Cuba Scrambles As Venezuela's Oil Industry Collapses

Tyler Durden's picture

Authored by Haley Zarumba via OilPrice.com,

As Venezuela’s oil industry goes down it flames, it’s looking like it may just take Cuba down with it.

Venezuela, 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.

Cuba 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 thirds of 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.

In the midst of political unrest and economic devastation, Venezuela’s 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) by 50 percent, resulting in workers hours slashed and access to vehicles severely restricted. This April, they also began restricting sales of premium gas to government officials and diplomats.

After 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 percent of 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.

Cuba 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 first shipment 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 million barrels 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.

It is almost certain that Cuba’s weak economy will continue to need the aid, but the Russian government has 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 cash-strapped nation.

If oil is found in Cuba, it will be a game-changer, but not necessarily for the Cubans. Australia-based Melbana Energy Ltd. has estimated that 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.

As 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 imports, the poverty-stricken country may very well bankrupt themselves in the effort to power their nation.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
DownWithYogaPants's picture

Von Firstenberg!  Wacky.  You don't toe the private central bankers line and the economy always seems to collapse.

LetThemEatRand's picture

It's important to remember here on ZH that central bankers are only bad when they are screwing middle class Westerners.  When they stick it in the ass of Venezuela and Cuba, it's purely socialism/communism that is to blame.  

tmosley's picture

Excellent. Communists can only learn through their own deaths.

LetThemEatRand's picture

Cuba and Venezuela have plenty of problems associated with their respective corrupt governments and poor policy choices, but there is no doubt in my mind that the Central Bankers play a large role in the suffering of their people.   Or maybe Perkins was full of shit.  Either way, it is irritating to see the same people who understand the damage bankers do to the West not understand the role of the bankers in these shithole countries.

Pure Evil's picture

Cuba could always become the 52nd welfare state on the Federal Reserve plantation.

They should hold a referendum.

ATM's picture

Everyone can stop wondering why Obama lifted sanctions on Cuba.

Antifaschistische's picture

I thought he did it to increase the liklihood of helping to populate the parasite masses in an attempt to bring down the productive white class in America...

Antifaschistische's picture

PS.  I don't know Cubans but I assume they are good people and are not parasites...however, like in America...with enough indoctrination, they can be taught they have been oppressed and deserve reparations, welfare checks, more better healthcare and other stuff restributed by the Free Shit army.

Alt RightGirl's picture

ZERO fucks given.

Next they will identify themselves as blacks and start asking for handout.

Black Lives Matter Has the Nerve to Ask for Money to Fund “Black Only” Healing Spaces


Art Van Delay's picture

We can turn Cuba into a big migrant CAMP and ship all the undesirables there.

They would fit right in since they love socialism.

Rusty Shorts's picture

I visited Cuba several times last winter. Good people. Beautiful place, borderline paradise. 

 

This is the place is like no other place on Earth. Truly a mind warp after experiencing the daily life of the average Cuban. 

 

The Cuban CUC is pegged to the USD.

 

Draw you own conclusions and prepare accordingly.

 

 

wee-weed up's picture

Great! Two Socialist "utopias" getting killed with one stone.

Insurrexion's picture

Exactly. Your point is well taken about the moronic hypocrisy.

But, we cannot fix stupid.

Solution: Terminate the Central Bankers with extreme prejudice.

They are soft targets (like the congressmen playing baseball today)

I work with ex-Mossad and Navy Seals (The jackals in Perkins terms)

It can be done for a comparatively small fee.

After all, it is all about money. Isn't it?

When the bodies start to pile up,
Then the real fun begins.

Offthebeach's picture

What makes you think commie countries aren't the final fulfillment of Central Banks?

HRH Feant2's picture

"Anti-government protesters in Venezuela set fire to the headquarters of the nation’s Supreme Court Monday as part of the ongoing effort to bring down the government of socialist dictator Nicolas Maduro.
The incident comes after the Supreme Court voted to reject a motion blocking Maduro from rewriting the country’s constitution, despite recent polls showing that up to 85 percent of Venezuelans oppose the reforms."

http://www.breitbart.com/national-security/2017/06/14/venezuela-proteste...

My oh my. Looks like things are getting heated up!

land_of_the_few's picture

VIOLENCE IN VENEZUELA AIMS TO CREATE CHAOS

Check the murderous AntiFa-style YOOTS with the expensive designer gasmasks and helmets. Your tax dollars at work.

Perhaps next they will be like this attacking a Trump rally. Don't be so smug at what happens to *useless Venezuelans*.

https://videosenglish.telesurtv.net/player/659120/violence-in-venezuela-...

76 Percent of Venezuelans Reject Foreign Intervention: Poll

85 percent said that disagreed with violent protests and the tactics of violent groups known as guarimbas.

http://www.telesurtv.net/english/news/76-Percent-of-Venezuelans-Reject-F...

HRH Feant2's picture

Chill out dude or dudette. I didn't write the article I linked. It is just news.

I am not smug. Not at all. This communist shit is building here in the good 'ol USSA. Right before our eyes.

land_of_the_few's picture

Seems maybe the young rioters are the main concern, and who is backing them. Seen that playbook before in the US, almost same style of clothing and tactics as the renta-"AntiFas" in NYC and DC (Soros kids). And not so different from Ukraine, or even Syria.

Maybe the rioters do think they are some sort of "Commies"/freedom fighters/Anarchists but weirdly, co-opted into attacking a leftist Government.

Worst case scenario - it ends up like Ukraine and many conscripts for the "new regime" simply get erased when they are told to attack the majority population holding out against the foreign-backed Color Revolution militias.

Koba the Dread's picture

You're not against corrupt central and private bankers; you're only against them when they screw you. Well, screw you!

The_Juggernaut's picture

Oh no! Our other people's money is running out!

sixsigma cygnusatratus's picture

Liberalism, socialism and communism are only different degrees of an inverse form of theocracy.  So as a government administers religious dogma (as they understand it), it is understandable why they enforce charity at the point of a gun.  

So we can all be equal. Because it says so somewhere.  Just think about how many Cubans and Venezuelans are enjoying their equality.

The_Juggernaut's picture

Maduro and his buddies are enjoying their equality.

land_of_the_few's picture

7 Steps to Kill a Revolution

What is in the U.S. manual for regime change?

http://www.telesurtv.net/english/multimedia/7-Steps-to-Kill-a-Revolution...

OAS Debates Venezuela, Not a Word About Brazil

Organization of American States, headquartered in Washington, D.C.

http://www.telesurtv.net/english/news/OAS-Debates-Venezuela-Not-a-Word-A...

The latest Parana Institute Research poll indicates that 87 percent of Brazilians favor the immediate removal of Temer.

https://videosenglish.telesurtv.net/player/651190/oas-head-against-venez...

 

Privyet_Jet's picture

my god about time somebody said so

Pure Evil's picture

Central bankers are socialist/communists.

That's what Central Planning Committees are all about.

What?! You think socialist/communist countries don't have central banks?

Stuck on Zero's picture

Also, not mentioned in this piece: thousands of highly trained Cuban troops have been keeping discipline and protecting the Venezuelan government. Maduro doesn't trust his own people.

Shadow1275's picture

Another Triumph For Socialism!!!

 

The Beatings will continue until we hang the Leftist Fuckers

wisehiney's picture

He who scrambles early, scrambles best.

 

Attribute to "The Funky Beatwhiskers"

GunnerySgtHartman's picture

Good riddance to BOTH.

williambanzai7's picture

I thought all shit was free?

Francis Marx's picture

I really doubt Bernie Sanders would ever make the connection that socialism ends in failure such as this 

revjimbeam's picture

It'll be different this time...

Ginsengbull's picture

The world, and all mankind, will forever be indebted to the glorious nation of Cuba...

 

because they gave us Vida Guerra!

venturen's picture

is this why Obama was trying to rescue the Cuban dictatorship?

Moe Howard's picture

Cuba is paradise. - Every Canadian Ever.

Zepper's picture

Please someone school me... and show me one country in south america and or Africa that has been consistely well run... Please show me... Just one ... and dont mention South Africa when they had appartied thats an easy one. 

medium giraffe's picture

as compared to whom? the most indebted nation on earth?

napper's picture

First, you show us a South American country that has not been under US subversive operations and financial / economic warfare.

land_of_the_few's picture

7 Steps to Kill a Revolution

What is in the U.S. manual for regime change? US actions against Chile and Venezuela compared

http://www.telesurtv.net/english/multimedia/7-Steps-to-Kill-a-Revolution...

Yen Cross's picture

  What does that have to say for Socialism/Communism, when the Host is asking the Parasite for HELP!!!   lmfao- and not because it's funny to see people starve to death.

  Thanks [for the downvote]  George

Dragon HAwk's picture

Math is such a bitch, always getting in the way of progress

create money by issuing debt, all debt has to be paid back, the world has no Money,  Genius.

silverer's picture

Don't worry. At an opportune time, the US Deep State will come to the rescue.

Drop-Hammer's picture

Looks like Cuba will go from oil cookies to dirt cookies.

WhyWait's picture

Ditto

Call it socialism or communism or whatever you like, these are ccountries struggling to escape from the grip of the banksters and we should be cheering them on, like most of us do for Syria and Donetsk.

When our own turn comes to create a post-bankster economy it won't be clean or neat either. Our money-drven system of cooperation will break down and millions will need to learn new ways of being and working, quickly, or die.

At least maybe we won't have to deal with the US Empire stirring up mischief and waiting to pounce.

underthevolcano's picture

Great comment. The level of brutal geo-politics is reaching a crescendo. The US is fighting for it's life, or at least it's 'privilege' to continue collecting tribute from the far flung reaches of it's former empire. Blowing up your own stuff (Middle East) is not a strategy for success, but they did it, without remorse, thinking that they would reign supreme. Instead they are trapped between a powerful Iran and a resurgent Iraq, with an axe to grind, and Erdogans back is covered by the Russian military installations in Syria and Northern Iran. The Russian equipment is new, well thought out and well exectued. I'm not saying it is foolproof, but frankly, the amount of fire power the Russians could bring to a fight is truly stunning.. And all the while Turkey, which had always been meant to use as leverage against just such an occurence, looks the other way. After all, Vlad saved his life and probably prevent a military takeover in the country, once again courtest of our friendly psychopaths at the CIA.

It appears that there has been some kind of agreement reached concerning NK, and possibly extending to a willingness to talk on the future of the South China Sea, but after the current display of insanity, it will be very difficult for them to reach any kind of political agreement, they are vicious, vicious vipers and the only way to deal with something like that, is to kill it. They will not yield willingly. They are imbued with the notion that they are special, exception people who's God given right is to have any kind of lifestyle they care to have, because, of course, they're Americans. And Exceptional. And Exceptinal people get it all, right? Even if you have to kill a few million people along the way, to get it.

Sadly, their own greed did them in. They collapsed the world financial system with many trillions of bad debt that had been re-hypothicated what, thousands of times over. And when you do that, and you can't pay your bills, and you still stomp around like some kind of mad gorilla, then the Gods have obviously made you insane, for your downfall.

I've waited many, many years to see this happen. I have observed their society closely, ever since the days of the Kennedy Assassination and the VIetnam War, and what I see today is the logical outcome of a race of people so immensely in love with themselves that they have lost all ability to behave rationally. In other words, we have an out of control monster on our hands, that is armed to the teeth, teetering on the brink of civil war, and financially bankrupt. Couldn't be worse.

Everything is just about in place now for the banking moguls to bring it down. They will need an instantaeous replacement that is supposedly non-political, and IMF will step in with Special Drawng RIghts, that has been in many European agreements for a long time now, including contracts issued from England. The value of the dollar will collapse and they will get their hyperinflation, not that it will matter anymore because their debt obligations will be worthless. Of course security forces will have to be deployed, and it will no doubt become a bloodbath. I am already getting indications from other areas of the former American-Fortress Latin America, that they are hurting for dollars badly. People have less and less money. Prices are rising in reality and not incomes and when the shit hits the fan, how will they even pay pensions, because there is ZERO money there. None. There's a lot of promises to pay, but, if you have no income, how do you pay? They have over the last 8 years liquidated every single large and medium size financial asset they had, and still it is not enough. The writing is on the wall, or as Simon and Garfunkel said 30 years ago: "The words of the prophets are written on the subway walls, and tenement halls"