Venezuela's Energy Woes Spread To Its Closest Ally: Cuba
Falling Revenue
PDVSA said this month its sales revenue fell more than 45 percent in 2015. Despite Venezuela's long track record of paying its foreign debts, there are growing concerns among Wall Street investors over whether it will be able to pay PDVSA's and the country's bondholders.
Oil Minister Eulogio Del Pino said there is no significant decline in production, but output is already well off a peak of 3.24 million bpd in 2008. In May, it reported output of 2.37 million bpd, almost 460,000 bpd less than two years ago, according to publicly-available OPEC data.
PDVSA did not respond to requests for comment.
Heavy oil makes up a growing portion of Venezuela's ailing production while the output of lighter crudes that can be used as diluents to turn extra heavy crude into exportable blends is falling sharply.
Production of Mesa 30 crude and other grades used as diluents has fallen by 40,000 bpd so far this year to some 395,000 bpd, according to a source at PDVSA and companies monitoring Venezuela's output.
That has forced it to drastically cut exports of lighter grades and import expensive diluents.
Some of the medium and light foreign crudes PDVSA imports at its Bullenbay terminal in the Caribbean have instead been redirected to Cuba, according to PDVSA's internal data.
In 2015, PDVSA sent 2.6 million barrels of Angola's Girassol and Russia's Urals crudes to Cuba. This year, the firm has opted to send Cuba heavier Venezuelan grades, such as Leona and diluted crude oil (DCO).
Less Venezuelan supply means Cuba will have little or no surplus oil or fuel to export, as it has done in the past.
"Cuba has been able to produce a surplus of gasoline and jet fuel, which it can export to the international market to generate hard currency," said Jorge Pinon, director of the Latin America and Caribbean Program at University of Texas at Austin.
"It would not have that luxury once it has to pay hard cash for the crude oil."
(Reporting by Marianna Parraga in Houston and Alexandra Ulmer in Caracas; with additional reporting by Sarah Marsh in Havana; Editing by Terry Wade and Kieran Murray)
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