EXCLUSIVE-Venezuela oil exports to Cuba drop, energy shortages worsen


(New throughout, adds details on rationing and power shortages
in Cuba)
    By Marianna Parraga and Marc FrankHOUSTON/HAVANA, July 13 (Reuters) - Venezuela's crude and
fuel deliveries to Cuba have slid almost 13 percent in the first
half this year, according to documents from state-run oil
company PDVSA viewed by Reuters, threatening to worsen gasoline
and power shortages in the communist-run island.
    Cuba's government since 2016 has reduced fuel allocations 28
percent to most state-run companies, and has cut electricity
consumption. Public lighting was cut 50 percent, while
residential electric use was spared.
    Beginning in March, Cubans also have reported minor gasoline
and diesel shortages at service stations.
    Cuba's economy depends heavily on Venezuelan crude shipments
under a series of bilateral agreements started in 2000 by the
South American country's late President Hugo Chavez. In return,
the island nation has provided Venezuela with Cuban doctors and
other services.
    Venezuela's shipments of crude for Cuba's refineries dropped
21 percent to 42,310 bpd, the documents showed. Last year,
Venezuela made up for a shortfall in crude shipments by sending
Cuba more fuels, but this year's data showed refined products
sent to Cuba remained almost unchanged at around 30,040 bpd.
    In total, PDVSA sent Cuba an average of 72,350 barrels per
day (bpd) of crude and refined products in the first half of
2017, down almost 13 percent from the same period of last year,
according to the data from internal PDVSA trade reports. Link to
Graphic: http://tmsnrt.rs/2tf4Fk8

    The source who provided the documents to Reuters asked not
to be named.
    "Cuba needs at least 70,000 bpd from Venezuela to cover its
energy deficit and avoid deeper rationing. A larger or total
loss of the Venezuelan supply would have a high political and
financial cost for Cuba," which has been gearing up to welcome
more tourists, said Jorge Pinon, a Cuban energy expert at the
University of Texas in Austin.
    Cuba suffered severe energy rationing in the 1990s after the
collapse of the Soviet Union, an ally that had provided cheap
fuel. In 2016, Cuba's economy went into recession for the first
time since those days, declining almost 1 percent as shrinking
export earnings left it short of funds to import oil on the open
market and replace declining Venezuelan supplies.
    With Venezuela's crude production sliding in 2017 for the
sixth year in a row, the OPEC nation has had less oil to send
Cuba and other customers in regions from Asia to North America
and the Caribbean. [nL1N1JX1A6]
    Cuba, which produces extremely heavy crude used by industry
and power plants, received 103,226 bpd of oil from Venezuela in
the first half of 2015, according to the same data.
    PDVSA, whose full name is Petroleos de Venezuela SA, did not
reply to a request for comment.
    Venezuela's oil shipments to Cuba have been falling since
2008, when they peaked at 115,000 bpd mainly due to a decline in
crude exports. The poor shape of Venezuelan refineries cut into
fuel exports this year, and Venezuela has also had to boost fuel
imports to meet domestic demand.
    Cuba, in addition to rationing fuel, is seeking oil cargoes
from other producers including Russia, something it had not done
for more than a decade. [nL1N1I51IU] [nL5N1H76Q7]
    In one of several recent shipments, the Ocean Quest tanker
loaded with fuel oil at Russia's Tuapse terminal, arrived in
Havana on July 9 and is waiting to discharge, according to
Thomson Reuters vessel tracking data. The Tuapse terminal is
operated by state-run Rosneft <ROSN.MM>.
    Cuba's three aged refineries have been operating at reduced
rates since last year due to a shortage of light crude, which
also affects Venezuela's 1.3-million-bpd refining network.

 (Reporting by Marianna Parraga in Houston and Marc Frank in
Havana. Editing by Gary McWilliams and David Gregorio)
 ((marianna.parraga@thomsonreuters.com; +1 713 2108510; Reuters
Messaging: marianna.parraga@thomsonreuters.com))


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