Cuba’s Cienfuegos Refinery Reduced Production By Half Due to Cuts In Venezuelan Oil / 14ymedio, Mario Penton and Nora Gamez Torres

The Camilo Cienfuegos refinery in Cuba. (EFE)
The Camilo Cienfuegos refinery in Cuba. (EFE)

14ymedio bigger14ymedio, Mario Penton and Nora Gamez Torres, Miami, 31 October 2016 – Cuba’s Cienfuegos refinery, operated by Cuvenpetrol SA, a Cuban/Venezuelan joint venture, has been forced to cut production by half due to cuts in shipments of crude oil from Venezuela, according to comments made on Monday by an official of the Cuban Communist Party (PCC).

Plans to build a neighboring petrochemical complex with Venezuela’s participation are also on hold, said Lidia Esther Brunet, first secretary of the Cienfuegos Provincial PCC.

The official admitted that the Camilo Cienfuegos refinery, a plant from the Soviet era, will not meet its targets this year “as it had done since its reactivation in 2007” and will process about 9.43 million barrels of oil, just 53% of the plant’s planned production. Brunet attributed the causes to “contract issues, Venezuela and other questions,” as she explained to the Chinese news agency Xinhua.

“Right now it is not processing Venezuelan crude. Shipments decreased substantially since last year,” said a specialist at the refinery who requested anonymity.

This month marks 16 years since the signing of the cooperation agreement between Venezuela and Cuba under which oil is exchanged for Cuban doctors and other services.

A worker at the refinery said the plant is refining crude oil from Algeria. “The situation is unstable, we start again Sunday, but sometimes it stops and restarts. We are all very afraid that in the end we will be lout of work. It would be a tremendous blow,” he said. The plant has a payroll of 780 workers, according to official data from 2010.

“The managers are saying that the joint venture could be closed due to the economic situation of Venezuela, and Cuba would wait for another country to assume their 49% of the shares. The big problem is that the refinery has never been profitable, because there were a number of needed investments that were never made,” said the refinery specialist, adding that “there has not been a reduction in the workforce yet, but it has already been announced. ”

In July of this year,Luis Morillo,general manager in Cuba for the Venezuelan state oil company PDVSZ, announced that the refinery would partially shut down for 120 days in various periods of the year “for maintenance.”

“The statements confirm what was already announced. Cienfuegos is not operating, but not because of technical problems, but because Venezuela does not have enough crude oil to send to refineries in Cuba. It is not about Cienfuegos, but about Venezuela,” said Jorge Piñón, acting director of the Center for International Energy and Environmental Policy at the University of Texas at Austin.

The expert, who monitors the movement of tankers in the Caribbean, said that in the last three or four months “there has been almost no traffic to Cienfuegos.”

The refinery’s expansion plans included increasing oil processing capacity to 150,000 barrels per day, the construction of a plant for olefin and aromatics, expanded storage capacity, and reactivating the pipeline between Matanzas and Cienfuegos.

According to Piñón the impact of the decrease in oil supply from Venezuela has not been even greater because the country continues to import oil from other sources, which comes in primarily to the port of Matanzas.

On Monday, Foreign Trade Minister Rodrigo Malmierca, admitted that the Cuban economy, severely hit by the crisis in Venezuela, would not grow even the 1% expected.

Starting in the second half of this year, the government announced cuts in fuel and electricity consumption, mainly in state enterprises. Under this plan, the central government assigns each company a monthly allocation of kilowatts of electricity. If the company exhausts its quota before the end of the month, their supply is cut off and workers go home “on vacation.”

The authorities have also cut public lighting and the distribution of fuel to companies, a part of which was diverted to the black market for private transport, the prices of which have risen as a result of this decision.

During a televised speech in July, President Raul Castro confirmed the decline in oil shipments from Venezuela. According to Reuters, citing internal PDVSA data, Venezuela supplies fell 40% in the first half of 2016. Jorge Piñón, the expert from the University of Texas, estimated that the reduction is 25% since the beginning of this year. The government has no recent statistics on the total refinement and extraction of domestic oil.