Venezuela, Cuba vow to reinforce oil ties

Venezuela's government is promising to replenish oil supply to its close political ally Cuba as part of a broad push to relaunch its PetroCaribe regional oil supply initiative.

Senior Venezuelan and Cuban government officials met in Caracas yesterday to discuss ways to neutralize escalating US sanctions on the two countries. The sanctions are aimed at removing Venezuelan president Nicolas Maduro, whom the White House accuses Havana of propping up.

Venezuela and Cuba "will recover PetroCaribe during the first half of this year," Maduro said. He invited regional members to "support the planning and execution" of PetroCaribe's revival "to recover the sovereignty, independence and development of our Caribbean countries."

PetroCaribe was created in 2005 by Maduro's late predecessor Hugo Chavez to promote regional economic development by supplying subsidized oil to around 16 Caribbean and Central American countries.

Venezuelan supply to PetroCaribe members such as Nicaragua, Jamaica, Dominican Republic, Haiti and El Salvador almost completely dried up in recent years, reflecting the Opec country's falling domestic production and its oil-backed debt commitments to China and Russia that have left fewer barrels for politically aligned neighbors.

Supply to Cuba, which derives from a separate bilateral deal under which Havana pays for the oil with the deployment of advisers and experts to Venezuela, has fallen to around 50,000 b/d, half of its 2015 level. Venezuelan oil supply to Cuba briefly surged late last year, as PdV sought to drain sanctions-related export bottlenecks. The agreement first signed in 2000 was renewed in 2008 and renewed again by Maduro this week.

For Maduro, the goal of reviving PetroCaribe is to rebuild the regional political support that Chavez enjoyed in multilateral entities, including the Washington-based Organization of American States (OAS) where Venezuela's political opposition succeeded in ejecting Maduro's representative in 2019.

Yet most of PetroCaribe's former beneficiaries have given up on Venezuelan oil, and some such as Dominican Republic and more recently Guatemala have dropped recognition of Maduro altogether in favor of US-backed opposition leader Juan Guaido, who is currently in London drumming up support for his cause.

"Maduro can't count on regional political support based on cheap oil supplies that PdV lacks the capacity to deliver," a Venezuelan oil ministry official said privately. "Practically speaking, PetroCaribe is dead."

In Havana, state-owned oil company Cupet said the renewed oil supply pact with Venezuela has "the same intention of international solidarity" but that the "economic reality has changed since 2008" because of "pressures created by US sanctions."

A Caribbean diplomat in the Cuban capital echoed that view. "The agreement might be renewed, but supplies to Cuba would still be constrained by US sanctions. The renewed agreement is a diplomatic statement of continuing cooperation, but will not ease Cuba's oil shortages."

Both Cuba and Venezuela are experiencing acute fuel shortages, affecting transportation and power generation.

An energy ministry official from Jamaica, which recognizes neither Maduro nor his rival Guaido, poured more cold water on PetroCaribe. "We have an unsettled dispute with Venezuela and dealing with this is a priority," the official said, referring to Jamaica's 2019 takeover of PdV's 49pc stake in the island's small refinery. PdV is seeking compensation in a local court.

"Venezuela had to scrap PetroCaribe because it did not have the oil to meet its commitments. Where would it get oil for a new version?" the official added.

Venezuela and Cuba are on the agenda of a meeting in Kingston today between US secretary of state Mike Pompeo and a handful of Caribbean leaders, including

Jamaican prime minister Andrew Holness and foreign minister Kamina Johnson-Smith, and the foreign ministers of the Bahamas, Belize, Dominican Republic, Haiti, St. Kitts and St. Lucia.