Venezuela's PDVSA steps up fuel shipments to Cuba as shortages bite

February 14, 2020 1:46 PM
MEXICO CITY/HAVANA - Venezuela’s state energy firm PDVSA has been shipping more oil this month to close ally Cuba, as tighter U.S. sanctions have worsened fuel shortages on the Caribbean island, according to sources and internal company documents seen by Reuters.
 
Six vessels, most of them owned by PDVSA’s maritime arm, have exported an average of 173,000 barrels per day (bpd) of Venezuelan crude and fuel to Cuba so far this month, according to Refinitiv Eikon data and PDVSA’s documents.
 
At least two more cargoes are planned for the remainder of the month, according to the documents and data.
 
In January, PDVSA’s exports to Cuba dipped to their lowest since mid-2019, at just 56,600 bpd.
 
“There are more vessels setting sail to Cuba in the past two weeks,” said a ship supervisor working at a port on Venezuela’s western coast. “They are going in and out very fast,” he added without elaborating on details about PDVSA’s instructions.
 
Sanctions imposed by Washington last year on PDVSA and Cuba’s state-run Cubametales, with the aim of toppling Venezuelan leader Nicolas Maduro, hampered PDVSA’s oil shipments to Cuba. The island’s energy crisis hit its key sugar industry this month with two mills halting operations in peak harvesting season.
 
Cuba also has experienced hour-long lines at pumping stations, while in the far east of the island supply seems to have dried up.
 
“There are no cars in the street. There is no transport. It’s a real mess,” said private taxi driver Fidel Gonzalez, 37, by phone from the eastern city of Santiago de Cuba.
 
Gasoline stations received some supply for the first time in a week on Wednesday, he said, but the fuel lasted only a few hours.
 
PDVSA and the Cuban government did not immediately respond to requests for comment. The U.S. Treasury Department, which has imposed sanctions on several companies involved in the Venezuela-Cuba oil trade, declined to comment on any possible or pending investigation, including to confirm whether one exists.
 
Similar shortages in September prompted PDVSA to send a flotilla of tankers with emergency cargoes of fuel oil and other refined products to Cuba.
 
The help was short-lived as sanctions reduced the number of vessels available to transport PDVSA’s oil to Cuba.
 
In recent months, Venezuela’s own low fuel production was another reason for the decline in shipments. PDVSA has been forced to rely more on imported products both to satisfy Venezuelan demand and to re-export to allies like Cuba.
 
Cuba has sought to diversify its imports in recent weeks with vessels arriving from Argentina, Algeria and Curacao, according to the Eikon data.
 
Due to the shortage, the island seems to be prioritizing power generation over motor fuel supply and fuel oil to industrial customers, said analyst Jorge Piñon from the University of Texas at Austin. It was not immediately possible to obtain data on Cuba’s domestic fuel production.
 
“There is still a lot that we do not know on how they are managing their crude and products supply and inventory levels,” Piñon said. “What is very clear is their continued dependency on Venezuela.”
 
BROADER ECONOMIC CRISIS
Cuba’s fuel crisis even affected the key tourism sector this month, one of country’s top sources of hard currency. For a while, agencies could only rent cars with a fuel quota so limited it would barely suffice for tourists to get around Havana. The situation had returned to normal by Thursday.
 
“Life is getting more complicated here by the day,” said Virgina Montes de Oca, after waiting for two hours to fill up her tank at a gas station. There were still a dozen cars ahead of her.
 
Cuba has faced shortages of everything, not just fuel, over the past year as the U.S. sanctions worsen a liquidity crisis that started with a decline in Venezuelan aid four years ago.
 
The latest range of products to vanish from shelves are toiletries and cleaning items.
 
The government said last week it would not be able to ensure a steady supply of these until April, given it was prioritizing other goods like food.
 
Cuba’s Foreign Ministry’s General Director for U.S. Affairs Carlos Fernandez de Cossio said on Twitter the U.S. sanctions were “brutal and immoral”.
 
“They don’t hide the desired goal of punishing the whole population to extract political concessions,” he said. “It’s a miracle that the situation is not worse and the country still enjoys peace and stability.”
 
Washington accuses the Cuban government of repressing its citizens and providing security assistance to prop up Maduro, who it brands a dictator. Maduro says the United States is seeking to control Venezuela’s massive oil reserves.
 
Reuters

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