Cuba deepens oil austerity to counter US sanctions

Cuba will adopt further belt-tightening measures to cope with a fuel shortage exacerbated by a widening of US sanctions on the island and its oil supplier Venezuela, Cuban president Miguel Diaz-Canel said yesterday.

The US is blaming Cuba for its failure to overthrow the Venezuelan government, Diaz-Canel said. "The fuel problem is not of Cuba's making, but has to do with the arbitrary US measures."

Domestic production meets 48pc of Cuba's oil demand, and the island has been unable to import adequate supply to meet the balance, Diaz-Canel said. Cuba's demand is 160,000 b/d, according to state-owned oil company Cupet.

Cuba's close political ally Venezuela remains the island's main source of crude and refined products, although volumes have plummeted off of around 100,000 b/d in 2015 in response to a sharp decline in Venezuelan state-owned PdV's domestic production and refining. The latest estimates of Venezuelan oil supply to Cuba are around 40,000 b/d.

Washington imposed an economic embargo on Havana in the 1960s, and more recently expanded sanctions as an offshoot of its campaign to oust Venezuela's president Nicolas Maduro.

Washington levied oil sanctions on Caracas in late January. The sanctions were later tightened to encompass shipping companies and tankers that transport Venezuelan oil to Cuba, but some supply is still getting through.

The new sanctions expanded Cuba's oil deficit to about 30,000 b/d compared with 25,000 b/d in January, Cupet says.

Throughput at the 65,000 b/d Cienfuegos refinery fell "slightly" in January-April compared with 2018, according to government officials.

The impact of the US sanctions is reflected in more frequent and longer power blackouts, and an expanded black market for oil and theft of scarce gasoline and diesel.

"Cuba has been constantly negotiating to guarantee fuel supply, but despite its efforts, it was not possible to secure the timely arrival of oil tankers," Diaz-Canel said.

No fuel has arrived in Cuba since 10 September and none will arrive before 14 September, the president said, without indicating the origin of the incoming shipment. "All fuel shipments during the month of October are guaranteed," he said in a nationally televised broadcast.

The shortage is evident in Cuba's public transportation and power generation. "We must maintain measures of savings and efficiency so that this fuel lasts us until the end of the month when the other ships enter and we can stabilize the situation," the president said. "The challenge is to guarantee fuel for our power plants."

He predicted that Cuba would experience no blackouts before 15 September, but promised that planned outages would be announced in advance.

Cuban utility UNE has been unable to meet demand over the past six weeks, with many parts of the island blacking out for extensive periods. The island has operational oil-based generating capacity of around 3,200MW, according to UNE.

Washington's latest round of Cuba sanctions, due to take effect on 9 October, limit private remittances and financial transactions by the Cuban government through banks in third countries.

The White House is seeking to financially isolate Havana by blocking access to hard currency, with the aim of pressuring the island to distance itself from the Maduro government. Cuba has a longstanding agreement with Venezuela to exchange oil supply for advisers in a range of areas, including security, health care and sports. Washington says Havana is propping up Maduro, whom most Western countries no longer recognize as president.

The latest sanctions will make it harder for the island to import oil from alternative sources such as Algeria, Russia, Iran and Angola because the supplies must be paid in cash at a time of reduced foreign earnings from tourism, nickel and sugar.

Diaz-Canel vowed that the unspecified austerity measures will not put Cuba through another "special period" of economic dislocation reminiscent of the 1990s collapse of the Soviet Union, which was Cuba's previous international patron.