Revolutionary Cuba Now Lays Sand Traps for the Bourgeoisie


MEXICO CITY — One of Fidel Castro’s first acts upon taking power was to get rid of Cuba’s golf courses, seeking to stamp out a sport he and other socialist revolutionaries saw as the epitome of bourgeois excess.

Now, 50 years later, foreign developers say the Cuban government has swung in nearly the opposite direction, giving preliminary approval in recent weeks for four large luxury golf resorts on the island, the first in an expected wave of more than a dozen that the government anticipates will lure free-spending tourists to a nation hungry for cash.

The four initial projects total more than $1.5 billion, with the government’s cut of the profits about half. Plans for the developments include residences that foreigners will be permitted to buy — a rare opportunity from a government that all but banned private property in its push for social equality.

Mr. Castro and his comrade in arms Che Guevara, who worked as a caddie in his youth in Argentina, were photographed in fatigues hitting the links decades ago, in what some have interpreted as an effort to mock either the sport or the golf-loving president at the time of the revolution, Dwight D. Eisenhower — or both.

President Hugo Chávez of Venezuela, who maintains close ties with Cuba, has taken aim at the pastime in recent years as well, questioning why, in the face of slums and housing shortages, courses should spread over valuable land “just so some little group of the bourgeois and the petit bourgeois can go and play golf.”

But Cuba’s deteriorating economy and the rise in the sport’s popularity, particularly among big-spending travelers who expect to bring their clubs wherever they go, have softened the government’s view, investors said. Cuban officials did not respond to requests for comment, but Manuel Marrero, the tourism minister, told a conference in Europe this month that the government anticipates going forward with joint ventures to build 16 golf resorts in the near future.

For the past three years, Cuba’s only 18-hole course, a government-owned spread at the Varadero Beach resort area, has even hosted a tournament. It has long ceased to be, its promoters argued, a rich man’s game.

“We were told this foray is the top priority in foreign investment,” said Graham Cooke, a Canadian golf course architect designing a $410 million project at Guardalavaca Beach, along the island’s north coast about 500 miles from Havana, for a consortium of Indians from Canada. The company, Standing Feather International, says it signed a memorandum of agreement with the Cuban government in late April and will be the first to break ground, in September.

Andrew Macdonald, the chief executive of London-based Esencia Group, which helps sponsor the golf tournament in Cuba and is planning a $300 million country club in Varadero, said, “This is a fundamental development in having a more eclectic tourist sector.”

The other developments are expected to include at least one of the three proposed by Leisure Canada, a Vancouver-based firm that recently announced a licensing agreement with the Professional Golfers Association for its planned resorts in Cuba, and a resort being designed by Foster & Partners of London.

The projects are primarily aimed at Canadian, European and Asian tourists; Americans are not permitted to spend money on the island, under the cold-war-era trade embargo, unless they have a license from the Treasury Department.

Developers working on the new projects said they believed Cuba had a dozen or so courses before the revolution, some of which were turned into military bases. Cuba and foreign investors for years have talked about building new golf resorts, but the proposals often butted against revolutionary ideals and red tape. Several policy changes adopted at a Communist Party congress in April, however, appear to have helped clear the way, including one resolution specifically naming golf and marinas as important assets in developing tourism and rescuing the sagging economy.

“Cuba saw the normal sun and salsa beach offerings and knew it was not going to be sustainable,” said Chris Nicholas, managing director of Standing Feather, which negotiated for eight years with Cuba’s state-run tourism company. “They needed more facets of tourism to offer and decided golf was an excellent way to go.”

The developers said putting housing in the complexes was important to make them more attractive to tourists and investors, and to increase profits.

Still, John Kavulich, a senior adviser for the U.S.-Cuba Trade and Economic Council, said Cuba had a history of pulling back on perceived big steps toward freer enterprise and might wrestle to explain how such high-dollar compounds could coexist with often dilapidated housing for everyone else.

“Will Cuba allow Cuban citizens to be members, to play?” he said. “How will that work out? Allowing someone to work there and allowing someone to prosper there is an immense deep ravine for the government.”

But Mr. Macdonald said political issues were moot, given that Cuba already had come to terms with several beach resorts near Havana that generally attracted middle-class foreign travelers.

“It’s not an issue for them,” he said. “It’s tourism. It’s people coming to visit the country.”

If the projects are built as envisioned, the tourists will enjoy not just new, state-of-the-art courses and the opportunity for a second home in Cuba, but shopping malls, spas and other luxury perks. Standing Feather, which calls its complex Estancias de Golf Loma Linda (Loma Linda Golf Estates), promises 1,200 villas, bungalows, duplexes and apartments set on 520 acres framed by mountains and beach.

The residences are expected to average $600,000, and rooms at the 170-room hotel the complex will include may go for about $200 a night, a stark contrast in a nation where salaries average $20 a month.

Standing Feather said that to build a sense of community and provide the creature comforts of home among its clientele, the complex will include its own shopping center, selling North American products under relaxed customs regulations.

“It is in the area that Castro is from, in Holguin Province,” added Mr. Cooke, the golf course architect.

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Cuba’s Hunt For Oil Raises Questions For U.S.


NPR: In the deep waters off Cuba’s north coast, a Chinese-built oil rig is due to begin drilling this fall in an area geologists believe may have huge beds of undersea crude.

A significant find could transform Cuba’s economy and possibly alter relations with the United States, but it may also present new environmental threats for the Florida coast.

Mariel — the town 30 miles west of Havanna that was a departure point for more than 100,000 Cubans who left the island in the 1980 Mariel boatlift — is being remade into a servicing hub for the Cuban oil industry of the future.

Crews there are working furiously to finish new port facilities and a railway with hundreds of millions in Brazilian financing.

This fall, the Spanish company Repsol plans to start drilling five exploratory wells in Cuban-controlled waters at depths up to 5,000 feet — about as far down as BP’s Deepwater Horizon rig.

U.S. trade sanctions against Cuba require the rig to contain no more than 10 percent U.S. technology, which has slowed its completion. Owned by an Italian company, the rig is now in its final construction phase and set to depart from Singapore in June.

A study by the U.S. Geological Survey estimates there are nearly 5 billion barrels of oil in the bedrock off Cuba’s north coast, enough to make the island a major energy player in the region. Cuba’s own geological studies show several times that amount.

Ricardo Torres, a Cuban economist who tracks the energy sector, says that thousands of jobs would be created if Cuba could go from being a net importer of energy to an oil exporting country, and other subsidiary industries could also arise. Even if it takes several years to bring the oil to market, new credit lines will open up for Cuba’s cash-strapped government, he says.

Pressure On The Embargo

What’s less clear is the impact a major discovery might have on the 50-year-old U.S. trade embargo. Those sanctions will keep American companies on the sidelines, but representatives from energy producing states have already proposed new exceptions to the embargo for U.S. oil industry firms.

Marc Frank, a reporter for the Financial Times in Havana who has been covering Cuba’s long search for domestic oil supplies, says it clearly would make the embargo less effective.

“And [it] adds an additional question to why that policy still exists,” he says. “What’s its purpose? So one would think it would lead to pressure towards changing that policy.”

Oil companies from Malaysia, Norway, India and several other nations have also signed exploratory drilling agreements, and Iran’s foreign ministry spokesman said during a Havana visit recently that his country stands ready to help.

Environmental Risk

Because the drilling will happen just 60 miles off the Florida coast, John McAuliff of the Fund for Reconciliation and Development, a group that advocates engagement with Cuba, says it’s in Washington’s best interest to work with Havana on contingency plans. After all, he says, the U.S. has the best cleanup technology and know-how.

“The question is how you minimize the risk, and there’s only one way to minimize the risk, and that is to have the kind of collaboration with Cuba that we have with Mexico or the Bahamas or any other country that is exploring for oil in a way that is potentially damaging to the U.S.,” McAuliff says.

At a U.S. government conference on safe drilling practices last month in Washington, Interior Secretary Ken Salazar called Cuba’s exploration plans “an issue of concern” that the Obama administration is watching closely. But Cuba was not among the dozen or so countries invited to the conference.

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Cuba to drill five new oil wells by 2013


HAVANA (AFP) – Cuba on Tuesday announced plans to drill five deepwater oil wells in the Gulf of Mexico beginning this summer, expressing confidence that its efforts will be rewarded with major new energy finds.

“We’re about to move to the drilling phase,” said Manuel Marrero, an official with the government authority tasked with overseeing Cuba’s oil sector.

“We’re all really hopeful that we will be able to discover large reserves of oil and gas,” said Marrero, who added that the ventures would be undertaken with the help of unspecified foreign companies.

He said the deepwater wells were to be drilled between 2011 and 2013, and would be in waters ranging in depth between 400 meters (a quarter mile) and 1,500 meters (1.6 miles). He did not specify which countries would be among the foreign partners working with Havana on the project.

Some studies estimate Cuba has probable reserves of between five and nine billion barrels of oil in its economic zone in the Gulf of Mexico. Cuban authorities have said their crude reserves are as high as 20 billion barrels.

In 2010, Cuba produced 21 million barrels of oil, about the same as it had extracted the previous year, representing a little less than half of its annual energy needs.

Cuba depends on Venezuela for the rest of its oil imports of about 100,000 barrels per day. Any cut to Venezuelan supplies could spell political and economic disaster for Havana.

The only one-party communist regime in the Americas, Cuba has long been plagued by energy dependence that amounts to its economic Achilles’ heel.

Havana used to depend on the eastern bloc for cut-rate oil, and plunged into economic chaos and blackouts when it was cut off after 1989.

Locking in energy independence, aside from potentially turning Cuba from a cash-strapped developing nation into a flush oil exporter, could help project its current regime years into the future.

On Monday, Rafael Tenrreyro, the head of state oil form Cupet’s exploration branch, said Cuba was anxiously awaiting a platform made in China for one of its offshore efforts.

“At some point this summer it should be getting here,” Tenrreyro told reporters, referring to the next few months’ time.

Despite the BP oil spill tragedy in the gulf, Tenrreyro insisted “safety is more than guaranteed. Cuban institutions have made sure that is the case.”

Cuba’s economic zone in the Gulf, just a stone’s throw from the US state of Florida, is divided into 59 blocs. Of those 20 are ventures with Repsol (Spain), Hydro (Norway), OVL (India), PDVSA (Venezuela), Petrovietnam and Petronas (Malaysia). Petrobras (Brazil) recently pulled out and Sonangol (Angola) recently signed on.

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Cuba’s Deepwater Oil Exploration Could Be a Game Changer See full article from DailyFinance: http://www.dailyfinance.com/story/cuba-deepwater-oil-exploration-game-changer/19865273/?icid=sphere_copyright


Dailyfinance.com:

People who follow the oil industry are closing watching a pair of news items, both involving drilling operations in the Gulf of Mexico.

Earlier this week, the Obama administration said Noble Energy (NBL) could restart drilling operations at its Santiago well in the Gulf. The announcement will make Noble the first company to resume drilling in the region since last April’s BP (BP) Deepwater Horizon disaster — and the first since the moratorium on deepwater drilling in the Gulf was lifted last October.

The other bit of news is that a semi-submersible oil rig, originally due to arrive in Cuban waters this month, will reportedly be delayed until late summer.

Working Around U.S. Trade Embargo

The rig is a multinational project: owned by an Italian oil service group, constructed by a Chinese firm and funded by a consortium led by the Spanish energy company Repsol (REP). The delay is being blamed on technical problems — but “part of the delays were originally that the [rig’s] works were going to have more than 10% of U.S. technology, which is not acceptable to the U.S.,” says Jonathan Benjamin-Alvarado, political science professor at the University of Nebraska at Omaha.

That 10% figure is a part of the U.S. trade embargo against Cuba, now in its sixth decade. But the possibility of a good-size oil find off the Cuban coast could be a major game-changer for both Havana and Washington.

A 2004 assessment by the U.S. Geological Survey reported that about 4.6 billion barrels of oil — as well as substantial deposits of natural gas — might lie trapped in the sediment just north of Cuba.

Some preliminary explorations of the site have shown promise, but the oil deposit is hardly a sure thing — especially since it’s in water even deeper than the BP Deepwater Horizon site. But given present concerns over oil supplies, “the idea is to eventually export [oil] in the area or for Cuban consumption,” says Arturo Lopez-Levy, a former political analyst for the Cuban government and now a research associate at the University of Denver.

Transitioning From Oil Importer to Exporter

“It could create a significant change in Cuba’s economic wherewithal,” says Benjamin-Alvarado, who recently co-authored a book on Cuba’s energy sector. He notes Cuba currently produces about 90,000 barrels of oil daily, or about half of its overall needs — with the rest being imported from Venezuela. But with the possibility of Cuba transitioning from an oil importer to a modest exporter, there’s been a dramatic increase in foreign direct investment in Cuba in recent years — as international companies invest in the country’s oil production infrastructure.

“About 88% of all the oil reserves in the world are already spoken for,” Benjamin-Alvarado says. “Only 11% are open and available for purchase by the international oil companies.” With that in mind, he says, “oil would solidify Castro’s effort to remain viable with the Cuban people, to satisfy their material needs. The Cuban people would take the trade-off. But over the course of 10 to 15 years, that may change.”

There are also some practical concerns about possibly having Cuban oil wells operating less than 90 miles from the Florida coast. A recent report by advocates for more U.S. engagement with Cuba suggests the U.S. government should start direct talks with Havana over energy and environmental issues — to prevent any future Deepwater Horizon-like spills in the Gulf.

That suggestion is getting a lot of push-back from anti-Castro groups in Florida, as well as state lawmakers. But according to the report, by the Center for Democracy in the Americas, the current trade embargo “restricts Cuba’s access to knowledge and associations that would help it plan for or react to a spill. The embargo prevents meaningful participation by U.S. private sector firms in planning for reaction, containment or remediation efforts.”

“The extent to which the U.S. can get on the stick and put forth a working agreement on environmental drilling will be very important, to be able to monitor very closely what the Cubans will be doing,” says Benjamin-Alvarado. “This won’t solve our energy problem, but it gives the U.S. an opportunity to have an imprint in the direction of the energy developments that are presently at play in Cuba.”

Arrival of Cuba offshore oil rig delayed again


HAVANA, Feb 22 (Reuters) – Delivery of a Chinese-built drilling rig that will open the first full-scale exploration for oil in Cuban waters looks unlikely until at least August in the latest delay to beset the project, sources said this week.

They said an inspection of the newly-built, high-tech rig had been ordered to make sure it was in good shape after taking on water in transit from the Chinese shipyard where it was built to Singapore for completion in October.

The rig — the Scarabeo 9, owned by Italian oil service firm Saipem SPLM.SI — had been expected to arrive in Cuban waters in late June or early July after several earlier delays postponed its original delivery date of September 2009.

If the inspection turns up problems that need repair, the latest delay could stretch beyond August, sources said.

The water problem was not considered a major issue, but an inspection was ordered to assure the rig’s overall quality, they said.

Once the rig gets to Cuba, it will be used by a consortium led by Spanish oil company Repsol YPF (REP.MC: Quote, Profile, Research, Stock Buzz) to drill one or two exploratory wells, then passed on to other oil companies for exploration in drilling leases they hold in Cuba’s part of the Gulf of Mexico.

Repsol drilled the only offshore well in Cuba in 2004 and found oil, but said it was “non-commercial.”

It has long planned to drill another well, but is widely believed to have had difficulty finding a rig that does not violate limits on use of U.S.-developed technology set by the 49-year-old U.S. trade embargo against Cuba.

Cuba, which depends on its socialist ally Venezuela for much of its oil, has said it may have 20 billion barrels or more of oil in its untapped oil fields.

The U.S. Geological Survey has estimated a more modest 4.6 billion barrels and 10 trillion feet of gas.

The Scarabeo 9 is a dynamic positioning, semi-submersible rig, meaning it floats partially submerged in the ocean and is kept in place by thrusters built into the platform.

It will be drilling in more than 5,000 feet (1,524 meters) of water, but is capable of working in depths of 12,000 feet (3,600 meters).

An August arrival would bring Scarabeo 9 to Cuba at the height of hurricane season, but the rig is built to withstand winds up to 115 miles per hour (185 km) and waves up to 88 feet (26.8 meters).

The prospect of offshore oil exploration by Cuba has prompted proposed legislation in the U.S. Congress that could penalize companies operating in the communist-led country or require them to prove they can adequately respond to an accident like last summer’s BP blowout in the U.S. Gulf of Mexico.

Cuba is just 90 miles (145 km) from Florida, but U.S. oil companies cannot operate there because of the U.S. embargo.

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Key political risks to watch in Cuba


HAVANA, Dec 2 (Reuters) – The success or failure of Cuba’s economic reforms will be the key issue to watch in the next year as the government moves to strengthen the economy and ensure survival of the island’s communist system once the current aging leadership is gone.

The cash-strapped government is looking for ways to cut spending while increasing income, and could get long-term help if offshore oil exploration slated to begin in 2011 is successful.

All this occurs against a backdrop of only slightly tempered hostility with the United States, including an ongoing dispute over a U.S. contractor held by the Cubans on suspicion of spying.

ECONOMIC CHANGES

President Raul Castro has taken aim at Cuba’s chronic economic problems with plans to slash 500,000 jobs from state payrolls by March while expanding the private sector and encouraging less reliance on the state.

About 200,000 of those jobs are expected to shift over to employee-run cooperatives that will be created at businesses currently operated by the state. The government also has begun issuing 250,000 new licenses for self employment and for the first time, the self-employed will be able to hire workers. So far, 30,000 licenses have been granted.

Self employment was first allowed in communist Cuba during the economic crisis that followed the collapse of the Soviet Union, the island’s main ally, in 1991. There were 143,000 licensed self-employed in 2009, and many more illegal ones.

The government’s bet is that it can create enough jobs quickly enough to absorb the laid-off government workers, most of whom it says were not in productive positions. After the first 500,000 jobs are cut, it plans to slash another 500,000 in the next few years, likely leading to more private sector expansion.

Castro announced the ruling Communist Party would hold in April its first Congress since 1997 to ratify the changes, many of which are already in action. Before the Congress, Cubans are to provide input at forums across Cuba.

The reforms are the biggest since Raul Castro succeeded brother Fidel Castro as president in 2008, and come with many questions.

Among them are whether the cumbersome government bureaucracy can move quickly to implement the plan and whether the new entrepreneurs will be too handicapped by regulations, taxes and lack of credit to succeed.

Also, do the planned job cuts present the danger of many people ending up without work and if so, what will the consequences be in a socialist country where people basically have been guaranteed employment for decades?

But the key question is whether the reforms will accomplish what Castro wants — more productivity, a stronger economy and, ultimately, the survival of communism, installed after his brother took power in a 1959 revolution. He has said maintaining the system is key to protecting national sovereignty.

Other reforms have been made, particularly in agriculture, with the same goal in mind. Castro, trying to increase output and reduce dependence on budget-draining food imports, has leased fallow lands to private farmers and taken other steps, but food production was down 7.5 percent in the first half of this year, as farmers complain that they are still too stifled by the state.

What to watch:

— How quickly the government moves to implement reforms.

— The numbers and performance of the newly self employed.

— The effects of government layoffs.

— Agricultural production.

CASH SQUEEZE, SOURCES OF REVENUE

Cuba, hit hard by hurricanes in 2008 and by the global financial crisis, has been so short of hard currency that it stopped paying most of its bills and froze Cuban bank accounts of many foreign businesses two years ago. The situation has eased, but is not yet resolved.

To avoid future cash shortages, Castro has cut spending and sought more income for the state, which controls 85 percent of Cuba’s economy. He has slashed imports by 30 percent.

Cuba is hoping to collect taxes from the newly self-employed and boost revenues from old standbys like nickel exports and tourism, two of its top hard currency earners.

The government has said it will allow construction of golf course developments, with the goal of attracting wealthier tourists.  The courses will be a small piece of the tourist industry in Cuba, but, given golf’s image as the leisure sport of the rich, a larger symbol of how far Cuba is prepared to go to improve its economy.

The government also hopes to one day get more American tourists, should the U.S. ease or eliminate the ban on most travel to Cuba under its 48-year-old trade embargo against the island. Republican gains in the U.S. Congress in the Nov. 2 mid-term congressional elections make changes less likely.

In a potentially game-changing development, a consortium led by Spanish oil firm Repsol YPF is expected to drill an exploratory well in Cuba’s part of the Gulf of Mexico in 2011. It previously drilled an offshore well in 2004, but said it did not find oil in commercially viable quantities.

The drilling rig to be used, which has been under construction in China, will be passed on to other companies such as Malaysia’s state-owned Petronas and a unit of India’s ONGC  to explore in blocks they have leased in Cuban waters.

The U.S. Geological Survey has estimated Cuba has about 5 billion barrels of oil offshore, but Cuba says it may have 20 billion barrels. Cuba currently depends on imports from its oil-rich socialist ally Venezuela.

Russia’s state oil company Zarubezhneft has said it plans to begin exploration next year in two blocks adjacent to Cuba’s coast.  A unit of China National Petroleum Corp. is set to begin a $6 billion upgrade of Cuba’s Cienfuegos refinery, with financing mostly by China’s Eximbank, backed by Venezuelan oil.

What to watch:

— Possible U.S. moves to ease its ban on travel to Cuba.

— Movement of nickel prices, start of golf course projects.

— Repsol’s second deep water exploratory well in Cuba.

— China’s growing presence in Cuba energy sector

U.S.-CUBA RELATIONS

Cuba’s relations with the United States have dominated events on the island for more than a century. During the last five decades of open hostility, the United States has tried to unseat the Castro brothers through subversion, assassination, coercion and a half-baked invasion. The long-standing trade embargo meant to topple the Castros through economic strangulation remains in place despite its lack of success. Cuba has used it to gain international support by casting itself as David versus an overweening Goliath, and at home as a scapegoat for its economic problems.

Despite modest changes at the beginning U.S. President Barack Obama’s administration, U.S.-Cuba relations have thawed only slightly and near-term prospects for improvement look dim due to Cuba’s detention of U.S. aid contractor Alan Gross.

Gross has been held since Dec. 3, 2009 on suspicion of espionage and providing illegal satellite communications equipment to government opponents, but has not yet been officially charged with a crime. The United States says he was only helping Jewish groups set up Internet access, but Cuba is suspicious because he was working for a U.S. federally-funded program seeking to promote political change on the island.

The U.S. government says it will take no major initiatives to improve relations with Cuba as long as Gross is held. Cuba may want to hold him until it gets something in exchange, such as the return of five Cuban agents imprisoned in the U.S. or an end to the programs like the one that sent Gross to Cuba.

The Cuban government is in the process of releasing political prisoners and sending them to Spain to resolve one of its biggest problems with the international community and to get its opponents out of the country.

While U.S. reaction has been guarded, the 27-nation European Union has instructed its foreign affairs chief to explore improved relations with Cuba.

Meanwhile, Cuba has steadily built relations with other key countries, among them China, Brazil, Russia and Spain. It has a special relationship with top trading partner Venezuela, whose President Hugo Chavez is close to Fidel Castro and agreed in November to extend economic cooperation another 10 years.

What to watch:

— Fate of Alan Gross.

— Continued release of political prisoners.

— U.S. and EU reaction to Cuban reforms.

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Russia’s Gazprom plunges into Cuba’s offshore oil business


Havana, Cuba (CNN) — Russian energy firm Gazprom has joined a growing list of foreign companies searching for oil off Cuba’s coast.

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Offshore Oil platform

Gazprom Neft, the oil arm of Gazprom, announced in a news release that it had bought a 30 percent stake in four offshore oil exploration blocks from Malaysia’s state-owned oil company Petronas. No financial details were provided.

The Cuban government says it has up to 20 billion barrels of oil in its portion of the oil-rich Gulf of Mexico, but the U.S. Geological Survey has estimated a smaller 4.6 billion barrels.

Cuba has divided its share of the Gulf into 59 blocks and foreign oil companies have leased 21 of them.

In the wake of this year’s BP Gulf oil spill, some in Florida are worried about Cuba drilling so close to home. Some of the blocs are about 50 miles off the coast of Key West.

Petronas leased its four blocks in 2007. Under the agreement, the lease can be extended through 2037 if oil is found and until 2042 if gas is found.

According to analysts and oil experts who have visited Cuba, the country aims to drill seven exploration wells by 2014.

Cuba currently produces about 60,000 barrels of oil per day from onshore wells. It imports another 115,000 bpd from Venezuela on favorable terms.

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