Caracas, 17 August (Argus) — Cuba will be the first country to lose preferential oil supplies from Venezuela next January if opposition presidential candidate Henrique Capriles Radonski wins the 7 October national elections, according to two senior economic advisers on a team that is drafting a plan for a new government's first 100 days in power.
Cuba currently receives an average 102,000 b/d of crude and refined products from Venezuela's state-owned oil firm PdV, with 100pc of the invoice paid in services provided by Cuban nationals to the government of President Hugo Chavez. These services include medical doctors and sports trainers, and defense, intelligence and security personnel attached to all ministries, military units and other entities involved in security matters.
But PdV is losing $3.7bn a year on its petroleum shipments to Cuba, assuming a current average price of $100/bl. PdV needs that revenue to close a projected financial deficit estimated at $7bn/yr over the coming four or five years as a result of maturing debt obligations.
The oil that PdV now ships to Cuba for free will be sold at market prices and commercial payment terms, and the proceeds will be used to pay down debt and fund critically needed spending in core upstream and downstream operations, Capriles Radonski's advisers told Argus.
PdV's current plans to fund the expansion of Cuba's Cienfuegos refinery and build a new 150,000 b/d in Matanzas also will be terminated in January if Capriles Radonski is elected president in October, the advisors said.
PdV will not have the cash resources needed to fund its Cuban capital expenditures (capex) plans. But the termination of PdV's Cuban capex plans and oil shipments to Havana will be accompanied by a larger “restructuring” of the current strategic alliance between the Chavez government and Cuba, the opposition candidate's advisers said.
All Cuban nationals currently in Venezuela on defense, intelligence and security missions will be ordered out of the country next January if Capriles Radonski wins, which many local polls conducted in July suggest is unlikely. Most recent polls indicate that Chavez, who is seeking re-election to a third consecutive term in power, appears to lead Capriles Radonski by 10-15pc.
But the opposition candidate's economic advisers disputed these polls yesterday. The Capriles Radonski campaign's latest internal poll by veteran US pollster Stan Greenberg indicates a tie between Chavez and Capriles Radonski, with the momentum favoring the opposition candidate. These results appear to be corroborated by local polling firm Consultores 21, whose latest poll at the end of July also indicates a tie.
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