Cuba´s main refinery is operating at half of its capacity and could be mothballed because of a sharp decline in subsidized crude supply from Venezuela, an official of Cuba's state-run oil company Cupet told Argus today.
The 65,000 b/d refinery has been running at 50pc capacity for the past five months, rendering the ageing facility "uneconomic" to operate. The future of Cienfuegos is "doubtful unless a source of oil can be found that will supplement the reduced quantities received from Venezuela," the official said.
The refinery is operated by the CuvenPetrol joint venture between Cupet and Venezuelan state-run oil company PdV.
The refinery produces gasoline, diesel, LPG, naphtha, jet fuel and fuel oil. About 90pc of the product yield is consumed locally, according to Cupet.
Cuba had been receiving about 80,000 b/d of crude and products from close political ally Venezuela as late as 2015 under a 2000 preferential agreement in which the island pays for the oil supply though the deployment of specialists in areas such as medicine, security and sports.
The imports supplement around 50,000 b/d of liquids and 20,000 b/d equivalent of natural gas that Cuba produces from onshore and shallow water reservoirs.
President Raul Castro said in July 2016 that the island's economy was struggling because of the loss of the Venezuelan oil supply, without indicating the new volumes.
The oil supply is believed to have been halved to roughly 40,000 b/d. PdV´s domestic crude production has fallen by around 300,000 b/d over the past year because of a lack of investment in core operations.
Castro's announcement coincided with a statement by CuvenPetrol general manager Luis Murillo that several plants at the Cienfuegos facility would be suspended for up to 120 days because of technical issues.
"There were some technical problems, but these are routine," the Cupet official said. "The main problem is the inadequate supply of feedstock for the plant. There is a search for other sources of crude that are needed to make the plant viable."
Cuba is cementing terms for crude and products supply from Algeria to replace the lower deliveries from Venezuela, Cupet said last month. Shipping data suggest that some Algerian Saharan Blend already reached the island last month.
The Cuban government is also seeking supplies from Russia and Iran.
Construction of Cienfuegos derailed after the 1991 collapse of the Soviet Union, Havana´s former patron. The refinery was finally commissioned in December 2007 after Venezuela invested $236mn to complete it.
CuvenPetrol had planned to upgrade the refinery to 150,000 b/d and install a regasification terminal on the site. Chinese state-owned contractor Huanqiu had been named to build the LNG facility.
Cuba's other refineries are 20,000 b/d Nico Lopez in Havana and 22,000 b/d Hermanos Diaz in Santiago.
CuvenPetrol said in 2010 that it planned a 350,000 b/d refinery at Matanzas on the northern coast, but the project never got off the ground.
