Cuban drivers facing high-octane fuel shortages feel pain of Venezuelan crisis

Cubans are adjusting to life with the reduction of Venezuela's subsidized refined oil products as their socialist ally faces an unprecedented economic crisis.

In Havana, drivers are having to save up enough fuel to not run out while waiting in long lines. Those who don't are forced to push their cars all the way to the tank in order to refuel. 

Cuba has seen "a contraction in fuel shipments" from Venezuela, Cuban President Raul Castro said during his July address to the island's Communist party.

In March, the government issued a memo warning that CUPET, the state-owned oil company, would not be delivering high-octane fuel in April. Officials implemented a restriction on sales of premium gas, ordering that what is left in stock should only be sold to tourists. 

The premium gasoline shortage affects drivers of modern cars. Some drivers are trying to adapt their cars to lower-grade gas, while the drivers of older models that run on diesel aren't facing restrictions. 

Cuba's energy future, without help from Venezuela, could be gloomy. The Cuban government's fossil-fuel-fired electricity plants also rely on their imports. About 95 percent of the island's electricity production depends on oil, diesel fuel and natural gas, according to the Cuban government

Although Venezuela has one of the world's largest crude reserves, PDVSA, the state-owned Petroleos de Venezuela, has been on a default watch and dealing with low oil prices.

President Nicolas Maduro influenced the Organization of the Petroleum Exporting Countries to cut production last year, PDVSA TV reported. But experts believe there will likely be another year of low oil prices. 

Cuba is not only one concerned about Venezuelan crisis

U.S. Reps. Jeff Duncan, a Republican from South Carolina, and Albio Sires, a Democrat from New Jersey, are among the congressmen worried that the situation in Venezuela could prompt the Russian state-owned oil giant Rosneft to gain control of refineries and pipelines in the U.S., The Wall Street Journal reported

Citgo Petroleum Corp., a PDVSA subsidiary, owes $1.5 billion to Rosneft that if unpaid "would give the Russians more control over oil and gas prices worldwide and inhibit U.S. energy security," Duncan and Sires wrote in a letter to the U.S. Treasury.

To survive the low oil prices, PDVSA offered a $7 billion bond swap that required postponing debt payments, Bloomberg reported. Seven Wall Street firms, including the London-based Ashmore Group, hold more than 25 percent of PDVSA's debt and were betting on bond paydays, Bloomberg reported

After arriving from Cuba on Tuesday, Venezuelan protesters, heckled Maduro as he faces a wave of protests over his tight grip on the government and the ongoing medicine and food shortages. Some investors feared that Maduro was going to address the political crisis and default on payments, but he didn't. He chose to pay debts instead.

On Wednesday, the OPEC nation in turmoil managed to make $2.2 billion in debt payments, Bloomberg reported. Oil Minister Eugolio Del Pino told PDVSA TV that Venezuela has a "sufficiently advanced" plan to continue to meet its obligations. In October and November, $3.5 billion in debt payments are due. 

"That means that those investors that made the risky bet could see huge profits," Barron's Teresa Rivas wrote. But some Venezuelan members of Congress on Thursday weren't happy that Venezuela was paying its bills with money borrowed from Rosneft, while using Citgo as collateral. 

 

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This BBSNews article was syndicated from News | WPLG, and written by News | WPLG. Read the original article here.