Fire could plunge Cuba into an energy crisis

Following a blaze that has destroyed at least 40% of the Matanzas Supertanker Base, Cuba stands to run low on power plant fuel. The consequences could lead the US to reconsider sanctions policy

WHAT: Cuba’s Matanzas Supertanker Base caught fire and burned for five days following a lightning strike on August 5.

WHY: The complex, which includes an import terminal and storage depot, handles about 40% of the island state’s crude oil and fuel imports.

WHAT NEXT: Damage to the facility is likely to exacerbate Cuba’s economic woes and energy shortages, sparking a humanitarian crisis that could even lead to a rethinking of US sanctions policy.

Cuba may be heading for an energy crisis following a devastating fire that has destroyed at least 40% of the Matanzas Supertanker Base, which serves as the country’s largest crude oil and petroleum product import terminal and storage depot.

The blaze broke out on the evening of August 5, when a bolt of lightning hit a section of the complex that houses four storage tanks. According to press reports, the lightning strike set one of the four tanks on fire on Friday night, and the flames spread to a second tank on Saturday and a third tank on Monday. Cuba’s government responded by sending hundreds of firefighters to the site, while the governments of Mexico and Venezuela provided assistance in the form of special equipment and emergency personnel.

Mario Sabines, the governor of Cuba’s western Matanzas province, indicated on August 8 that firefighters had been having great difficulty preventing the fire from spreading to other parts of the tank farm. “The risk we had announced happened, and the blaze of the second tank compromised the third one,” he was quoted as saying by the Associated Press.

CNN, meanwhile, quoted him separately as saying that the fire had spread from tank to tank like flames from an “Olympic torch,” turning the entire area into a “cauldron.”

The fire raged for nearly five days and was finally reported to be out on the afternoon of August 9. In remarks broadcast on state television on that day, Rolando Vecino, the Cuban Interior Ministry’s head of transport, said there were signs that the severity of the blaze had diminished. First responders have “managed to control the fire,” he declared.

Ed Augustin, a correspondent for Al Jazeera, agreed, noting in a news broadcast from the port of Matanzas on August 9 that the colour of the flames had changed from black to light grey. “The blaze finally seems to be under control,” he said “You can see a huge amount of smoke billowing out but crucially, the colour has changed. For the last three days, the colour has been a deep soot black,” he said. “Now it’s a light shade of grey, evidence that much of the fire has been smothered.”

Casualties and damage

As of press time, the full details of the story were still emerging.

One firefighter was reported dead, with another 14 missing and five more injured and in a critical condition. Among the civilian population, more than 100 people were said to be injured, with 22 of them hospitalised.

Cuban authorities have claimed that the fire did not cause any crude oil or petroleum products to be leaked into Matanzas Bay, even though the spread of the blaze from the first tank to the second set off a number of explosions and led to the spillage of the second tank’s contents. However, the burning fuel led the government to evacuate nearly 5,000 people from the nearby Dubrocq neighbourhood and to warn residents of areas surrounding the port to wear face masks or stay indoors so as not to breathe in fumes that might contain poisonous substances. The warnings extended to sites as far away as Havana, which is about 100 km east of Matanzas

Officials in Havana have also not commented on the exact amount of fuel lost in the blaze. Each of the four tanks at that section of the Matanzas complex was built with a capacity of 50,000 cubic metres, or 50mn litres. The first tank was reported by AP to have been about half full before the incident, while Bloomberg said that the first tank had contained about 26,000 cubic metres of crude oil and the second 50,000 cubic metres of residual fuel oil (RFO).

Knock-on effects

The fire is also having knock-on effects in other sectors of the Cuban economy.

As noted above, the Matanzas complex is Cuba’s largest oil and petroleum product import terminal, and as such it handles much of the fuel that comes into the country to serve as feedstock for electricity generation. Some of that fuel must now be turned away or diverted; as TankerTrackers.com reported on August 8, the Vilma, a Cuban tanker carrying around 340,000 barrels of Venezuelan crude, had to change destinations and dock in Antilla, a port in eastern Cuba, rather than Matanzas because of the fire.

Meanwhile, noted Jorge Pinon, an expert in Cuban energy policy at the University of Texas at Austin, one of the complex’s key customers is the country’s largest thermal power plant (TPP), the 200-MW Antonio Guiteras facility in Matanzas. Pinon told Al Jazeera on August 10 that if the Matanzas complex stopped functioning, Cuban authorities would lose the ability to deliver feedstock to power stations – and not just to the Matanzas TPP but to other facilities as well. This will compound the problems that are already hampering operations at these stations, he said.

Pinon told Al Jazeera on August 10 that if the Matanzas complex stopped functioning, Cuban authorities would lose the ability to deliver feedstock to power stations – and not just to the Matanzas TPP but to other facilities as well. This will compound the problems that are already hampering operations at these stations, he said.

“The problem with [electricity generation in Cuba] has not been the lack of fuel, but the plants are very old and have maintenance problems. Now they will also have a lack of fuel,” he said. “If they lose Matanzas, they lose the ability to supply the power plants.”

Problems had already arisen by Monday, August 9. On that day, Cuba’s Union of Electrical Workers revealed in social media posts that about 1,223 MW of the island state’s installed generating capacity was off line. It did so on the same day that that the Ministry of Mines and Energy announced that the Antonio Guiteras TPP had been disconnected from the national grid. Cuba’s Communist Party issued a similar announcement and explained that the fire was interfering with the plant’s water supply.

Policy change?

The situation is still developing, but it does seem clear that the fire is likely to exacerbate Cuba’s far-reaching energy shortages and economic problems.

With respect to energy, the country has not been able to meet local demand for electricity. Rolling blackouts are common, and TPPs are often unable to operate at optimum levels due to inadequate maintenance and the difficulty paying for supplies of fuel, which have become far more expensive in recent months.

On the economic front, meanwhile, Cuba saw annual inflation rates reach 29% in the month of June, partly because of higher fuel costs but also because of the weakening of the national currency. The rise in prices has helped offset the 1.3% growth in GDP that the island state recorded in 2021 after two successive years of significant declines.

It is not yet clear how quickly Cuba authorities will be able to recover from the fire at the Matanzas complex – or, indeed, whether it can recover without external assistance in its present condition. As such, the island state is likely to experience no small amount of misery in the short term. Without Matanzas, it will be even less able to supply its TPPs with enough fuel to meet demand, so electricity shortages are likely to become even more commonplace than they already are. And without electricity, Cuba’s economy will be less capable of functioning, and its people will suffer.

This suffering is sure to attract offers of assistance from friendly countries such as Mexico and Venezuela, both of which made significant material contributions to the firefighting effort at Matanzas, as well as some other states in the region and international humanitarian organisations.

But there is also a chance that it may lead the US government to chip away further at the sanctions imposed on Cuba. The sanctions regime was tightened under President Donald Trump, but some restrictions have been removed under Trump’s successor, the incumbent Joe Biden. Indeed, the Biden administration took steps in May of this year to facilitate travel, family reunification, technology access and remittance payments. In the face of a spreading humanitarian crisis, officials in Washington – especially those who do not share the Trump administration’s animus against Cuba – may very well advocate for a policy change.