DEVELOPMENTS IN THE CUBAN PETROLEUM INDUSTRY IN 1964

Created: 4/1/1965

OCR scan of the original document, errors are possible

nrr.ary and Conclusions

I. Supply of

II. Imports of Petroleum

Movements of

III. Domestic Developments in the Petroleum

and

of Petroleua Supplieslpnent

IV. Prospects for

i.lix

Source References

Tables

Cuba: Ccaiposition of Tjaports ofI-6U

Cuba: Apparent Consumption of Petroleua

- iii -

DEVELOPMENTS ITT THE CUBANDUSTRYV

Smrtaryonciusions

The supply of petroleum in Cubab amounted toore than in any year in its history. Imports from the USSR again, as in other years since the Castro takeover, represented aboutercent of the total supply of petroleum in Cuba. Domestic crude oil and imports of lubricants from Rumania and sources in Western Europe accounted for the remainder. The value of total importsasillion, orercent of the estimated total value of all goods and services imported by Cubab,.

The quantity of crude oil importedb,illion tons, showed no significant change from the annual level of such imports over theears. Imports ofillion tons of petroleumalthough substantially higher thanere similar to the quantities Imported3I-

Ho widespread shortages of petroleum were evident in Cubab, and the USSR appeared able and willing to meet Cuba's essential needs. There were reports that Cuba discussed the purchase of petroleum with suppliers In Greece, Algeria, and the UAR, but only in the case of the Egyptians was there evidenceegotiated contract for future supply.

No important changes in the quantity, composition, or origin of the petroleum supply in Cuba ore expected Although the refineries in Cuba, built to Free World specifications, continued to operate at remarkably high levelsk, troubles arising from the unavailability of replacement parts and equipment may become manifest

* The estimates and conclusions in this memorandum represent the best Judgment of this Office as of

** Tonnages are given in metric tons throughout this memorandum.

I. Supply of Petroleum

The supply of petroleum in Cuba4 amounted tor0 barrels per day (bpd). This figurean increase of almostercent above the level3 and was about equal to the supply Almost all of this supply wasdomestic production of crude oil totaled less0 tons, unchanged Cuba continued to be dependent almost completely on the USSR for imports of petroleum, although several bulk shipments of lubricating oil were purchased from Rumania and several minorof packaged lubricants were delivered from Western Europe. The estimated composition, quantity, and value of Cuban imports of petroleum14 are shown in*

The supply of petroleum probably was adequate to meet the essential demands of the Cuban economy Thereoticeable, but not crippling, decline in the delivery of petroleum to Cuba in September, October, and November. The fact that the rate of delivery in December increasedevel approximately equal to the daily average for the year suggests that the decline in the Immediately preceding months was only temporary and did not reflect any unwillingness on the part of the USSR to supply Cuba's petroleum needs. Although shortages occasionally were reported during the year, there is no evidence that either the Cuban economy or the Ministry of Revolutionary Armed Forces (Miafar) suffered from lack of fuel or lubricants. Lubricating oils, especially those for use in internal combustion engines, continued to he in short supply in the civil sector. While total imports of petroleum remainedigh level. Imports of petroleum products more than doubled at the expense of imports of crude oil. The estimated consumption of petroleum products in Cuba4 is shown in

II- Imports of Petroleum

A. Composition

Cuban imports of crude oilbillion tons, aof onlyercent from3 level. These imports were aboutercent of total importsompared with almostercent Imports of petroleum producta4illion tons, representing an increase ofercent above imports of products The sharp rise in imports of gas oil and fuel oil, which together accounted for most of the increase, brought the pattern of imports of petroleum products back in line with the patterns registered2 and previous years, t

Tonnages may be converted to barrelsominal ratearrels per metric ton. ** P. P.elow.

t iscussion of the effect on petroleum imports resulting from the conversion of the catalytic cracking unit in Havanarude distillation unit in2 and its return to operationatalytic cracking unit inee (For serially numbered source references, see the Appendix.)

Table 1

Cuba: Composition of Imports of Petroleum a/

b

ConnoJlly

to/

(Thousand Metric Tur.s)

Aj {Titousand 1)

b/ (trscsiaanS Hetrlc Tons)

d/ (niouaand r)

to/

(Tbouaand Hetrlc Tons)

aj (Thouaond S(

cj (Tnousond hetrlc ?ons)

d/ (Thou&and S)

oil

products

-j

gaaoilne

k

fuel

oil

oil

bOO

r.fc

ave been rojnded to tvo significant digits. Because of rounding,y not add to the totals shown.

on tne oasis of data abovn lo aourceodirlit to reflect data shown In cargo manifests, shipping reports, andsource material.

Ct Estimated on tbe basis of data reflected In cargo manifeats, shipping raporto, and other reliable source materials. re based on dale of arrival In Cuba in calendarathor tnan on date or departure from porta of loading, d. . estimated or. tba basis of average prices shown for almllar lteaut In source y.

Table 2

Apparent Consumption of Petroleum Products a/

Thousand Metric Tons

*j/

Motor

Jet

Diesel/gas

Fuel

a. All figures have been rounded to two significant digits. Because of rounding, components may not add to the totals shown,

ne basis of estimated imports of petroleum productsh plus an end-product breakdownb imports of crude oil as indicated -inU plan for refineryby

Imports of aviation gasoline remained essentially the sameb asnd imports of Jet fuel also were relatively unchanged from previous years. The apparent production of Jet fuel at the Havana and Santiago refineries contributed nominally to the total supply of Jet fuel.

Imports of motor gasolineU were aboutercent less than in The decline may reflect renewed domestic production of high-grade gasoline made possible by the operation of the catalytic cracking unit in Havanaossible reduction in demandesult of continued decline in the number of privately owned automotive equipment in use.

ubaull line of lubricating oils and greases adequate in quantity and quality to meet essential civil and military requirements. The source of lubricants, however, shifted from previous years. Whereas only negligible quantities were procured from non-Soviet sources in earlier years, aboutercent of the supply of lubricants came from Rumaniab. The rest of the lubricants came primarily from the USSR, although indeterminate quantities of finished lubricants, as well as chemical additives, were obtained from suppliers in Western Europe and Hungary. Over-all imports of lubricants rose moderately in

S-Sf^Ks-T

and Imports of Internal combustion engine oils alone increased from an0 tonso0b.

B. Value

The estimated value of total Cuban imports of petroleumillion, aboutercent higher than* Thethese imports representedercent of the total Cubanfor all goods and services. Imports of crudeercent of the total estimated value of imports, compared with almostercent Increased importsmore expensive petroleum products, accompanied hy aimports of crude oil, explain the downward shift in the sharevalue of crude oil represented in tbe total value of petroleum

ports.

C Ocean Movements of Petroleum

Approximatelyercent of the Cuban imports of petroleumfrom Black Sea ports. Exceptew movements of packagedfrom Western Europe, theercent originated from Soviet Baltic Sea ports. It is possible that the decline in theof petroleum to Cuba In September, October, and November may hove been related to tanker transport problems. Except for that, period, there were no serious delays in the supply of petroleum that could be attributed to transport difficulties.

Aboutercent of the petroleum supplied to CubaU was carried in Soviet Bloc tankers, compared with aboutercenthe increased participation of Bloc tankers in the Cuban petroleum trade is, inirect result of the decision of the Mavroleon Shipping Group (UK) and the Greek government to withdraw ships under theirJurisdictions from the Cuban trade, aa charters with the USSR expired. 5/ The Mavroleon tankers (British, Greek, and Norwegian registry) accounted for more thanercent of the petroleum movementsb. By the end ofb, two or three tankers of Italian registry were the only Free World tankers still carrying petroleum to Cuba. Free World tankers probably will carry onlyercent of the supply of petroleum to Cuba

m- Domestic Developments in the Petroleum Economy

A. Exploration and Production

Exploration activities in Cubab have not changed the earlier estimate that Cuba will notignificant prc-ducer of petroleum in the near future. Drilling took place off the north coast of Cuba on Cayo Prances, Cayo Lucas, Cayo Fragoso, and also in the Central Basin. No success has been noted at any of the newsites.

* Because price datab are not3 prices were used to prepare the estimate.

The meager production of crude oilh came primarily froa the small Cristales oilfield In the Central Basin. Total production is estimated to have been less0 tons, substantially unchanged Domestic production continued to account for lessercent of total supply.

B. Refining

All principal processing units at the three refineries areto have been in operation.* There is no evidence that any new refining units were installed- The decline of imports of crude oilUorresponding moderate decline in refinery throughput during the year. Deliveries of crude oil to the Nico Lopez refineryombination of the former Esso and Shell refineries) in Havana,hroughout capacity of0 bpd, indicate that this refinery probably operatedbate of0 bpd. The Heraanos Diaz refinery (formerly Texaco) at Santiago de Cuba,rude throughput capacity0 bpd, apparently operated almost at capacity, as didpd refinery at Cabalguan In Las Villas Province, jj About one-fourth of tbe throughput at the Cabalguanwas domestic production. The modest decline in over-all refinery throughput probably reflects, in part, restoration of full-timeof the catalytic cracking unit at the Rico Lopez refinery and possibly longer periods of downtime of process equipment.

Manufacture of kerosine-type jet fuel (gradeas noted for the first timeb, principally at the Hermanos Diaz refinery in Santiago de Cuba. 8/ Although lt had been estimated that both the Havana and Santiago refineries were capable of producing Jet fuel, there had been no evidence of its manufactureb. Production of Jet fuel is at the expense of production of kerosine and diesel fuel. Civil demand for kerosine and diesel fuel is important enough to restrict the manufacture of Jot fuel.

There are currently no facilities in Cuba for the manufacture, of hlgh-ouality lubricating oils and greases. Negotiation* were begunest European firm, however, on the possibility ofubricants-manufacturing plant in Cuba at some unspecified future date.The USSR supplied Cuba with aboutercent of its lubricantsb, and Rumania supplied most of the balance. Additives and some finished lubricants apparently were Imported from Western Europe anduba continued toarge part of its internal combustion engine oil supplies. Soviet gradeeavyngine oil, is blended with machine oil to obtain engine oils of intermediate SAB grades.

* Although the status of the catalytic reforming unit at the former Texaco refinery in Santiago de Cuba ls not known, there were reports thatb the Powerformer at the former Esso plant operatedC0 bpd and that the Platformer at the former Shell plant operatedpd.

C- Procurement of Petroleum Supplies and Equipment

The USSR appeared to be able and willing to meet Cuba's essential needs for petroleum and equipment for the petroleum industry. There were reportsowever, of discussions between Cuba andWestern suppliers of petroleum in the UAR, Algeria, and Greece. It is not known at whose initiative these discussions took place. The only reasonably fine contract known to have resulted from theseinvolves the purchase from the UAR of as muchons of fuel oil for delivery (The UAR previously had0 tons of fuel oil to Cuba)

Imports of equipmentU apparently were limited to Soviet refinery maintenance parts and Rumanian auxiliary drilling Inutch firm was reported to be supplying catalyst for the cracking unit inechnical assistance pact was signed with the Bast German petroleum industry inut there is no evidence that any assistance has- been rendered. Cuba currently is reviewing bids from Czechoslovakia, Italy,oint French-Spanish venture on one or more desulfurization units for delivery in6 or- French and Italian firms have bidas turbineto replace the undersize Soviet compressor installed on the catalytic cracking unit in Havana, and another French firm has offered to build large-capacity storage tanks at the Havana As with most of tbe discussions with Western suppliers for the purchase of petroleum, however, there is no evidence that any contracts for such equipment have been signed.

rv. Prospects?

Ho important change, is expected in the supply or consumption pattern for petroleum in Cuba Domestic production probably will remain at the same low level as The USSR again will provide most of Cuba's imports of petroleum. Rumania and,esser extent. Free World sources will supply Cuba with part of its imports of lubricants and related materials. With continuing world-wide surpluses ofit is wholly likely that, given suitable conditions for trade, Cuba would purchase petroleum from such non-Soviet sources as Algeria, the UAR, and Iran (through members of the consortium).

A preliminary refinery plan for productionillion tons of products has been reportedodest reduction from4 level of refinery crude oil It should be noted, however, that4 plan also called forillion tons, whereas actual throughput wasillion tons. Imports of products5 again.will be in the orderillion tons.

Although the refineries in Cuba have been able to operate athigh levels in the years since the Castro takeover, it may bethat crude oil will be processed at progressively decreasing throughput rates. Cuban and Soviet ingenuity notwithstanding, it would be unreasonable to expect that these refineries, built on Free World

standards and specifications, could operate effectively indefinitely in the absence of replacement parts and equipment from the Free World sources. Evidence of troubles in thc refining sector may become manifest

Continued lack of success in finding oil at the locations currently being drilled may result In curtailment or relocation of that activity. Conversely new geological surveys may be conducted to find the newsources of oil that Cuba needsesperately.

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