Oil Blockade Threatens Cuba's Heavy Reliance on Oil-Fired Power Plants

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Written by Jesse Broehl, Assistant Editor-in-Chief for IIR News Intelligence (Sugar Land, Texas)

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Summary

U.S. pressure on Cuban oil imports is taking a toll. The country's electricity infrastructure is at risk since 72% of the country's power generation capacity is from plants run on fuel oil.

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Cuba Relies on Fuel Oil for Electricity

U.S. pressure on Cuban oil imports is taking a toll, with the country's largest oil refinery being forced to shut down in early February. And now, the country's electricity infrastructure is at risk since the majority, 72%, of the country's power generation capacity is from power plants run on fuel oil, and most of that oil is imported.

Approximate quantities of supply vs. demand for fuel oil for the power plants is not confirmed here, but the specific plants and megawatt (MW) nameplate capacity are identified and suggest a heavy vulnerability to the oil blockade. Should a supply shortage persist, these will be the plants facing fuel rationing and disruptions, leading to power outages for Cubans.

The six oil-fired power plants represent 1,906 MW (72%) of capacity of the country's total of 2,655 MW in power generation capacity.

See IIR Energy for a compilation of all the power plant units operational in Cuba and this list of the oil-fired units and the six plants shown in the chart below.

Some Relief on the Way?

A potentially significant change to the situation occurred this week when on Wednesday, Feb. 25, the U.S. Treasury Department's Office of Foreign Assets Control published new guidance. It would now view favorably applications from U.S. companies for licenses seeking authorization for the resale of Venezuelan-origin oil for use in Cuba. "This favorable licensing policy is directed towards transactions that support the Cuban people, including the Cuban private sector (e.g., exports for commercial and humanitarian use in Cuba)," the office said.

However, both Treasury and Commerce have said companies cannot sell the oil to the Cuban government or the military. IIR Energy notes that the oil-fired power plants are owned by the Cuban government, so presumably sales to supply those plants would still be prohibited. There is not a clear line between supporting the government or supporting the Cuban people. Therefore, it is unclear if this new policy guidance will improve availability of electricity for the country's population.

Refineries Already Impacted

IIR Energy confirmed in this February 11 article that state-owned CUPET was forced to shut down its 65,000 barrel-per-day (BBL/d) Camilo Cienfuegos Refinery, which is the largest of the island nation's four refineries. The refineries operate with a total approximate crude capacity of 123,000 BBL/d.

U.S. Squeezing Crude Shipments to Cuba

Cuba relies heavily on imported oil and the country has reportedly received no shipments of oil in January and February. This is a result of a U.S. campaign to pressure the ruling regime that the U.S. government considers an adversary. The majority of Cuba's crude imports typically come from Venezuela, primarily followed by Mexico.

Oil imports from Venezuela stopped after the U.S. removed Venezuelan President Nicolás Maduro on January 3. Crude imports from Mexico also halted after the Trump administration on January 29 set up a process to impose tariffs on countries that provide Cuba with oil.

Key Takeaways

• Cuba's electricity infrastructure is at risk from the U.S. oil blockade.
• 72% of Cuba's power generation capacity is derived from fuel oil, and most of that oil is imported.
• The six oil-fired power plants represent a total of 1,906 MW of capacity of the country's total of 2,655 MW in power generation capacity.
• This companion article shows that state-owned CUPET was forced to shut down its 65,000-BBL/d Camilo Cienfuegos Refinery.
• Cuban officials warned commercial airlines that there is not enough fuel for airplanes to refuel on the island.

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).