Last month there were reports from Reuters and the Financial Times about a $6 billion investment project that the Chinese company CNPC would carry out, with financial backing from Venezuela, to more than double the capacity of the oil refinery at Cienfuegos (to 150,000 barrels per day) and to build a liquid natural gas plant there too.
Those reports were based on anonymous sources, and I have yet to see an on-the-record confirmation from any party in Cuba, Venezuela, or China.
Yesterday, the refinery was mentioned in Cuban media as being owned by a Cuban-Venezuelan joint venture. Vice President Ramiro Valdes visited, lauded its efficiency, and himself discussed the 150,000-barrel expansion plan – without mentioning China.
With Cuba awaiting renewed drilling in its Gulf waters by the consortium led by Repsol, one has to ask whether the Chinese know something we don’t know about Cuba’s oil future. 150,000 barrels per day would approximately cover Cuba’s energy requirements.
But the expanded refinery could be of use to China even if Cuba doesn’t strike it big. Former oil executive Jorge Pinon explains at Cuba Standard that China could use the refinery to process crude oil supplies it is acquiring from Brazil, Ecuador, and Venezuela.
I could be completely wrong, but my understanding is that these plans were already in the works and the only real news was that the Chinese were selected to do the engineering and construction, which is not a surprise since most other Western companies use US technology, which is forbidden.
ReplyDeleteIn other words, Cupet and PSVSA will retain control over the complex and China will not have any ownership stake in the refinery, petrochemical complex, power plant or LNG terminal.
Seen like that, it becomes less about what China is getting from the deal (besides a hefty construction contract and the commissions that come along). Instead it is more about the importance Cuba and Venezuela see in Cienfuegos to justify the expense.
Expanding refinery capacity has long been a goal of Cuba - both to replace aging refineries (2 of which sit polluting the bays of Havana and Santiago) and to be able to process the sludge oil that likely sits in the huge Gulf reserves. A lot of companies have passed on pursuing production in the Gulf blocks because the lack of refining capacity. Same goes with the Orinico blocks that are being exploited next in Venezuela - dirty oil that requires a special refinery. The refinery (and LNG terminal) would supply Cuba's energy needs - as well as allow for export.
But again, I know details are sketchy, but I had assumed CUPET and PDVSA were retaining their stakes in the Cienfuegos complex.