Tuesday, July 8, 2008

Receivables

Challenges of the oil business in Cuba: finding the oil, extracting it, and getting paid for it.

Here’s a press release from the publicly traded Canadian company Pebercan, which is involved in oil production on Cuba’s north coast, just east of Havana. It says that after Cuba agreed to a payment schedule last year to settle a debt owed to the company, the payments have not been forthcoming. But new talks are under way, and as in past instances, the company expects “a positive outcome.”

The press release begins by citing the “context of increases in the cost of raw materials and food staples” that has made it impossible for the Cuban oil company Cupet to make its payments. That sounds like Cupet saying that it wants to make the payments but the Central Bank won’t allocate the foreign exchange, because food imports are a higher priority.

If so, it’s a sign of the worldwide food and oil price crunch that is hitting Cuba hard (see the Economist’s account, here). But regardless of the reason, the Pebercan story is not one that will encourage prospective investors in Cuba’s oil business.

2 comments:

rafael said...

Cuba has a long, long history of welshing on its obligations. It is often a mercurial business partner and every partner who does business with cuba should know that it always runs the risk of not getting paid.

rafasan

Anonymous said...

Those silly Canadian capitalistas! Before loaning money to Cuba, didn't they know that the Castros never pay their debts? And if they don't like it, they can pack up the oil wells they built in Cuba and load them onto a raft going to Halifax.