Cuba probes for own oil as crisis slashes Venezuelan flow
09 Jun 2017 - 1:39
Boca de Camarioca: Near the Cuban seaside village of Boca de Camarioca, a giant drill runs into the ground and out to sea, probing for oil.
Cuba once got most of its oil cheap from its socialist ally Venezuela, largely paid for by exporting medical staff and supplies—but economic crisis in Venezuela has stemmed the flow of crude.
That has caused “instability” of supplies on the communist island, says Roberto Suarez, joint director of the state oil monopoly Cuba Petroleo (CUPET).
“We are making every effort to explore and identify zones that might produce oil.” The island is being forced to look for alternatives at home as analysts warn that, without Venezuela, there are few available abroad.
Cut-price oil from Venezuela helped rescue Cuba from the downturn it suffered in the 1990s after the collapse of the Soviet Union, its most powerful patron. But Venezuela’s oil exports have plunged by 40 percent since 2014, according to independent analysts.
Cuban authorities have been regularly resorting to energy rationing since last year. Cuba consumes 130,000 barrels of oil a day but only produces 50,000 itself, estimates Jorge Pinon, a former oil executive and now an analyst at the University of Texas at Austin. Venezuela for years supplied more than 100,000 barrels of crude a day to Cuba, which refined and exported the excess.
But that industry has declined too. UN statistics body Uncomtrade says output at the key Cienfuegos refinery plunged from $500m in 2013 to $15.4m last year.
A total halt to Venezuelan oil imports would cost Cuba $1.5bn a year, Pinon estimates—a further blow to its already grim finances after it entered recession last year.
CUPET hopes to drill a well dubbed “Varadero 1,008” to tap a reserve which it estimates to hold 11 billion barrels of oil. That would turn Cuba into a well-funded small power overnight. But for now, there is no breakthrough.
The company’s on-shore oil platforms have run dry and attempts to drill in the Gulf of Mexico have been fruitless.
CUPET already has nine other wells drilled in the broader Varadero zone. Between them they account for more than 98 percent of Cuba’s home oil production.
Cuba also appears to be reaching out beyond its shores—it received 249,000 barrels of crude from Russian state oil firm Rosneft in May.