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Russia May Fill Cuba's Oil Quota

|Includes: TAG Oil Ltd. (TAOIF)

Russia has recently signaled that it could replace Venezuela as Cuba's main oil supplier. This speculation comes after Russian VP for Economic development, Alexei Gruzev, stated by letter that, "In our opinion, the successful completion of the negotiations on supplies of Russian hydrocarbons to Cuba will not only promote an increase in trade turnover, but also have a positive socio-political and humanitarian effect on the Russian-Cuban relations."

Venezuela has been Cuba's main supplier of crude since 1999, but in the wake of that country's economic problems, Cuban President Raul Castro has looked to Russia to supply a stable supply of oil and derivatives.

Russia has been shipping to Cuba for several years: Between 2010 and 2015, for example, Russia supplied Cuba with $11.3 million in oil products. But this new announcement signals a vast increase. The reserves and technical conditions of Rosneft and Lukoil of Russia allow for an easy increase in the shipments to Cuba, and according to Sputnik news, contracts are being prepared but have excluded price.

Havana Times has reported that 90,000 barrels of crude a day were being shipped to Cuba from Venezuela. Interestingly, shipment of that oil is paid for 90% by the salaries of at least 30,000 Cuban professionals, mostly doctors, who were contracted out to Venezuela per year.

It will be interesting to see what quantity of oil Russia will provide, how Cuba will pay for it. The story will undoubtedly continue to unfold over the next few months. Read the full article from Sputnik here.