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 several others and threatened to further increase fuel import bills for the impoverished island nation, which depends on foreign oil for everything from transportation to transportation. power grid.

Cuban officials may need to build expensive floating storage capacity to handle imports aimed at easing acute fuel shortages, sources and experts said Monday.

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

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Matanzas is Cuba’s only terminal capable of receiving large tankers rated for 100,000 tons deadweight. It also serves as a hub for domestic oil production to supply the country’s power plants and distribute imported fuel and crude oil to local refineries.

Shipping and import costs are expected to rise as a result of the massive fire that has spread since Friday. Cuba was already struggling to afford fuel purchases, and global tanker freight rates have skyrocketed since Russia’s invasion of Ukraine.

Cuba will now have to look for long-term tanker charters or smaller vessels to carry imports for its storage needs. This would be a logistical problem on top of recovery costs for Cuba’s biggest oil industry accident in decades. Read on

In the first half of the year, Cuba imported 57,000 barrels per day (bpd) of crude and fuel from its main ally Venezuela, Refinitiv Eikon data showed. Imports arrive on a dwindling fleet of older tankers owned by Cuba or Venezuela.

The Cuban government is increasing purchases from Russia, among others, to ease long lines of drivers at stations and power rationing shortages. President Miguel Diaz Canel has complained about almost unaffordable fuel prices this year.

The Liberian-flagged tanker NS Laguna is scheduled to arrive in Matanzas next week, carrying about 700,000 barrels of Russian oil, according to Econ. The vessel delivered Russian fuel oil to the country in July.

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

After the fire was extinguished, Matanza’s berth could be used to “U” other ships to fill, which did not represent a difficult technical challenge.

The switch to floating storage could prompt Cuba, a heavily sanctioned country, to ask the U.S. government for exemptions from regulations limiting the flow of ships that call at the island’s ports, experts said.

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

After a fire of the scale seen in Cuba, recovery usually takes time and millions of dollars, analysts say.

“The affected tanks will be useless after the fire and so will everything else connecting them to the containment walls,” Carrillo added.

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Mariana Parraga in Houston reported; Editing by David Gregorio

Our Standards: Principles of Thomson Reuters Trust.

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