Cuba Cozies Up to Russia for Potential Energy Deal

Despite his impending exit from the office of President of Cuba, Raul Castro is still making potentially major political moves.

Castro met with the chief executive of state-owned Russian petroleum leader Rosneft, Igor Sechin, this past Sunday. State-controlled media released a photo of Castro, Sechin, and Economy Minister Ricardo Cabrisas with a simple caption that read, “a working meeting.”

Although the finer details of the meeting have not been publicly released, an October meeting between Sechin and two other Cuban government officials, the Minister of Energy and Mines of Cuba Alfredo Lopez and Cuban Ambassador to Russia Emilio Lozada Garcia, gives some insight into what might have been discussed. An October press release by Rosneft reads, “During the meeting the parties discussed extension of supplies volume, joint production projects, as well as prospects for cooperation in modernization of Cuban refinery Cienfuegos.”

Cienfuegos was originally a Cuban-Venezuelan joint refinery venture, but Venezuela recently pulled out of the partnership, giving full ownership to Cuba, supposedly over debts incurred by Venezuela during its recent and ongoing economic crisis.

These recent events mark a change not only in Cuba’s relationship with Venezuela, but also a potential shift in Cuba’s foreign policy motivations. Cuba has been dependent on Venezuelan oil imports for many years, with as much as 70 percent of its domestic energy coming from Venezuelan oil. But it wasn’t always that way. Cuba struggled desperately with blackouts and fuel shortages after the fall of the Soviet Union in 1991. It wasn’t until the rise of the late President Hugo Chavez, that the Cuban energy crisis began to subside as it became dependent on Venezuelan oil.

Now that Venezuela seems to be vacating its role as a main supplier to Cuba, Castro and others could very well be looking for Cuba’s next big energy partner.

The recent meeting with Russian state oil giant Rosneft is a telling sign of Cuba’s next move towards an energy deal. Few other foreign energy companies currently operate in Cuba. One of these, however, is Australian company Melbana Energy, which has set its sights on an offshore deposit that could net over 637 million barrels of oil.

A potential deal with Russia could be sorely needed in the coming years for Cuba, as its longtime energy partner Venezuela struggles to stay afloat. The Cienfuegos refinery only processed about 24,000 barrels of crude oil per day int he month of August, despite having a capacity of 65,000 barrels per day.

Rosneft is also making moves in Venezuela, winning licences to develop two offshore gas fields from President Nicolas Maduro for the next 30 years. Venezuela’s struggling government has been increasingly dependent on its allies, often turning to Russia for needed cash and credit to survive.

Sources:

Cuba’s Castro and Russian oil executive meet in Havana

Rosneft to develop cooperation with Cuba