Venezuela Sells Oil Refinery Stake To Cuba

Venezuela has sold its stake in the Cienfuegos refinery to its partner in the joint venture, Cuba. Venezuela’s state oil company PDVSA held 49 percent in the refinery, and according to a former government official from the South American country, Cuba took over the stake as payment for debts that had been incurred from tanker rentals and professional services, Reuters reported.

Based on reports from Cuban media, it seems that the official takeover was the natural conclusion of a de facto takeover: Cuban daily Granma noted that the Cienfuegos refinery has been operating as a fully Cuban state facility since this August.

The refinery has a capacity of 65,000 barrels of crude daily, but in August this year it only processed about 24,000 bpd, the Cuban daily said. What’s more, Venezuela’s oil industry troubles led to a change in the grades it sent to Cienfuegos to heavier ones that are more difficult to process.

Cienfuegos produces fuels for the Cuban market, which relies on Venezuelan crude oil to satisfy more than two-thirds of its fuel demand. Yet since 2014, deliveries of Venezuelan oil have declined consistently, and are now 40 percent lower than three years ago, which has prompted Cuba to look elsewhere for the commodity.

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Earlier this year, Cuba received a Russian crude delivery from Rosneft, and the Russian company has indicated it was willing to expand its cooperation with the Caribbean island.

There are few foreign companies with a presence in the Cuban energy market. One of these, Australian Melbana Energy, earlier this year announced that it had planned a drilling campaign in an onshore block that could contain as much as 44 billion barrels of crude, of which 637 million barrels recoverable. If Melbana makes a successful discovery, Cuba would in the future be able to diminish its dependence on imported crude and fuels.

By Irina Slav for Oilprice.com

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