Cuba bets big on black gold in Gulf of Mexico
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| Published on Friday, March 23, 2007 |
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HAVANA, Cuba (AFP): Cuba is optimistic it could soon see a breakthrough in exploiting major oil reserves, officials said this week, a potential shift that could make the cash-strapped communist regime a flush energy exporter.
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Cuban Basic Industry minister Yadira Garcia.
AFP PHOTO |
"We are sure. We are convinced" that major oil reserves lie in the Gulf of Mexico just north of the island, Basic Industry Minister Yadira Garcia told reporters at the Geosciences Conference 2007 in Havana.
Cuban authorities are betting big that black gold from its waters could once and for all could eliminate the perpetual Achilles' heel of the local economy: energy.
Cuba's power plants run mainly on imported oil. If the country's planned economy is short on oil or gasoline (petrol), power shortages ensue, food doesn't make it to market, and long lines of commuters snake from bus stops.
At the moment, the Americas' only one-party communist regime gets cut-rate oil from Venezuela.
But depending on the relationship with Venezuela's President Hugo Chavez also makes the Cuban economy vulnerable.
With many international investors and experts eager to get a piece of this untouched pie, Manuel Marrero, oil sector advisor in the Basic Industry ministry, cautioned: "a substantial increase (in output) only will be possible in the Cuban sector in the Gulf of Mexico, and will take enormous efforts, huge investment and perseverance."
Yet "2008 is going to be very promising insofar as undersea seismic studies and drilling in areas of our economic zone," Garcia said.
Next year, she added, "the drilling phase in the blocs we are working with Repsol" will start.
The Spanish multinational is just one of the firms elbowing in, along with Norsk Hydro, Canada's Sherrit, Malaysia's Petronas and India's Videsh.
Cuba has divided its exclusive zone into 59 blocs for exploration and production, 16 of which are contracted out. Repsol has six, Sherrit and Petronas have four each, while Videsh has two.
Eight more are under negotiation -- four with Venezuela's state-owned PDVSA and another four with an Asian country which Cuba has not disclosed. The other 35 are still up for grabs.
Repsol in 2005 was the first to break ground in the area, but the company determined the crude it discovered was not commercially exploitable at that time.
Repsol brought in partners in Videsh and Norsk Hydro to share the risk and to benefit from Norsk's technology, in order to keep exploring in its six blocs.
While US lawmakers opposed to Cuba's communist regime have warned drilling in waters between Cuba and US shores could present potential environmental concerns, some US multinationals are irked that the US economic embargo is keeping them from getting in on this potential gold rush.
US companies "have been coming, talking, checking things out ... but we are not the ones limiting them. It is the US government," Garcia said.
She said Cuba would work with US oil companies "just as we do with other countries, so long as laws are respected, negotiating rules are respected, we have no reservations."
In 2006 Cuba produced about 3.9 million tonnes of oil, seven times more than 1990 when the former East bloc collapsed, depriving Cuba of its long-accustomed supply of cut-rate Soviet crude.
Marrero said that with new wells found north of Havana and development of existing functioning reserves, output could hit five million tonnes by 2010 -- for now still well below Cuba's consumption estimated at about nine million tonnes two years ago.
Cubapetroleo, known as Cupet, also says that Cuba has 43 exploration blocs mapped out inside close territorial waters and on land (15 offshore and 28 on land).
Among companies involved in production in them are Sherrit, Peberco, also from Canada; and Chinese giant Sinopec. Five are under negotiation and 33 open. |
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