Venezuela Sells Cienfuegos Oil Refinery Stake To Cuba

Venezuela has pulled out of a partnership with Cuba in its Cienfuegos oil refinery and the Caribbean island has taken full ownership of the plant, Cuban state media said on Thursday.

Venezuela is grappling with a crippling economic crisis that already forced it to slash cheap oil shipments to Cuba, which has had a knock-on effect on the island’s ailing economy.

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.

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.

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