By Marianna Parraga and Bhargav Acharya
WASHINGTON, Feb 25 (Reuters) – The U.S. Treasury Department said on Wednesday it would authorize companies seeking licenses to resell Venezuelan oil to Cuba, according to guidance posted on the department’s website, a move that could help ease the island’s acute fuel scarcity.
Since Washington took control of Venezuela’s oil exports in early January in the aftermath of the capture of Venezuelan leader Nicolas Maduro, the South American country’s supply to Cuba has ceased, worsening an energy crisis in the communist-run country that is hitting power generation and fuel for vehicles, houses and aviation.
Venezuela had been for more than 25 years the main supplier of crude and fuel to its political ally Cuba through a bilateral pact mostly based on barter of products and services. Mexico, which had emerged as an alternate supplier, also has halted shipments to the Caribbean island since a fuel cargo arrived in Havana in January, according to shipping data.
Large trading houses including Vitol and Trafigura handle the lion’s share of Venezuela’s oil exports, with millions of barrels exported to the U.S., Europe and India, and millions of additional barrels stored at Caribbean terminals for resale.
U.S. President Donald Trump has said Venezuela’s allies that were taking its oil as part of swaps, debt repayments and other agreements must now pay fair market prices for cargoes. These allies include China and Cuba.
On Wednesday, U.S. Secretary of State Marco Rubio arrived in the Caribbean to begin talks with leaders who have warned that Cuba’s growing humanitarian crisis could destabilize the region.
Even with the new policy, it is not clear whether Cuba can afford oil purchases without favorable terms. With Cuba struggling to pay for fuel imports on the spot market in recent years, any potential purchase from traders is expected to demand regular commercial terms such as bank guarantees and cash payments.
The U.S. Treasury’s guidance also makes clear that potential transactions must “support the Cuban people, including the private sector,” including exports for commercial and humanitarian use in Cuba, while transactions involving or benefiting the Cuban military or other government institutions would not be covered.
The U.S. Bureau of Industry and Security had previously released guidance saying that exports and re-exports of U.S. gas and petroleum products to eligible Cuban private sector entities would be authorized.
Cuba’s government controls motor fuel distribution and power supply through state companies, but fuel consumers also include private airlines and other companies.
The Treasury Department said applicants do not necessarily need an established U.S. entity, and limitations in a license granted in January to broadly export Venezuelan oil would not apply to Cuba.
UNDELIVERED FUEL CARGOES
The U.S. pressure on Venezuela and Cuba has left several fuel cargoes undelivered since December, contributing to the island’s inability to keep the lights on and cars circulating.
A Cuba-related vessel that loaded Venezuelan gasoline in early February at a port operated by state-run company PDVSA remained this week anchored in Venezuelan waters waiting for authorization to set sail. The ship had previously loaded Venezuelan jet fuel, but returned its cargo, a company document showed.
No oil cargoes have departed from Venezuela since January without authorization from Washington, which now controls the country’s exports and sale proceeds as part of an agreement with the government of interim President Delcy Rodriguez.
On Wednesday, the Hong Kong-flagged tanker Sea Horse, carrying fuel likely bound for Cuba, halted navigation in the Atlantic Ocean, ship tracking data showed. It could have arrived in Cuba as early as this week.
The tanker loaded through a ship-to-ship transfer in the Mediterranean, monitoring service TankerTrackers.com said.
Hongkong Hangda Shipping LTD, the firm listed at maritime databases as the Sea Horse’s owner and manager, and PDVSA did not immediately reply to requests for comment.
(Reporting by Bhargav Acharya in Toronto, Marianna Parraga in Houston and Daphne Psaledakis in Washington; Editing by Costas Pitas, Matthew Lewis and Paul Simao)
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