In today’s news: China Eyeing Cuba Offshore Oil
A shocking report aired on the Lou Dobbs show Thursday night revealed that Cuba has not only allowed China to drill but also to service an old Soviet refinery in Cuba while U.S. companies are locked out of the game. The Dobbs report also revealed that Venezuela’s Castroite president, Hugo Chavez, has offered Chinese oil firms operating rights in his country.
Thursday, April 13, 2006 at this blog:
from the Caribbean strategic point of view, China would be the one to gain the most.
Venezuela, the world’s fifth-largest oil exporter, has struck a $2bn deal to buy about 100,000 barrels a day of crude oil from Russia until the end of the year.
Venezuela has been forced to turn to an outside source to avoid defaulting on contracts with “clients” and “third parties” as it faces a shortfall in production, according to a person familiar with the deal. Venezuela could incur penalties if it fails to meet its supply contracts.
Documentation obtained by the Financial Times shows that the state-owned Petróleos de Venezuela (PDVSA) made a financing arrangement this month with investment bank ABN Amro to facilitate the purchases of oil from Russia via Rotterdam.
PDVSA is believed to have dropped the Dutch bank after the Russian government agreed to provide Venezuela with an “open account” facility to buy the oil.
Any questions on transparency?
The move suggests a growing gap between Venezuela’s declining domestic output and its expanding contractual obligations to international customers.
Luis Pacheco, a former planning director of PDVSA, said: “Why would Venezuela be buying crude oil from Russia? I would imagine it would be to meet obligations for light oil deliveries, but they are relatively small. Most of PDVSA’s obligations are for heavy oil.”
Under President Hugo Chávez, PDVSA’s oil output has declined by about 60 per cent, a trend analysts say has accelerated in the past year because of poor technical management.
Mr Chávez’s push to extend his influence throughout Latin America and the Caribbean with promises of cheap oil for friends and allies may be overstretching PDVSA’s finances, however.
Venezuela currently supplies about 300,000 barrels per day of oil and products to Cuba, Nicaragua and others under favourable long-term financing arrangements.
This week, Venezuela signed a deal to send oil to town mayors in Nicaragua aligned with the leftwing Sandinista party.
We’ll continue to keep an eye on the Caribbean maneuverings by all parties involved.