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 economy depends heavily on Venezuelan crude shipments under a series of bilateral agreements started in 2000 by the South American country’s late President Hugo Chavez. 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 barrels per day (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 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.
“Cuba needs at least 70,000 bpd from Venezuela to cover its energy deficit and avoid deeper rationing. 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 University 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 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.