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oil exports to Cuba drop, energy shortages worsen
Marianna Parraga and Marc Frank

HOUSTON/HAVANA (Reuters) – Venezuela’s crude and fuel deliveries to Cuba
have slid almost 13 percent in the first half this year, according to
documents from state-run oil company PDVSA viewed by Reuters,
threatening to worsen gasoline and power shortages in the communist-run
island.

Cuba’s government since 2016 has reduced fuel allocations 28 percent to
most state-run companies, and has cut electricity consumption. Public
lighting was cut 50 percent, while residential electric use was spared.

Beginning in March, Cubans also have reported minor gasoline and diesel
shortages at service stations.

Cuba’s depends heavily on Venezuelan crude shipments under a
series of bilateral agreements started in 2000 by the South American
country’s late President Hugo . In return, the island nation has
provided Venezuela with Cuban doctors and other services.

Venezuela’s shipments of crude for Cuba’s refineries dropped 21 percent
to 42,310 bpd, the documents showed. Last year, Venezuela made up for a
shortfall in crude shipments by sending Cuba more fuels, but this year’s
data showed refined products sent to Cuba remained almost unchanged at
around 30,040 bpd.

In total, PDVSA sent Cuba an average of 72,350 barrels per day (bpd) of
crude and refined products in the first half of 2017, down almost 13
percent from the same period of last year, according to the data from
internal PDVSA trade reports. (Link to Graphic: tmsnrt.rs/2tf4Fk8)

The source who provided the documents to Reuters asked not to be named.

“Cuba needs at least 70,000 bpd from Venezuela to cover its energy
deficit and avoid deeper . A larger or total loss of the
Venezuelan supply would have a high political and financial cost for
Cuba,” which has been gearing up to welcome more tourists, said Jorge
Pinon, a Cuban energy expert at the of Texas in Austin.

Cuba suffered severe energy rationing in the 1990s after the collapse of
the Soviet Union, an ally that had provided cheap fuel. In 2016, Cuba’s
economy went into recession for the first time since those days,
declining almost 1 percent as shrinking export earnings left it short of
funds to import oil on the open market and replace declining Venezuelan
supplies.

With Venezuela’s crude production sliding in 2017 for the sixth year in
a row, the OPEC nation has had less oil to send Cuba and other customers
in regions from Asia to North America and the Caribbean.

Cuba, which produces extremely heavy crude used by industry and power
plants, received 103,226 bpd of oil from Venezuela in the first half of
2015, according to the same data.

PDVSA, whose full name is Petroleos de Venezuela SA, did not reply to a
request for comment.

Venezuela’s oil shipments to Cuba have been falling since 2008, when
they peaked at 115,000 bpd mainly due to a decline in crude exports. The
poor shape of Venezuelan refineries cut into fuel exports this year, and
Venezuela has also had to boost fuel imports to meet domestic demand.

Cuba, in addition to rationing fuel, is seeking oil cargoes from other
producers including Russia, something it had not done for more than a
decade.

In one of several recent shipments, the Ocean Quest tanker loaded with
fuel oil at Russia’s Tuapse terminal, arrived in Havana on July 9 and is
waiting to discharge, according to Thomson Reuters vessel tracking data.
The Tuapse terminal is operated by state-run Rosneft.

Cuba’s three aged refineries have been operating at reduced rates since
last year due to a shortage of light crude, which also affects
Venezuela’s 1.3-million-bpd refining network.

Reporting by Marianna Parraga in Houston and Marc Frank in Havana.
Editing by Gary McWilliams and David Gregorio

Source: IEA says OPEC compliance with oil cuts at lowest in six months –
www.reuters.com/article/us-iea-oil-idUSKBN19Y0Q0

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