La Revolución Energética: A Model for Reducing Cuba's Dependence on Venezuelan Oil

• DOI: https://doi.org/10.13169/intejcubastud.9.1.0091
• Pages: 91-116
• Published date: 01 April 2017
• Date: 01 April 2017
• Author: Tom Fletcher
• Subject Matter: energy,oil,Venezuela,Cuba,dependency

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ARTICLE

LA REVOLUCIÓN ENERGÉTICA: A MODEL

FOR REDUCING CUBA’S DEPENDENCE ON

VENEZUELAN OIL

Tom Fletcher

The University of Sheffield, UK

Abstract

Given Cuba’s growing dependence on subsidised Venezuelan oil, which accounts for

a majority of oil consumed in Cuba, any collapse in existing agreements could have

wide-ranging consequences for the Cuban economy. As such, strategies to reduce this

dependence, and to mitigate the impact of an end to subsidised oil, are becoming an

increasingly important issue. This article aims to illustrate how aspects of Cuba’s so-

called ‘Energy Revolution’ of 2005 can be drawn upon as part of a range of proposed

solutions to the problem of over-dependence on Venezuelan oil. The article firstly

investigates why a reduction in dependence is necessary. This is accomplished first

through an examination of the oil agreement between the two countries, after which

an assessment of the extent of Cuba’s dependence is presented, followed by an

adjudication of the likelihood of a breakdown in agreements. Finally, this is used to

evaluate how Cuba would be affected should Venezuelan oil subsidies end. The article

then explores the potential of three strategies to reduce this dependence, and therefore

the impact of any breakdown, or renegotiation of agreements. Particular attention is

paid to evaluating the effect of existing government policies, and building the case for

further work in each of the strategy areas, with the ultimate aim of making the Cuban

economy more resilient to supply disruption from Venezuela.

Keywords: energy, oil, Venezuela, Cuba, dependency

92 ARTICLE – TOM FLETCHER

INTERNATIONAL JOURNAL OF CUBAN STUDIES 9.1 SPRING 2017

Introduction

Amid 224 days of extensive electricity blackouts in 2005 alone, Fidel Castro

launched ‘La Revolución Energética’, or the Energy Revolution. This was an

ambitious programme designed to transform and modernise the Cuban energy

system, with the ultimate aim of ensuring a reliable supply of energy once and

for all (Seifried 2013: 3).

Composed of six core building blocks, the initiative focused on the develop-

ment of domestic oil and renewable energy resources, improving energy effi-

ciency and diversifying electricity generation through the use of smaller,

distributed generators (Seifried 2013: 2). The driving vision was of a system

which had greater capacity, and was more resilient to disruptions, with emphasis

on self-sufficiency and exploiting a varied range of energy sources.

While the initiative had its problems, largely related to rising electricity prices,

it saw the upgrading of approximately 90% of the national grid, as well as the

successful decentralisation of power generation, with 22% of installed capacity

now provided by local generators (Hernandez 2013; Oficina Nacional de

Estadística e Información [ONEI] 2016a: 23).

Today, clear parallels can be drawn between the problems that the Energy

Revolution aimed to resolve, and issues related to Cuba’s uncertain relationship

with Venezuela. As context, since 2000, Cuba has been engaged in an increas-

ingly formal alliance with the country, driven largely by the personal friendship

of Castro and former Venezuelan president Hugo Chávez (Azicri 2009: 99).

Dubbed ‘Cubazuela’ by the press, the alliance was constructed upon revolu-

tionary solidarity, and a shared opposition to the so-called ‘Washington

Consensus’, which had been the dominant paradigm in economic development

since the early 1980s (Córdoba 2013; Gore 2000: 790). Characterised by grow-

ing economic and political interdependence between the two countries, the part-

nership was initially centred around trading subsidised Venezuelan oil for Cuba’s

surplus of well-educated doctors and medical staff, though its scope has grown

sizeably over the years (Corrales 2005: 2).

Following Chávez’s death in 2013, the future of the ‘Cubazuela’ alliance has

been called into question. Despite Venezuelan president Nicolás Maduro’s ongo-

ing support for the Castro administration, a combination of low oil prices and

high government spending has thrown the Venezuelan economy into turmoil (The

World Bank 2016a: 101). This has allowed the opposition coalition, who have

frequently criticised the costly nature of oil-based agreements with Cuba, to gain

significant ground in parliamentary elections (Feinsilver 2008: 5; Rojas 2015).

Given Cuba’s growing dependence on subsidised Venezuelan oil, which now

accounts for a majority of oil consumed in Cuba (Arreaza and Grisanti 2015: 2),