Devastating fire may force Cuba to resort to floating oil storage

Aug 8 (Reuters) – A fire at Cuba’s largest oil storage facility has killed at least one firefighter, injured scores more and threatens to further increase the fuel import bill for the impoverished, oil-dependent island nation. foreign oil for everything from transportation to your power grid

Cuban officials may have to scramble to set up expensive floating storage capacity to handle imports meant to ease an acute fuel shortage, sources and experts said Monday.

Cuba relies on the 2.4 million-barrel Matanzas terminal, about 130 kilometers (60 miles) from Havana, for most imports and storage of crude and heavy fuel oil.

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Matanzas is the only terminal in Cuba with the capacity to receive large tankers of 100,000 deadweight tons. It also serves as a blending center for domestic oil production to supply the country’s power plants and to distribute imported fuel and crude oil to local refineries.

The spread of a large fire from Friday is expected to increase shipping and import costs. Cuba was already struggling to pay for fuel purchases, and global tanker freight rates have soared since Russia’s invasion of Ukraine.

Cuba may now have to seek long-term tanker charters for its storage needs or smaller vessels to transport imports. This logistical problem would add to the recovery costs of the biggest oil industry accident in decades in Cuba. read more

In the first half of the year, Cuba imported 57,000 barrels per day (bpd) of crude and fuel oil from its main ally, Venezuela, Refinitiv Eikon data showed. Imports arrive aboard shrinking fleets of old oil tankers owned by Cuba or Venezuela.

The Cuban government has been increasing purchases from others, including Russia, to alleviate shortages that have led to long lines of drivers at stations and power rationing. President Miguel Díaz Canel has complained about almost unaffordable fuel prices this year.

The Liberian-flagged oil tanker NS Laguna is scheduled to arrive in Matanzas next week with some 700,000 barrels of Russian oil, according to Eikon. The vessel follows a delivery of Russian fuel oil to the country in July.

If the Matanzas retaining walls can prevent the fire from spreading to the port’s berths, the receiving part of the facility could still be used to unload imports and transfer the oil to smaller tankers for floating storage, experts said.

Once the fire is out, the Matanzas berths could be used to make a “u” to fill other boats, which does not represent a great technical challenge.

A switch to floating storage could prompt Cuba, a heavily sanctioned country, to ask the US government for a waiver of rules limiting the flow of ships calling at the island’s ports, experts said.

“The most likely scenario now is that the authorities let the product left in the tanks burn off while keeping the area as cold as possible using water,” said Lino Carrillo, a Canada-based expert and former executive with Venezuela’s state oil company PDVSA.

After a fire of the proportions seen in Cuba, recovery often takes time and millions of dollars in repairs, according to analysts.

“The affected tanks will be unusable after the fire and everything else that connects them within the retaining walls,” added Carrillo.

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Reporting from Marianna Parraga in Houston; Edited by David Gregory

Our standards: The Thomson Reuters Trust Principles.

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