More than 100 oil workers and contractors hired by Mexico's state oil monopoly Pemex have aided criminal gangs stealing millions of barrels of fuel over the past decade, a document obtained by Reuters shows.

The corrupt workers collaborate with crime gangs, some with links to powerful drug cartels, to hijack tanker trucks or siphon gas, crude oil and jet fuel out of tens of thousands of miles (kilometers) of pipelines snaking across Mexico.

Since 2001, 97 workers and seven contractors, usually truck drivers, have been linked to fuel thefts, Pemex [PEMEX.UL] told Reuters through a freedom-of-information request.

Some of those staff members have engineering skills and inside knowledge of the company.

Fuel theft has cost Pemex some $600 million since last year alone -- a major headache for Mexico's government, which relies on oil revenues for about a third of its budget.

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For graphic, see: r.reuters.com/vyh72s

Full coverage of drugs war: link.reuters.com/wam89p

Factbox on political risks in Mexico: [ID:nRISKMX]

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The government is trying to address the problem and a new law moving through Congress would slap stiffer penalties on employees convicted of willingly collaborating on thefts. Those found guilty could face up to six years behind bars.

But the weakness of Mexico's judicial system makes convicting criminals difficult. Only 15 sentences have been handed out from the more than 2,600 formal complaints Pemex filed for fuel thefts since 2000 through August of last year.

"The (Pemex employees) that look the other way are working with the bad guys. It's an alliance," said a former contractor for Pemex who worked with the company for 30 years.

"There are groups at every level and everyone knows about it," he said, asking not to be identified because of his current position in a Mexican state government.

The crooked workers are just a tiny fraction of the nearly 150,000 employees that make the state oil behemoth one of the largest companies in the world and Pemex says the biggest culprits are organized crime syndicates, not insiders.

Pemex is suing several U.S. companies accused of buying stolen Mexican natural gas condensate, a gasoline-like by-product used in petrochemical plants. [ID:nN01194100]

A handful of U.S. executives pleaded guilty to the charges including Tim Brink, former CEO of Continental Fuels. In a final statement, Brink's lawyer said Pemex officials hooked him up with the groups hijacking the condensate.

Drug smugglers use the fuel to power their cars and planes or sell it. Armed gangs menace pipeline inspectors and some have even kidnapped Pemex workers, with 17 victims since 2005.

While Pemex says it does not know the motives behind the assaults, criminals could be using brute force to intimidate workers into spilling privileged information.

SKILLFUL TAPS

With new, sophisticated monitoring systems including satellite tracking, closed-circuit cameras and gauges to measure pressure changes in the oil ducts, Pemex managed to slash fuel thefts by 66 percent between 2008 and 2010.

But the number of criminal pipeline taps jumped 55 percent in the same period as innovative thieves tried new techniques.

"We often find illegal taps where there is one hose stealing the fuel and another hose injecting water at the same time so that the pressure variations are minimized," Pemex CEO Juan Jose Suarez Coppel said last month.

Illegal pipes known as "hot taps" are sometimes welded to pipelines actively pumping gas and can cause massive explosions if not connected with expertise.

In December last year, oil spilling from a breached pipeline burst into a fireball that killed 28 people and destroyed homes and cars in the small town of San Martin Texmelucan east of Mexico City. [ID:nN19172322]

"Most people who know how to do this are in Pemex or are former Pemex employees because it's a high-tech operation. A guy off the street or your run-of-the-mill narco isn't going to know," Houston-based energy analyst George Baker said.

But not all the taps are top quality and some cruder varieties could be set up by an ordinary plumber, said Juan Bueno Torio, a senator from the oil-producing state of Veracruz on Mexico's Gulf.

Pemex sources asked about the 104 employees and contractors involved in thefts could not say how many had been prosecuted, but said a telephone hotline set up to place anonymous tips was helping authorities react more quickly.

"The company is getting more and more sophisticated detecting the thefts," Bueno Torio said. "But then the rats are always looking for new tricks."

($1=11.614 pesos)