Does the Global Drug Trafficking Industry Affect Oil and Gas?

Although international drug trafficking does not have a tangible effect on the overall supply or pricing of the hydrocarbon trade, it may present issues for the transportation of oil and gas as well as its extraction.

That’s according to Dryad Global Analyst Andrea Peniche Cobo, who told Rigzone that these effects on transportation and extraction manifest in both direct and indirect ways.

“There are two main groups of actors in the international drug trade that can impact oil and gas - cartels and insurgent actors,” Cobo told Rigzone.

“Due to the fact that natural gas is hard to capture, store, and use without a highly technologized process, main drug traffickers like cartels or insurgent groups usually do not target gas pipelines. They may target gas complexes, but more in order to attack the state than to profit themselves,” Cobo added.

“On the other hand, given the low-technological boundary required to use oil, cartels and insurgent groups often target oil pipelines. Usually, in the case of belligerent non-state actors, drug trafficking and fuel smuggling go hand in hand as fuel smuggling is a viable manner in which to undermine the state, control territory by controlling vital resources, and, like drug trafficking, is a form of revenue for these non-state actors,” the Dryad Global Analyst continued.

Offering examples, Cobo noted that some groups involved in the drug trade that have targeted state oil pipelines and syphoned supply are Mexico’s cartels, Libya’s militias, and Syria’s ISIS.

Looking at some of the indirect effects, Cobo outlined that the presence of drug trafficking is a symptom and indicator of a deterioration in security and rule of law.

“These conditions of a degraded security environment are what cause problems for oil and gas rather than just the mere act of trafficking drugs,” Cobo said. 

“For example, a massive deterioration in civil security and rule of law throughout much of Mexico, directly related to cartels’ growing power and increasing subversion of the state, has led to an increase in piracy and attacks on Mexico’s petrol platforms,” the Dryad analyst added.

“While it is unlikely that cartels are directly tied to these attacks on Mexico’s platforms, they do create the environment for their proliferation,” Cobo continued.

While all of these direct and indirect impacts may cause delays or obstructions to the transportation or extraction of hydrocarbons, it usually does not have a large impact on global market supply, and therefore has minimal influence on pricing, the Dryad analyst told Rigzone.

Global Drug Smuggling Methods Are Rapidly Evolving

Earlier this year, Dryad released a Counter Narcotics report, which provides an analysis of the global drug trafficking industry and its impact on commercial shipping. The report also provides insights on how to mitigate the risks of drug smuggling and protect vessels, crew, and cargo.

“Global drug smuggling methods are rapidly evolving within the maritime domain,” the report’s summary states.

“These changes are costing shipping companies millions of dollars in extra operating costs through fines, vessel seizures, detentions, and arrests,” it adds.

“Smuggling organizations have typically hidden their narcotics within legitimate cargo inside shipping containers. These containers are then loaded with illegal narcotics before they are put onboard cargo vessels, unbeknownst to shipping companies and crews,” the summary continues.

Smuggling organizations use a variety of methods to move their products at sea, including small boats, at sea transfers, semi-submersibles, and aircraft, according to the summary, which notes that, to do so, they recruit smaller cargo vessels, fishing vessels, support vessels, and crews to receive and offload illegal narcotics via at sea transfers or within ports.

“While historically smuggling organizations haven’t widely involved crew members onboard the larger cargo vessels, this has begun to change in recent years and smuggling organizations are now putting major efforts into recruiting (through force, extortion, and threats) crew members from major global shipping organizations to facilitate the transportation of illegal narcotics,” the report summary warns.

In a statement accompanying its 2021 Counter Narcotics report, Dryad stated that illicit drug producers continued to develop complex trafficking patterns, targeting commercial vessels and their crew to transit their supply through multiple stopover and transit points.

“The safety of the vessel, crew and their families can be at risk, and despite the existence of IMO Frameworks to protect crew when under investigation, unknowing seafarers and masters have been detained for extended periods of time in relation to drug trafficking incidents,” Dryad noted in that statement.

“It is imperative that the appropriate measures are employed and enforced rigorously to mitigate the likelihood and risk of being targeted by these drug trafficking syndicates,” it added.

Dryad describes itself as a global risk intelligence partner. The company is headed by CEO Corey Ranslem, who has 27 years of experience in the public and private sector working with ports, cargo lines, cruise lines and large yachts. Ranslem is a veteran of the U.S. Coast Guard and a recognized expert in U.S. Federal Court in maritime security, Dryad’s site highlights.

To contact the author, email andreas.exarheas@rigzone.com