November 22, 2017
Volume 17 Issue 52
Rosneft Steps in for PdVSA in Cuba
Russian oil major Rosneft began shipping an emergency supply of base oils and other petrochemical products to Cuba earlier this year after the Caribbean island’s primary supplier, Petroleos de Venezuela (PdVSA), cut regular shipments because of financial problems, a consultancy said.
Last year Rosneft bought a 49.9 percent stake in Houston, Texas-based Citgo, state owned Pdvsa’s refining and lubricants and fuels marketing subsidiary in the United States.
Rosneft, Russia’s second-largest lubricant marketer, shipped 17,000 tons of base oils and roughly 200,000 tons of crude oil, fuels and other products to Cuba during this year’s first three quarters, the company claims. The shipments occurred in May and June of 2017.
Some observers estimate the total value of the shipment to be around U.S. $100 million at current market prices. These base oil shipments are likely the first since Russia did a few non-recurrent shipments to Cuba under Boris Yeltsin in the 1990s, Nikita Medvedev, head of research and consulting at Russian consultancy RPI, told Lube Report.
“These shipments offset the irregular supply to the island by PdVSA, a company that might very soon file for bankruptcy, as is the case with [many companies in] the Venezuelan economy in general,” Medvedev claims.
Moscow-based RPI found that the majority of crude and base oil volumes consumed in Cuba come from Venezuela. “At its blending facilities located at the Cienfuegos refinery, Cuba produces obsolete industrial and motor oils. As the shipments by Pdsva stalled, Rosneft stepped in to help save the island’s industry,” Medvedev told a reporter.
He believes these base oil shipments are not favorable for Rosneft. “It is difficult to determine if they will continue in the future, as it is related to the situation of the Venezuelan economy.” In a recent Rosneft report, however, the company said shipments may continue in 2018.
Other Russian oil companies are eyeing expansion opportunities in this region as well. LLK International, Russian oil major Lukoil’s lubricant arm, recently announced plans to open a representative office in Mexico City by the end of 2017, while Gazpromneft-Lubricants, Russian oil major Gazprom Neft’s lube segment, started to ship finished lubricants to Colombia last year.