Cuba Scrambles As Venezuela’s Oil Industry Collapses

Discussion of current events
Post Reply
User avatar
Booklady
Posts: 656
Joined: Thu Dec 15, 2016 10:21 pm

Cuba Scrambles As Venezuela’s Oil Industry Collapses

Post by Booklady » Thu Jun 15, 2017 8:27 pm

Cuba Scrambles As Venezuela’s Oil Industry Collapses
NickSJ on June 14 2017 said:
Ah, the benefits of socialism. Venezuela and Cuba used to be among the most prosperous countries in Latin America, but after years of socialist progress, they're both on the brink of collapse.


Indeed, very bad news for both of these two countries.
As Venezuela’s oil industry goes down it flames, it’s looking like it may just take Cuba down with it. Venezuela, once the crude powerhouse of South and Central America, is no longer able to produce enough oil to sustain its own economy, much less those of other countries. Cuba is frantically drilling in search for new reserves and reaching out for new suppliers, but there is no guarantee they’ll be able to stabilize their oil income any time soon.

Cuba became dependent on Venezuelan oil in the 1990s, when they were sold cut-price crude in exchange for the services of skilled laborers in order to bail them out of economic collapse in the wake of the fall of the Soviet Union. Currently, Cuba relies on foreign oil for more than two thirds of its daily consumption, with over 100,000 barrels of crude flowing from Venezuela every day for years. Now, quite suddenly, their dependence on Venezuelan oil has been forced to come to a bitter end.

In the midst of political unrest and economic devastation, Venezuela’s oil exports have plummeted by 40 percent in the last 3 years. During an export drought that lasted the better part of last year, the Cuban government has been combatting the stemmed fuel flow with regular energy rationing. In an attempt to avoid blackouts, the government has ordered cuts in electricity and fuel consumption to most state-run companies and entities (a huge pool in a communist country) by 50 percent, resulting in workers hours slashed and access to vehicles severely restricted. This April, they also began restricting sales of premium gas to government officials and diplomats.

After this eight-month moratorium on exports to Cuba, Venezuela once again began to export light oil to Cuba and Curacao in March, but at a great cost to their own refineries. As of this month, the 187,000-barrel-per-day Puerto la Cruz refinery is running at just 16 percent of its capacity thanks to a deficit in light oil and a lack of maintenance in ill-funded refineries. With this unsustainable model and no sign of improvement in the country’s economy, Cuba is looking for new sources of crude, and quickly.

Cuba is currently probing for oils in its own offshore wells, with some hope for a vast untapped reserve, but so far they’ve run dry. In response, they’ve reached out to an old friend--Russia. Just last month, Russia exported its first shipment of oil to Cuba in decades. The tanker, carrying 250,000 barrels of Russian oil, was just the first installment of a total 1.9 million barrels to be sent by the Russian government-owned oil company Rosneft. It’s unknown if the deal is to be extended after the total is reached.

It is almost certain that Cuba’s weak economy will continue to need the aid, but the Russian government has made it clear that this is not a hand-out--there will be no more oil if Cuba doesn’t have the cash to back it up. Unlike Venezuela, who allowed Cuba to build up an unpaid tab for oil imports, Russia has announced that they will give no leniency to the cash-strapped nation.

If oil is found in Cuba, it will be a game-changer, but not necessarily for the Cubans. Australia-based Melbana Energy Ltd. has estimated that their Cuban assets contain as much as 637 million barrels of recoverable oil and the company is beginning an intensive two-well drilling campaign slated for 2018 with a budget of $30 million.

As Cuba desperately drills for new reserves and looks to Russia to replace the Venezuelan vacuum of low-cost crude, the future of the already-unstable communist country grows more and more uncertain. With no luck so far in their own probes, some of their most promising potential reserves owned by outside interests, and their Russian allies promising a swift cut-off if Cuba can’t pony up for oil imports, the poverty-stricken country may very well bankrupt themselves in the effort to power their nation
.
A saucer of cream will do for me, thank you for your kindness.

User avatar
cassowary
Posts: 997
Joined: Thu Dec 15, 2016 11:30 pm

Re: Cuba Scrambles As Venezuela’s Oil Industry Collapses

Post by cassowary » Fri Jun 16, 2017 12:17 am

Hahaha. I have always said that Socialism leads to bankruptcy. America today practices Socialism lite. That is why its national debt is now $18 trillion. You got to do something to cut back on the welfare state or what you call entitlement spending.

The trouble with Socialism is that you eventually run out of other people's money. ... Thatcher.

User avatar
SteveFoerster
Posts: 771
Joined: Thu Dec 15, 2016 7:17 pm
Location: Northern Virginia, USA and Dominica, West Indies
Contact:

Re: Cuba Scrambles As Venezuela’s Oil Industry Collapses

Post by SteveFoerster » Fri Jun 16, 2017 6:13 am

For a long time now Dominica has been on the receiving end of Venezuela's attempt to buy friends in the region. Now that the Maduro regime is collapsing, our PM is looking further afield for donor countries, he recently made a trip to Russia for joint appearances with Grandmaster Putin (which will surely delight Sertorio).
Writer, technologist, educator, gadfly.
President of New World University: http://newworld.ac

neverfail
Posts: 969
Joined: Sun Dec 18, 2016 3:47 am

Re: Cuba Scrambles As Venezuela’s Oil Industry Collapses

Post by neverfail » Fri Jun 16, 2017 6:18 pm

Booklady wrote:
Thu Jun 15, 2017 8:27 pm
Cuba Scrambles As Venezuela’s Oil Industry Collapses



If oil is found in Cuba, it will be a game-changer, but not necessarily for the Cubans. Australia-based Melbana Energy Ltd. has estimated that their Cuban assets contain as much as 637 million barrels of recoverable oil and the company is beginning an intensive two-well drilling campaign slated for 2018 with a budget of $30 million.




I had never heard of this Melbana Energy Ltd before so out of curiosity I Googled up their name. I knew that with a name like :roll: Melbana they just had to be Melbourne based - and I was right.

http://www.melbana.com/irm/content/prof ... ectCount=1

http://www.melbana.com/irm/company/show ... =0&RID=433

Melbana only has a market capitalisation of just $19 million (that's Aussie dollars - smaller in value than your US dollars) so it looks to me like what you Yanks might define as a two bit operation.It's scatter-gun spread of oil drilling interests speak to me of a high-risk, small capital penny-hopeful that acquires drilling acreage in places where the oil majors would have no interest in going.

I have invested in such exploration firms in the past. I would not place too much trust in their optimistic forecasts of likely recoverable oil reserves in their exploration permit areas. All such firms seem to do that in order to pique investor interest and therefore bump up their share price - which is usually how the firm's principals and directors end up making their money.

Post Reply

Who is online

Users browsing this forum: Bing [Bot], cassowary and 4 guests