China’s major state-owned oil company, CNPC, through its subsidiary, Great Wall Drilling, has begun exploring for oil off Cuba’s coast in a joint venture with state-owned oil firm Cuba Petroleum Company (CUPET), according to an April 16 report in the China state news agency, Xinhua. Great Wall has been engaged in oil exploration in Cuba since 2005, but this is the most promising result to date. Advanced drilling technology from CNPC has opened the prospect of major oil off Cuba for the first time.
The news comes as Washington sanctions target Venezuela oil earnings and also its agreements to supply Cuba with low cost oil. While the Maduro government continues to insist it will deliver oil to Cuba despite sanctions, clearly the security of supply is becoming riskier and supply less.
Currently Beijing is Cuba’s largest trading partner and Havana’s largest creditor, with Cuba importing major supplies of Chinese rice, along with thousands of China tourists, a business that brings Cuba an estimated $2 billion annually. Sugar and nickel are the two major Cuban products sent to China amid a trade imbalance in China’s favor.
If China now develops major offshore oil resources in Cuba, their presence will significantly increase and the decline of Venezuelan oil to Cuba as a kind of barter payment for the military and medical and other support, will be eased. Until now Russia’s Rosneft has filled the oil import gap for Cuba.
China is well-established as the major foreign creditor as well to Venezuela with some estimates putting their debt as high as $61 billion. Venezuelan oil is clearly at the heart of the relationship, but there are indications Chinese companies also are looking to exploit untapped gold and coltan resources there. Since the Washington declarations in support of Guaido, China has been unusually outspoken in defense of Maduro, unusual for a state that claims never to involve in local politics.
With details of the extent of Chinese investments in Venezuela not fully clear, China has also made a major presence in neighboring Guyana, since 2018 officially welcoming the small former British colony to join the Belt, Road Initiative, sometimes called China’s New Economic Silk Road.