Page 5 - LatAmOil Week 40 2019

LatAmOil COMMENTARY LatAmOil
 Venezuela under pressure
For one thing, Venezuela’s ability to deliver suf- cient volumes of fuel on a regular basis is very much in doubt.
As mentioned above, PdVSA is under a sig- ni cant amount of pressure because of the US sanctions regime. Because of the trade restric- tions, the Venezuelan company is having a hard time borrowing money, chartering tankers and taking other steps that might facilitate fuel shipments.
As Francisco Monaldi, a Latin American energy expert at Rice University’s Baker Insti- tute, told Reuters last week, Caracas is having an increasingly di cult time nding partners for transactions related to the oil industry. “It’s get- ting harder and harder,” he remarked.
PdVSA has tried to nd ways to overcome these challenges, and in some cases it has suc- ceeded. It has reportedly been working with Rosne , Russia’s largest oil operator, to move some of its production to markets around the world. And as Reuters reported last week, it resorted to using vessels from an ageing domes- tic eet that had not departed from Venezuelan territorial waters for years to send crude and petroleum products to Cuba.
ese tactics may have a limited life span. e ships used to deliver fuel to Cuba are old enough that they will not be available inde - nitely, and the US government is working to identify and penalise as many of PdVSA’s part- ners as possible. Just last month, for example, US Treasury Secretary Steven Mnuchin said that his department’s O ce of Foreign Asset Control (OFAC) had imposed sanctions on four com- panies involved in transporting crude oil and petroleum products from Venezuela to Cuba.
Under these circumstances, Cuba should not expect Venezuela to meet all of its needs – cer- tainly not every month, and not in full.
Russia to the rescue?
Meanwhile, Moscow is not exactly coming to the rescue either.
Medvedev did state last week that Russia wanted to help Cuba secure adequate supplies of fuel and develop its own oil and gas resources. But he did not say that the Kremlin was ready to o er any type of short-term relief or logisti- cal assistance. For example, when asked by the
Rossiya-1 television channel whether Russian ships could escort tankers heading for the island state, he replied: “I think we will nd other ways to help Cuba get oil and petroleum products.”
He also indicated that discussions between Moscow and Havana were still in the relatively early stages, without much in the way of concrete plans. “We discussed this today and agreed that we would dra a work plan for energy supplies to Cuba, bearing in mind conventional energy sources, hydrocarbons and maybe some other available avenues,” he told Rossiya-1.
The prime minister and other Russian officials indicated that Moscow’s preferred approach was to continue participating in the development of Cuba’s upstream oil reserves. is is perhaps a logical approach, given that Cubapetroleo is already extracting enough crude from its own elds to cover 40% of domes- tic demand. But once again, it o ers little relief in the short term. Exploration campaigns do not always succeed, and even when they do, oil operators usually need several years to bring new elds on stream.
Sanctions trump socialism
In short, Cuba is still in a precarious position, and its long-time allies Venezuela and Russia are not likely to provide any long-term xes any time soon.
Indeed, Moscow has indicated that its will- ingness to help Havana is limited. While in Cuba last week, Medvedev downplayed the close ties that the island state had to the Soviet Union dur- ing the Cold War, hinting that Russia was not willing to prop up another country.
“ e Soviet Union is no longer there, and Cuba is changing, and there’s no question about any free help which would then have to be writ- ten o ,” he remarked. “All our relations are very pragmatic. Although they are friendly in nature and based on a historical past, they are never- theless relations between modern states. ey should be mutually bene cial.”
Caracas, for its part, is likely to take a more friendly stance, especially in light of the ideo- logical similarities between the governments of Venezuela and Cuba. Even so, this will not necessarily take the form of concrete aid, since sanctions are making ships hard to nd, even in the face of socialist solidarity..™
Cuba is still in “
a precarious position, and Venezuela and Russia are not likely to provide long-term xes any time soon
MEXICO
Chevron buys 40% stakes in deepwater Mexican blocks from Shell
CHEVRON said last week that it had arranged to buy a minority 40% stake in three deepwater o shore blocks in Mexico.
In a statement, the US giant said it had signed an agreement on the transaction
with a subsidiary of Royal Dutch Shell (UK/ Netherlands).
It did not identify the blocks, but it did say they were among the nine o shore sites that Shellwonduringaroundofauctionslastyear.
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