexican transportation companies—Servicios Logisticos Ambientales and Grupo Jala Logistica—and three individuals linked to the Jalisco New Generation Cartel (CJNG). These entities are accused of transporting stolen fuel and crude oil from Mexico into the U.S., generating hundreds of millions of dollars annually for the cartel.
In a notable case earlier this year, the Utah-based Lael-Jensen family was indicted for conspiring with Mexican criminal organizations to smuggle nearly 2,900 shipments of stolen crude oil into the U.S., mislabeling it as "waste oil" to bypass import regulations. The operation, run through their facility in Cameron County, Texas, allegedly relied on oil stolen from Pemex.
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