China Looks to the Caribbean to Strengthen its Presence and Exploit Cuban Oil

China Looks to the Caribbean to Strengthen its Presence and Exploit Cuban Oil

By Gustavo Arias Retana / Diálogo
September 24, 2019

China takes part in Cuban oil explorations with the company Gran Muralla, employing 160 Chinese nationals who work together with the state-owned company Unión Cuba-Petróleo, said Chilean online news portal AméricaEconomía. Gran Muralla is a subsidiary of China National Petroleum Corporation, a company with business on the island since 2005. This company drills oil wells with technology that Cuba didn’t have access to before, the publication says.

Carlos Murillo, a specialist in geopolitics at the National University of Costa Rica, explains that in recent years Beijing increased its visits to the island, trying to accelerate its expansion by establishing trade relations in different areas, such as the oil industry.

“The bonds between Beijing and Havana date back many decades; however, now they have a new drive due to China’s interest in having a presence in Latin America,” Murillo told Diálogo. “This has accelerated because China was seeking to consolidate its global status in 2025, but the trade dispute with the United States forced it to increase its influence in all regions and areas. Cuba intends to become a benchmark in the Caribbean, and that’s in Beijing’s interest, as China seeks to have a presence in the most places possible.”

The current hydrocarbon production in Cuba is not enough to satisfy local consumption, and in terms of energy resources the island is not attractive to investors.

“Cuba doesn’t offer any resource that’s really valuable for China. The Chinese market is not interested in Latin American rum or sugar, because transport costs are high, and they have nearby markets that offer these products. What’s important to China is the island’s strategic position. China’s dream is to have a naval base near the U.S. border, hence Cuba’s high value. Although the island is becoming increasingly less relevant in political terms, it’s important from a geopolitical perspective; Cuba will always be key in the Caribbean,” Murillo said.

“Although Cuban reserves are not relevant, China’s appetite for hydrocarbons is parallel to its expansion strategy in Latin America,” Dr. Constantino Urcuyo Fournier, lecturer at the University of Costa Rica’s School of Political Sciences, told Diálogo.

“Cuba is part of China’s political and resource-oriented interests; one of these resources is hydrocarbons, and it wants to be more connected to the island, so as to increase its presence with oil exploration. China always seeks [to relate] politics with the economy, as with Cuban oil, although it isn’t as abundant as in other countries.”

The role of the Venezuelan crisis

An important factor related to the Chinese presence in the island is the ongoing crisis in Venezuela, which was Cuba’s main partner in recent years, providing the country with support with oil at preferential rates. Murillo believes that this situation explains Havana’s actions, as the situation of the Nicolás Maduro regime is fragile and needs urgent support from other nations to survive.

The Nico López refinery in Havana had to increase production in 2019, after Venezuela reduced exports of subsidized fuel to Cuba. (Photo: Yamil Lage, AFP)

 

“Chinese concerns regarding Venezuela relate to getting their loans back. Beijing seeks asymmetrical relations where it can dominate and set conditions on any country,” Murillo said. “On the other hand, Cuba depends on other countries to survive: first on Spain [1492-1898], then on the United States [1898-1959], after that on the Soviet Union [1960-1990], and on Venezuela in this century [1998-2019]. Havana knows that Venezuela’s means of survival is exhausted with Maduro in power. That’s why it’s desperately seeking other providers, and Beijing sees an opportunity to use the situation to expand.”

Urcuyo agrees with Murillo, but points out that contrary to Venezuela, the trade relationship between China and Cuba is more complex, since the island doesn’t have many resources to offer.

“Cuba leans on Venezuela, but it will seek other providers, and I think they are already receiving oil from Moscow. China might be a source of financial support; it has invested in Venezuela in exchange for oil, but Cuba still can’t offer that resource other than as a prospect,” Urcuyo concluded.

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