Cuba | Cuba opens oil and gas sector to private individuals

The US government imposes coercive measures against Cuban institutions and companies in strategic areas almost every two weeks. Photo: IMAGO/ITAR-TASS Cuba is continuing the restructuring of its economy. A new legal framework passed in mid-October expands participation opportunities. The biggest innovation is oil concessions with a term of up to 30 years. In addition to foreign companies, Cuban private companies can for the first time take part in the exploration and production of oil and gas. The state transfers ownership of the extracted deposits to investors; The oil in the ground remains the property of the state.

Since exploration and production are very capital-intensive activities, the practical impact of the new regulations is likely to initially remain low. »This is an activity for large industries; “The Cuban economy will not be able to meet the necessary financing needs,” said London-based Cuban economist Daniel Torralbas. "Where the private sector's participation in the value chain in the petroleum sector can be expanded, however, is in the areas in which it has already begun to invest: the marketing, import, storage and sale of fuels."

The development of the Cuban oil and gas sector is part of the most extensive economic reform in decades passed by the Cuban parliament in mid-June. The 176-point package of measures provides for a greater opening of the state-controlled economy and the introduction of market economy mechanisms. In recent months, Cuba has approved the establishment of private banks, permitted private gas stations and pharmacies, abolished the state foreign trade monopoly and allowed the establishment of large private companies with more than 100 employees.

Meanwhile, the US government continues to tighten the sanctions. In mid-October, Washington imposed coercive measures on the Cuban state financial institution BICSA, with which foreign companies, private companies and authorized US exporters maintain accounts, for allegedly providing services to an Iranian bank that was also sanctioned. At the same time, US Secretary of State Marco Rubio renewed allegations that Havana serves "as a base for malicious actors and terrorist groups."

After blocking all crude oil deliveries to Cuba at the end of January, Washington has further tightened the sanctions regime against the Cuban government since May. Almost every two weeks, the US government imposes coercive measures against Cuban institutions and companies in the strategic areas of finance, mining, military, tourism and medical services.

In late September, the Trump administration also repealed the rule that allowed Cuban entrepreneurs to maintain accounts with U.S. financial institutions. U.S. companies and individuals are prohibited from all transactions and dealings with the sanctioned Cuban entities. Third-party transactions are subject to the threat of sanctions. This has already led to the withdrawal of Spanish hotel groups, the credit card companies Visa and Mastercard, international shipping companies and the Canadian mining company Sherritt from business in Cuba.

On Tuesday, however, Sherritt, whose joint venture with the Cuban government is responsible for about three-quarters of Cuba's nickel production, said it had received approval from the U.S. government to ship fuel to Cuba to restart mining operations on the island that were suspended in May.

The license issued by the US Treasury Department allows the sale and transport of fuels, heating oil and sulfur to Cuba. What's special: The application was submitted jointly with the US company Gillon Capital, which belongs to former Trump advisor Ray Washburne and is seeking a majority stake in Sherritt. The procedure shows that foreign investments in strategic sectors are no longer decided solely in Havana, but also in Washington.

This can also be observed with petrol and diesel imports. The fuel supply in Cuba has eased noticeably in recent weeks - even if the overall supply situation remains critical. There are significantly more cars on the streets again; The prices for petrol and diesel have fallen sharply. The US oil blockade has forced the Cuban state to give up its monopoly on fuel imports. This, in turn, has made the United States the main supplier to the island's private sector. The shift in trade is significant. Total U.S. fuel shipments to Cuba rose from $88,000 in January to $48 million in June. In July the import volume was already more than 60 million US dollars.

Politically, however, there is no rapprochement. US Secretary of State Rubio has repeatedly declared “regime change” in Havana to be his goal. Donald Trump only confirmed this on Friday during a rally in Florida. »These beautiful (war) ships will sail past Cuba. We'll have one of them stop about 45 meters from the coast. They will raise their hands. “And then we’ll send Marco Rubio over there to wrap things up,” threatened the US President.

The talks that began in March are at an impasse. Despite recent contacts between the two countries, Havana sees no progress toward serious dialogue with the Trump administration. Cuba's deputy ambassador to the United States, Tanieris Diéguez, told the Spanish news agency EFE. "There have been a number of contacts, but we don't see any real progress towards a serious dialogue, which is what we are currently striving for." Cuba is ready to talk about any topic; However, the sovereignty and constitutional order of the country are not negotiable.

With us, no one has to pay to be informed. Sounds like a bad business model? It is too. But independent journalism and participation for everyone are more important to us than profit. Journalism still costs money: research, printing and all the people who do it. That's why we depend on you. We need 300,000 euros by the end of the year.

Donate once or regularly, every amount counts. So that nd remains.