Venezuela’s energy woes spread to Cuba

Long-time trade partners, Venezuela and Cuba, are struggling to maintain a 15-year relationship that provided oil assistance to Cuba. While Cuba improves relations with the United States, it is also experiencing the fallout from Venezuela’s economic decline. Venezuela’s state-run oil firm PDVSA has slashed exports to Cuba this year; the Caribbean island has received 53,500 barrels per day (bpd) this year, a 40 percent decline from the first half of 2015. But the crude that PDVSA is now exporting is heavier than the Mesa 30 that has long been used in Cuba; it is difficult for Cuban refineries to produce the ideal mix of oil for its economy, using this crude. Although Cuba receives about 4 percent of Venezuela’s total oil exports, it is unclear if Cuba is looking to secure new suppliers for crude. The Island has benefitted tremendously from the barter arrangement with its Latin America neighbor and would pay significantly more for petroleum products on the open market. Venezuela has the world’s largest crude reserves but PDVSA is struggling to keep up investment and production. Despite changes in quality of crude, terminating the trade relationship with Venezuela will make it more expensive for Cuba to import crude and increase the cost of power on the island.
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