Cuba details sanctions impact in rare assessment

Market: Crude oil, Electricity, LPG, Oil products
26/10/20

Cuba issued a rare assessment of the bleak impact of escalating US sanctions on its political ally and main oil supplier Venezuela, on top of the enduring US embargo on the island that dates back to the 1960s.

A 22 October government report that covers the year ending March 2020 highlights difficulties in obtaining spare parts for power plants, interruption of the island's offshore oil and gas exploration campaign, and growing fuel shortages.

"This is an unusually frank and detailed exposé of the island's fuel situation," a Caribbean diplomat in Havana told Argus. "There are signs of shortages everywhere, but traditionally the government has been very careful about revealing the extent of the problem."

The report was issued by the Cuban foreign ministry on the eve of the 3 November US general elections that may see a victory for Joe Biden. He served as vice president to former US president Barack Obama whose eight-year term was marked by a thawing of relations with Havana that his successor Donald Trump swiftly reversed.

In the Trump administration's latest turn of the screws, the US Treasury Department today prohibited Cuban military-run companies from processing the US dollar remittances on which the island's economy heavily depends.

Opaque supply deal

Venezuela's state-owned PdV supplies crude and refined products to Cuba under an opaque two-decade-old barter agreement. But PdV's own crude production has plummeted and its refineries are mostly broken.

Cuba still receives some Venezuelan oil, but neither the government nor state-owned oil company Cupet has disclosed the actual volumes and make-up of the supplies, nor the state of operations at the 65,000 b/d Cienfuegos refinery.

"No citizen or sector of the Cuban economy has escaped the impacts of the blockade, which is hindering the country's development," the report said.

In addition to scarcity of gasoline and LPG, fuel theft is a growing problem. Blackouts caused by inadequate feedstock at diesel-burning power plants have worsened, and the fuel deficit has affected distribution of products ranging from chemicals to toilet paper, the report said.

Cupet "faced serious barriers to the import of fuels and other oil services as a result of the blockade … and was forced to seek new suppliers, in more distant markets and at higher rates."

The report noted that the power sector was hit by the refusal of Germany's Clyde Bergmann to supply spare parts after a US investor bought into the company.

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US extends oil service firms' Venezuela waiver

Washington, 7 November (Argus) — The outgoing administration of US president Joe Biden extended authorization for oilfield services companies Halliburton, SLB, Baker Hughes and Weatherford to continue working in Venezuela until 9 May 2025. The waiver allows the service companies to pay their staff and maintain limited operations, but it prevents them from drilling new wells or otherwise contributing to state-owned PdV's production and exports. The Biden administration reimposed sanctions on Venezuela's oil sector in April, after a six-month reprieve. The sole exemption is a waiver for Chevron allowing it to import oil into the US from its joint venture with state-owned PdV. US crude imports from Venezuela averaged 212,000 b/d in January-August, US Energy Information Administration data show. Chevron's Venezuela output has stood at about 200,000 b/d. Neither president-elect Donald Trump nor his campaign addressed the Venezuela sanctions regime or indicated if they would change it. Republicans in Congress ahead of the election called for the Chevron exemption to be revoked. The Biden administration separately extended a prohibition for holders of $3.4bn in PdV 2020 bonds guaranteed by 50.1pc in US refiner Citgo's holding company to exercise their claim, this time until 7 March 2025. The PdV bondholders in theory hold a superior claim to Citgo Holding — a legal entity that directly owns Citgo and, in turn, is owned by Citgo parent company PdVH. A federal court in Delaware recently oversaw an auction of PdVH shares that yielded a $7.3bn bid from a company backed by investors including Elliott Investment Management. Legal wrangling over the bids and the distribution of auction proceeds is likely to keep Citgo ownership unresolved in the near term. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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German government collapse could delay energy policies

07/11/24

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07/11/24

German government collapse could delay energy policies

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Mexican peso plummets on Trump win

06/11/24

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06/11/24

Mexican peso plummets on Trump win

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Trump victory raises climate law questions

06/11/24

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06/11/24

Trump victory raises climate law questions

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Cop 29 finance talks need leadership after Trump win

06/11/24

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06/11/24

Cop 29 finance talks need leadership after Trump win

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