Siegfried's Diesel mission is a bit convoluted and doesn't offer that much of a direction so here is how you can complete it and get the achievement along the way.
Diesel is one of the most mysterious missions in Jagged Alliance 3 and while there are multiple ways to complete it, not all of them are "correct", which is shown by not getting the associated achievement and eventually in the epilogue.
Anyway, you can start the mission by talking to Siegfried in the Drachenberg Mine, next to Landsbach.
Ask him about the mine and he will suggest you track down Diesel for him and he will gift you the mine.
List of all Diesel clues in Jagged Alliance 3
As soon as you finish the conversation, you will be able to examine Siegfried's desk for the first clue.
After exiting his residence, don't fast-travel immediately. Instead, go closer to the mine and inspect the nearby fuel tank. You can also search the houses as one of them belongs to Bonecrusher, who is enhanced by Diesel.
After that, go to Landsbach at night and enter the Night Club. Talk with Bounce and ask about Diesel - he will provide the next clue.
Go up the stairs in the warehouse and enter the office that has a laptop in it. The office is exactly above the Night Club's fighters. Examine the laptop to gain one more clue.
Then you will have to defeat Bonecrusher in a cage fight to get the next bit of information. Alternatively, you can speak to Mole and pay him $5,000 to get directions to the next clue, which will be talking with Travis at the nearby Old Gas Station. Go there, talk to the stoner and then inspect the wrecked van together to gain another clue.
After you're done with Travis, go to the neighbouring sector to the west, annihilate the massive Legion party and inspect the vans in front of the giant track. This is where you finally loot the Diesel.
Go to Camp Grand Prix and inspect a fuel tank at the top of the hill for another clue.
With all those clues in tow, you can now visit Siegfried and tell him you know he's been using Diesel to enhance his soldiers. With that, he will go on a Hitler-like rant and then you should say you won't honour the deal. This turns Siegfried's guards hostile so you need to quickly deal with the ones who are closest to your party. Beware of the scouts, they are packing explosives so don't get too bunched up and take them out as soon as possible.
Bounce and his buddies will also attack and be hostile to both you and Siegfried's soldiers so you can actually let quite a few of them kill each other.
By that point, the achievement should have popped up and the mission is complete.