Cuba Scrambles As Venezuela's Oil Industry Collapses

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.

Comments

LetThemEatRand tmosley Wed, 06/14/2017 - 21:36 Permalink

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.

In reply to by tmosley

Insurrexion LetThemEatRand Wed, 06/14/2017 - 22:42 Permalink

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.

In reply to by LetThemEatRand

HRH Feant2 tmosley Wed, 06/14/2017 - 23:51 Permalink

"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-protest…

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

In reply to by tmosley

land_of_the_few HRH Feant2 Thu, 06/15/2017 - 02:36 Permalink

VIOLENCE IN VENEZUELA AIMS TO CREATE CHAOSCheck 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: Poll85 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-…

In reply to by HRH Feant2

land_of_the_few HRH Feant2 Thu, 06/15/2017 - 03:05 Permalink

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.

In reply to by HRH Feant2

sixsigma cygnu… The_Juggernaut Wed, 06/14/2017 - 21:47 Permalink

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.

In reply to by The_Juggernaut

land_of_the_few medium giraffe Thu, 06/15/2017 - 02:30 Permalink

7 Steps to Kill a RevolutionWhat is in the U.S. manual for regime change?http://www.telesurtv.net/english/multimedia/7-Steps-to-Kill-a-Revolutio… Debates Venezuela, Not a Word About BrazilOrganization of American States, headquartered in Washington, D.C.http://www.telesurtv.net/english/news/OAS-Debates-Venezuela-Not-a-Word-… 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-vene… 

In reply to by medium giraffe

Zepper Wed, 06/14/2017 - 21:43 Permalink

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. 

Yen Cross Thu, 06/15/2017 - 05:26 Permalink

  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 Wed, 06/14/2017 - 21:53 Permalink

Math is such a bitch, always getting in the way of progresscreate money by issuing debt, all debt has to be paid back, the world has no Money,  Genius.

WhyWait Wed, 06/14/2017 - 22:14 Permalink

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.