Decline of Mexico’s oil industry transforms Paraíso into ‘hell’

Until recently, Edgar Barrera enjoyed a life many Mexicans could only hope for.

In a few short years, the 36-year-old bookkeeper rose from handyman to white-collar worker at what seemed to be one of the most stable companies in Latin America: state-owned oil firm Pemex.

Thanks to Pemex, Barrera met his wife, vacationed on the Mayan Riviera and envisaged a rewarding career without leaving his hometown in Tabasco, a rural state at the southern hook of the Gulf of Mexico where more than half the population lives on less than roughly $92 a month.

Then everything changed.

Oil prices plummeted, forcing Pemex to cut his and thousands of other jobs across Mexico. An energy reform, meant to spur business with private competitors, struggled to attract immediate investment. And the gang violence that has crippled Mexico over the last decade finally spread to Tabasco, previously a relatively peaceful corner of the country.

Mounting consequences, from an economic recession to soaring murder rates, have rapidly made Tabasco one of Mexico’s most troubled states. Its small, but once seemingly solid, middle-class now struggles with a downturn and lurid violence.

Barrera himself, after brushes with extortionists and kidnappers who may have once been Pemex colleagues, recently sought asylum in Canada.

Paraíso, or “paradise,” is the Tabasco town where Barrera grew up and worked at a Pemex port. It is “now a hell,” he said.

‘Debacle’

It’s little surprise that industry turbulence would hurt Tabasco, home to Mexico’s first petroleum discovery and a state where more than half the economy, and nearly half the jobs, rely on the oil sector.

But the extent of the problems has caught locals, industry executives and government officials off guard, especially as criminals increasingly exploit what’s left of any prosperity by targeting Pemex resources, equipment and employees.

“The oil debacle hit us hard,” said Tabasco Governor Arturo Núñez. “It caused social problems that without question are contributing to higher crime.”

President Enrique Peña Nieto, now in his last year in office, made an overhaul of the energy industry his signature initiative, ending Pemex’s longstanding grip on exploration, production, refining and retail fuel sales. Proponents long argued that operators besides Pemex are needed to reverse more than a decade of declining crude output and unlock potential in untapped deposits.

But the reform, finalized in 2014, came into law just as global oil prices collapsed, dampening companies’ willingness to invest. Despite a recent rebound, the price of crude in global markets plummeted by as much as 76 percent as of June of that year.

Since then, Pemex has slashed nearly 18,000 jobs across Mexico, about 13 percent of its workforce, according to company figures. In Tabasco, Pemex let go 1,857 workers, or roughly 12 percent of the 16,000 jobs the state shed between 2014 and 2016, according to government data. Many of the other layoffs were among suppliers and other businesses that rely on Pemex.

Combined, the cutbacks gave Tabasco Mexico’s highest unemployment rate and mired the state in recession. In 2016, the most recent year for which data is available, Tabasco’s economy shrank by 6.3 percent. It is the only state where both poverty and extreme poverty, defined by the government as monthly income of less than about $50, have risen in recent years.

Crime has accompanied economic trouble. In Tabasco, police registered 388 murders last year, over triple the number in 2012. Despite a population of 2.4 million people, small compared with many of Mexico’s 30 other states and giant capital district, Tabasco had the fourth-highest kidnapping tally and sixth-highest number of extortions reported last year.

Current and former Pemex workers are at both ends of the crimes – some as victims but others as instigators, participants or informants. Emboldened by the impunity and graft that have enabled crime nationwide, some locals have turned to illicit businesses, joining or seeking to start gangs that steal Pemex fuel, machinery and supplies. Others are targeting relatively well-off current and former Pemex workers, such as Barrera.

Mounting pressure

Last October, kidnappers captured his brother-in-law. Days before, after three decades of Pemex service, Barrera had received a retirement bonus of roughly $20,000.

Within days, the family cobbled together a ransom of about $30,000. The kidnappers released him. With contact information stolen from his telephone, though, they began calling friends and family, demanding more.

“Pemex’s workforce is contaminated,” Barrera said, echoing family members who believe the kidnapping was planned with inside information. “The workers are feasting on one another.”

Last November, Barrera secured a few weeks’ work as a Pemex contractor. The threats grew closer.

A colleague told Barrera’s wife, who still works at Pemex, that suspicious men had been asking about her outside the office gates. Colleagues then told Barrera that armed men were waiting outside the office for him, too.

Terrified, he slept in the office that night.

Enough, he thought.

Barrera booked a ticket to Canada, where Mexicans can travel with no visa. He landed in Toronto last Christmas and applied for asylum. He hopes to bring his family, who moved to Villahermosa, Tabasco’s capital, in order to avoid the gangsters in Paraiso.

Those familiar with the industry say it makes sense that criminals, not just victims, could emerge from the Pemex payroll. Even if not committing atrocities themselves, some employees are believed to cooperate with gangs for their own cut of the proceeds or, merely, out of fear.

“They know the guts of the place, so they can provide information,” said Raúl Múñoz, a former Pemex chief executive, who now has private business with the company in Tabasco and says he faces regular security problems. “Everyone wants a piece of the action.”

Not good

In a statement, Pemex said it “has zero tolerance with any worker involved in any crime.” The company said it cooperates with local, state and federal police to investigate illegal activity, but declined to comment on specific episodes or cases involving individual workers mentioned in this story.

During a recent interview, Carlos Trevino, Pemex’s chief executive, conceded that employees are increasingly at risk because of their jobs and pay. “Petroleros have a better salary than many other people,” he said, using the Spanish term for oil industry workers.

Across Mexico, Trevino added, the company is increasing measures to ensure the security of personnel and property. It has taken its name and logo off trucks. It told workers to stop wearing Pemex uniforms off site.

Still, he said, “it’s hard to have a completely safe operation.”

“This thing in Tabasco,” he added, “it’s not good.”