CUBA PURSUING REFINING JOINT VENTURE WITH VENEZUELA

Cuban officials are holding talks with Venezuela's state oil company over a proposed joint venture refining deal on the island. Cuba, grappling with a major oil shortage because of a steep cut in Soviet shipments, is scrambling to line up other oil supplies. The negotiations were confirmed by Rodrigo Ortiz, Cuban vice-minister of basic industries, at a meeting of the Latin American Energy Organization (Olade) in Caracas late last month.

Nov. 11, 1991

2 min read

Cuban officials are holding talks with Venezuela's state oil company over a proposed joint venture refining deal on the island.

Cuba, grappling with a major oil shortage because of a steep cut in Soviet shipments, is scrambling to line up other oil supplies.

The negotiations were confirmed by Rodrigo Ortiz, Cuban vice-minister of basic industries, at a meeting of the Latin American Energy Organization (Olade) in Caracas late last month.

Ortiz said his government is in advanced" negotiations on other projects with France's Total and Brazil's Petroleos Brasileiro SA. He didn't disclose the projects.

Ortiz said Cuba wants to work out a joint venture or lease arrangement with Petroleos de Venezuela SA involving the 70,000 b/d refinery at Cienfuegos, Cuba.

Under the plan, the Cienfuegos refinery would refine Venezuelan crude with proceeds from the sale of products to be split between the two governments. Apparently, Cuba also would take advantage of Pdvsa's international marketing network to sell the products.

CUBA'S PROBLEMS

Ortiz downplayed Cuba's problems created by the shortfall in Soviet supplies.

The U.S.S.R. ships crude to Cuba via an exchange agreement under which Pdvsa sends crude to Cuba, while the Soviets ship an equal volume of crude to Pdvsa customers in Europe.

Accordingly, an equity interest in refining capacity in Cuba would mesh well with Pdvsa international strategy to be the supplier of choice in the Western Hemisphere.

Ortiz said the Soviets have cut the supply of crude to Cuba this year by "only" 60,000 b/d to 200,000 b/d.

If the Soviets cut exports further, Ortiz said, Cuba will have to look for oil supplies from a country that imports sugar.

He cited the Middle East as a likely source.

Venezuelan political analysts contend that despite recent improvement in diplomatic relations between Havana and Caracas, notably contacts between Venezuelan President Carlos Andres Perez and Cuban Premier Fidel Castro, a refining deal with Venezuela won't develop until Castro takes steps toward democratic reform in the hardline Communist nation.

They see Perez pressing efforts to be a mediator in seeking a peaceful exit of totalitarianism from Cuba as reports mount of growing unrest there in response to a flagging economy weakened by loss of Soviet financial support.