Venezuela’s oil industry goes down it flames, it’s
looking like it may just take Cuba down with it.
once the crude powerhouse of South and Central America, is no longer
able to produce enough oil to sustain its own economy, much less
those of other countries. Cuba
is frantically drilling in search for new reserves and reaching out
for new suppliers, but there is no guarantee they’ll be able to
stabilize their oil income any time soon.
became dependent on Venezuelan oil in the 1990s, when
they were sold cut-price crude in exchange for the services of
skilled laborers in order to bail them out of economic collapse in
the wake of the fall of the Soviet Union. Currently, Cuba relies on
foreign oil for more than two
its daily consumption, with over 100,000 barrels of crude flowing
from Venezuela every day for years.Now,
quite suddenly, their dependence on Venezuelan oil has been forced to
come to a bitter end.
the midst of political
oil exports have plummeted by 40 percent in the last 3 years. During
an export drought that lasted the better part of last year, the Cuban
government has been combatting the stemmed fuel flow with regular
energy rationing. In an attempt to avoid blackouts, the government
has ordered cuts in electricity and fuel consumption to most
state-run companies and entities (a huge pool in a communist country)
resulting in workers hours slashed and access to vehicles severely
restricted. This April, they also began restricting sales of premium
government officials and diplomats.
this eight-month moratorium on exports to Cuba, Venezuela once again
began to export light oil to Cuba and Curacao in March, but at a
great cost to their own refineries. As
of this month, the 187,000-barrel-per-day Puerto la Cruz refinery is
running at just 16
its capacity thanks to a deficit in light oil and a lack of
maintenance in ill-funded refineries. With this unsustainable model
and no sign of improvement in the country’s economy, Cuba is
looking for new sources of crude, and quickly.
is currently probing for oils in its own offshore wells, with some
hope for a vast untapped reserve, but so far they’ve run dry. In
response, they’ve reached out to an old friend--Russia. Just
last month, Russia exported its firstshipment of
oil to Cuba in decades. The
tanker, carrying 250,000 barrels of Russian oil, was just the first
installment of a total 1.9
to be sent by the Russian government-owned oil company Rosneft. It’s
unknown if the deal is to be extended after the total is reached.
is almost certain that Cuba’s weak economy will continue to need
the aid, but the Russian
made it clear that this is not a hand-out--there will be no more oil
if Cuba doesn’t have the cash to back it up.Unlike
Venezuela, who allowed Cuba to build up an unpaid tab for oil
imports, Russia has announced that they will give no leniency to the
oil is found in Cuba, it will be a game-changer, but not necessarily
for the Cubans. Australia-based
Melbana Energy Ltd. has
their Cuban assets contain as much as 637 million barrels of
recoverable oil and the company is beginning an intensive two-well
drilling campaign slated for 2018 with a budget of $30 million.
Cuba desperately drills for new reserves and looks to Russia to
replace the Venezuelan vacuum of low-cost crude, the future of the
already-unstable communist country grows more and more uncertain.
With no luck so far in their own probes, some of their most promising
potential reserves owned by outside interests, and their Russian
allies promising a swift cut-off if Cuba can’t pony up for oil
poverty-stricken country may very well bankrupt themselves in the
effort to power their nation.