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    Cuban refinery cuts production in half because of drop in Venezuelanoil

    Cuban refinery cuts production in half because of drop in Venezuelan oil

    The oil crisis in Venezuela has struck at the center of Cuba.

    The drop in Venezuelan oil deliveries to the island has led to a major
    cut in production at a refinery in Cienfuegos managed by the two
    countries, a Cuban Communist Party official has confirmed.

    Lidia Esther Brunet, the party’s chief for Cienfuegos province in
    central Cuba, said production this year at the Camilo Cienfuegos
    refinery — built during the Soviet era — has been cut by half. And plans
    to build an adjoining petrochemical complex with Venezuelan investments
    have been put on hold, she added.

    “The arrival of crude to be processed in our refinery has in fact been
    limited,” Brunet was quoted as saying by China’s Xinhua news agency.
    “This year it will not meet the established target, which it did every
    year since … [2007] and the reasons are known — the issue of contract,
    the issue of Venezuela and other issues.”

    Brunet said the refinery would process about 9.43 million barrels this
    year, barely 53 percent of its target.

    The cut in production could mean the loss of jobs for hundreds of
    employees in a province with little else to offer in an already
    struggling economy.

    “Right now it is not processing Venezuelan crude. The deliveries dropped
    substantially since last year,” said one refinery employee who asked for
    anonymity to speak frankly about the problem.

    Another employee told el Nuevo Herald that the refinery has been
    processing crude from Algeria. “The situation is not stable. We started
    up again Sunday, but sometimes you stop and start again. We’re all
    afraid that in the end we will wind up without a job. That would be a
    tremendous blow,” the employee said.

    Luis Morillo, general director of the Cuba operations for PDVSA,
    Venezuela’s state oil monopoly, announced in July that the refinery
    would be partially closed “for maintenance” for periods totaling three
    months over the remainder of the year.

    “The statements confirm what was already announced. Cienfuegos is not
    operating, but not because of technical problems. Rather, Venezuela does
    not have enough medium crude to send to the Cuban refinery,” said Jorge
    Piñón, interim director of the Center for International Energy and
    Environmental Policy at the University of Texas at Austin. “It’s not so
    much Cienfuegos. It’s Venezuela.”

    Piñón, who has been monitoring the movement of oil tankers in the
    Caribbean area, said that the announcment also confirms the reduction of
    Venezuela supplies to the refinery. “There’s been almost no traffic to
    Cienfuegos in the last three or four months,” he said.

    The refinery’s expansion plans included increasing its processing
    capacity to 150,000 barrels per day, the construction of a plant for
    olefins and aromatics, an expansion of its storage capacity and the
    reactivation of a pipeline from Cienfuegos on Cuba’s southern coast to
    Matanzas on the northern coast.

    “The word among refinery executives is that the joint venture
    [Cuvenpetrol S.A.] could be closed because of the economic situation in
    Venezuela, and Cuba would then wait for another country to take on the
    49 percent investment,” said one of the refinery employees.

    “The big problem is that the refinery has never been profitable because
    that would have required a series of investments … that were never
    made,” added the employee. “There’s been no staff reduction so far, but
    it’s on the way.”

    More than 500 people currently work at the refinery. Official figures in
    2010 stated the refinery employed 780 people.

    The drop in Venezuelan oil deliveries has not been felt more strongly in
    Cuba because Havana has imported oil from other sources, which is
    largely arriving at the port of Matanzas, Piñón said.

    Cuban Foreign Trade Minister Rodrigo Malmierca on Monday acknowledged
    that the island’s economy, hammered by the Venezuelan crisis, would not
    achieve the government’s prediction of 1 percent growth in Gross
    Domestic Product this year.

    Over the summer, the government announced cuts in electricity and fuel
    supplies, primarily at state enterprises. The central government
    assigned tight quotas to each enterprise and warned that if they went
    over, they would be forced to shut down and send employees home “on

    Part of the fuel supplied to state enterprises regularly winds up on the
    black market, sold to private vehicle owners. The prices of private
    transportation such as taxis and trucks have risen since the new quotas
    were established.

    Cuban ruler Raúl Castro acknowledged the drop in Venezuela’s oil
    supplies during a speech in July but gave no details. Piñón has
    estimated it at 25 percent, and the Reuters news agency, quoting
    internal PDVSA data, put the drop during the first half of 2016 at 40

    The mutual cooperation agreement between Venezuela and Cuba to exchange
    oil for medical services was signed 16 years ago.

    The Cuban government has not reported its domestic oil production or
    refinery statistics for 2015.

    Source: The oil crisis in Venezuela has struck at the center of Cuba |
    In Cuba Today –