NotiEn - A Newsletter on Energy Policy Issues in Latin America
July 29, 2010
Vol 1, Issue 8

Energy Troubles in the Caribbean 


This issue of NotiEn will look at some energy issues in the Caribbean.  When one thinks about energy, Cuba is the country that has garnered the most attention.  The Caribbean nation has for decades been the center of geopolitical struggles, with countries like the former Soviet Union and Venezuela gaining favor with the regime in Havana by supplying oil and other types of energy.  But Cuba has been aware that the country sits on untapped supplies of oil, and its long-term plans are to become more self-sufficient in energy.  The island consumes about 150,000 barrels of oil per day.   


The collapse of the former Soviet Union in the late 1980s and early 1990s left Cuba without one of its most reliable suppliers of oil.  Until the 1980s, Cuba was receiving the majority of its oil from the USSR, although some supplies came in from Mexico and Venezuela through the Pacto San José.  In the past several years, Venezuela has stepped in to fill some of the void left by the loss of the ex-USSR.  Caracas provides around 100,000 barrels per day of petroleum and its derivatives to Cuba. These are paid for mainly with Cuban medical services, teachers, coaches, and consultants in diverse fields.   


The Cuban government does not want to tie itself entirely to Venezuelan oil and has entered into agreements with other suppliers, including Brazil, Algeria, Russia, and Angola. Read more... 

Carlos Navarro - Editor


Cuba: Oil Production is Up But so is the Cost of Imported Oil - March 30, 2000    

To reduce energy costs, the Ministry of Basic Industry (MINBAS) announced in early March that it would increase domestic oil production this year by more than 30% to a total output of 23.8 million barrels. Production of natural gas is projected at 660 million cubic meters--a 45% increase over last year. However, the rising price of imported oil threatens to cancel out much of the savings from domestic production.


Cuban oil is heavy crude used mainly for electricity generation and for various industrial applications. Domestic production supplies half the island's electricity needs and all its energy requirements in the cement industry.


MINBAS officials say domestic production has saved the country US$650 million in imported oil in the past eight years. By next year, the oil industry will be supplying enough fuel to produce 70% of the nation's electricity needs.  Read more... 

In This Issue...
A Note From the Editor
Cuba: Oil Production is Up But so is the Cost of Imported Oil
Cuban Economy Hurt by Suspension of Venezuelan Oil Shipments Under 2000 Agreement
The Treeless Forests of Haiti
Electrifying the Electorate to Save the Government: Top Priority for Dominican Republic's President Leonel Fernandez
New Oil Find Boosts Cuba's Energy Prospects
Haiti Gets Help From Venezuela and Cuba; President Rene Preval must Tread Lightly to Keep U.S. in Line
U.S. Could Ease Oil Dilemma by Drilling in Cuba's Vast Reserves, but There's a Catch
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Cuban Economy Hurt by Suspension of Venezuelan Oil Shipments Under 2000 Agreement
June 13, 2002  

The April 11 coup against Venezuelan President Hugo Chavez has had serious consequences for Cuba as coup leaders abruptly stopped scheduled shipments of oil to Cuba.  Shipments did not resume after the collapse of the short-lived coup regime.


Under an October 2000 agreement (Programa de Cooperacion Energetica), the Venezuelan state oil company Petroleos de Venezuela (PDVSA) was to ship 193 million barrels per year of crude and various derivatives for five years.  Cuba agreed to pay up to 75% in 90 days and the balance was to be financed over 15 years.


The agreement originally allowed Cuba to pay part of the bill in goods and services, exchanging medical, sports, and tourism services and agricultural products for part of the oil shipments.


The barter system was dropped in September 2001 and all exchanges were paid for in cash after that.  Cuban authorities said the system was abandoned because it was too complicated.  Read more...  


The Treeless Forests of Haiti - July 22, 2004   

A 10-foot-high mound of charcoal sacks heaped at Edmond Pierre's spot on the highway leading into Haiti's capital looks the same as ever.  Sales are pretty good.  He gets 400 gourdes, about US$12, for each bag containing the dirty black hunks of what were once part of an increasingly rare commodity here: a tree.


Once three-quarters forested, Haiti now has less than 1% tree cover. The deforestation is part of an ongoing environmental disaster that recently killed 2,700 people in Haiti and the neighboring Dominican Republic when rain rushed down treeless slopes and fatally flooded valleys.


"I used to clean rooms at the Holiday Inn, but I couldn't survive on that," Pierre said.  "I'm not getting rich now, but at least I'm surviving." 


Pierre's wares are part of what keeps Haiti's wheels turning, or at least keeps people fed.  Almost 75% of the country's energy needs are met by wood and charcoal.  Huge trucks trundle into the capital each day, stacked high with firewood, fatwood, and mounds of charcoal sacks.  They are used to cook most of Haiti's meals, bake its bread, distill its alcohol and dry-clean its clothes.  Read more...  


Electrifying the Electorate to Save the Government: Top Priority for Dominican Republic's President Leonel Fernandez - December 16, 2004

The Dominican Republic has been suffering an electricity shortage that now threatens, implied second-term President Leonel Fernandez, to bring his government down.  Blackouts have become a way of life in the country, so much so that the problem was incorporated into Fernandez's inauguration speech last Aug. 16, when he spoke of seeking private bank loans to shore up the failing power-generating and distribution system.


The Superintendencia de Electricidad reported in September that the system produces less than half the country's demand.  Several plants were out of service for lack of fuel, while others functioned at a fraction of capacity.  Blackouts of as long as 20 consecutive hours were experienced as aging machinery labored to crank out 600 megawatts against a demand of 1,635 MW per hour.


A presidential spokesperson called it a "critical situation," mentioning a US-owned plant, AES, which usually supplies 300 MW, but has reduced its output to 70 MW. AES has since sold off half its ownership in the Empresa Distribuidora del Este (Edeeste). Small businesses have failed, and unemployment has increased as factories and other work sites that do not have their own generators have closed. The grid was also severely damaged by Hurricane Jeanne, which left many population centers without power. Read more... 

New Oil Find Boosts Cuba's Energy Prospects
January 13, 2005      

The Canadian firms Sherritt International and PEBERCAN announced last month that they had discovered oil deposits in the Santa Cruz 100 oil field in the Gulf of Mexico.


According to the results of explorations in offshore blocks allotted to the companies 55 km east of Havana, the Santa Cruz 100 field could measure up to 20 sq km and produce high-grade oil of far better quality than the heavy crude Cuba now produces. Two appraisal wells are to be sunk in early 2005 to permit detailed analysis. Sherritt and PEBERCAN are developing other fields in joint ventures with the Cuban state oil company Cubapetroleo (CUPET).


In recent years, oil production has increased enough to bring Cuba close to self-sufficiency in oil for firing its power plants.  Production was 26 million barrels in 2003 though slightly lower in 2004.


At present, Cuba consumes 150,000 barrels per day, half domestically produced and most of the rest imported from Venezuela under favorable terms. CUPET projects that by 2006, 60% of its oil needs will be domestically produced.  Read more...  


Haiti Gets Help From Venezuela and Cuba; President Rene Preval must Tread Lightly to Keep U.S. in Line March 15, 2007      

The Western Hemisphere's poorest country, Haiti, got a much-needed hand from its neighbors on March 12, when Cuban and Venezuelan officials signed an aid package with President Rene Preval.  An accord worth somewhere between US$20 million and US$120 million depending on how the accounting is done was signed by Preval, President Hugo Chavez, and Cuban Vice President Esteban Lazo.Additional money, perhaps as much as US$1 billion, has been reported in some press accounts, but Venezuelan sources have not verified that, and there are indications the information may be false. The aid is destined for the most essential of Haiti's needs--health, education, economy, and energy.


For Chavez, "The essential part of this strategy is the incorporation of Haiti into ALBA [Alternativa Bolivariana para los pueblos de America]."


Haiti joins Cuba, Bolivia, Venezuela, and prospective members Nicaragua and Ecuador in the organization Chavez created to offer an alternative to the neoliberal policies currently dominating the region, policies whose cornerstone is privatization of state entities and whose keystone is free-trade agreements. Read more... 

U.S. Could Ease Oil Dilemma by Drilling in Cuba's Vast Reserves, but There's a Catch - October 23, 2008     

As petropolemics continue to occupy a central position in US presidential campaign rhetoric, Cuba's director of exploration for the state oil company Cubapetroleo (Cupet), Rafael Tenreyro, offers an alternative to the partisan bickering about offshore drilling. If the US were serious about seeking to increase its production, and officials simultaneously wished to avoid the environmental politics of placing platforms in its own coastal waters, the solution would be to drill on the Cuban side of the maritime limits. Cuba says there is plenty there.


Recent Cupet estimates are that there could be as much as 20 billion barrels of oil in its offshore fields. If that is so, Cuba is set to find a place among the world's top 20 producing nations. This is more reserves by half than the US Geological Survey (USGS) has published, but Tenreyro said his estimates are based on better data. He told reporters, "We have more data. I'm almost certain that if it [USGS] asks for all the data we have, their estimate is going to grow considerably.


By "considerably," Tenreyro means the new estimate would nearly equal US reserves, which the Oil & Gas Journal puts at 21 billion barrels. It would nearly double that of Mexico, with 11.7 billion barrels.  Read more... 


Havana, Caracas Strengthen Economic Pragmatism in Bilateral Relations - August 05, 2010     
Havana's economic relations with Caracas are increasing under the government of President Raúl Castro. There is now a sense of greater pragmatism in commercial projects and industrial joint ventures, while the political rhetoric is losing the power that characterized the meetings of Venezuela's President Hugo Chávez with former Cuban head of state Fidel Castro.

Venezuela is the island's biggest trading partner (US$3,318 million in 2009), followed by China (US$1,687 million), Spain (US$907 million), Canada (US$726 million) and the US (US$675 million). The relationship has grown since 1999, when Chávez took power and strengthened ties with the communist island. Since that time, official visits are frequent as are reciprocal gestures of support.

Health care has been the most visible collaboration between the two governments, but cooperation also extends to priority sectors such as energy generation. Venezuelan oil has eased the power cuts and the economic paralysis that affected Cuba in the 1990s after the collapse of the former Soviet Union.

Raúl Castro, reputed to be more pragmatic and more organized than his brother, has steered bilateral relations to a new stage. On July 25-27, the two countries held a ministerial summit in Cuba facilitating a "new dimension to bilateral economic ties," said Ricardo Cabrisas, Cuba's vice president of the Council of Ministers. Read more...


Energy Policy, Regulation and Dialogue in Latin America


NotiEn is an original newsletter with breaking news that analyzes and digests relevant and contemporary information in energy, alternative energy and energy policies in Latin America. A complimentary service provided by the University of New Mexico as part of LA-ENERGAIA Project funded by the US TICFIA Program