Cuba sourcing oil globally to meet shortfall

Cuba is intending sourcing oil from Russia, Algeria and Iran to compensate for falling supplies from Venezuela, according to oil industry sources and the trade press.

Quoting an unnamed official from Cuba’s state oil company CUPET, the industry publication the Petroleum Argus has reported that the Cuban government is preparing to start negotiations with Russia for the supply of crude and refined oil products. The online magazine’s informant said this was “to counter possible disruptions in imports from current sources.”

Cuba also plans to discuss oil supply with Iran, according to the official.

The reports follow other indications from the Algerian state-owned company Sonatrach that it is sending an 80,000 tonne shipment of crude in October to Cuba for the first time to help offset lower supplies from Venezuela. The cargo is the first reported shipment.

Cuba currently relies on Venezuela for crude and oil products which are supplied under a preferential arrangement reached in 2000, that sees the Venezuelan state oil company PdVSA provide around 80,000 b/d and payments to Cuba under an exchange arrangement whereby Cuba provides technical support in medicine, security, education and in other areas.

Venezuela continues to have production problems exacerbated by low oil prices and poor management.

The Petroleum Argus, quoting its CUPET source, said that the likely quantities to be imported from Russia “will be the subject of the planned negotiations,” adding that Cuba’s foreign affairs and foreign trade ministries were already involved in discussions with Moscow. The same source reportedly said that any oil supply agreement with Russia “will be based on Cuba paying cash for the imports.”

“There is uncertainty about the political and economic situation in our traditional source of oil, and the government’s intention is to diversify sources so the country is not dependent on one source,” the CUPET official told the publication.

Although Iran and Cuba discussed cooperation in several areas including oil supply during a recent visit to Havana by its Foreign Minister Mohammad Javad Zarif (Cuba Briefing August 29, 2016), the Argus’ CUPET source said that there were no detailed exchanges as yet about oil imports from Iran.

In July, Cuba announced that it was introducing a period of austerity which would include a reduction in power and fuel use by state entities (details in Cuba Briefing July 11, 2016).

Cuba has long…

This is an extract from the Caribbean Council’s weekly Cuba Briefing, a leading publication that provides detailed and accurate news on economic, social and political developments inside Cuba to corporate interests with a long term economic relationship with the island.

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