Cuba Hoping To Kickstart Offshore Oil & Gas Industry

Cuba Hoping To Kickstart Offshore Oil & Gas Industry
By Andy Tully
Posted on Wed, 22 July 2015 21:11

The Cuban oil company Cubapetroleo, or Cupet, is close to a deal with
Angola's state-run Sonangol to get Cuba's deepwater energy exploration
program up and running three years after work was suspended because of
failure to find any oil or gas.

A Cupet official told the British energy news service Argus Media that
the two companies expect to begin operations next year on two of four
areas of the Gulf of Mexico off the Cuban coast based on an agreement
between Cupet and Sonangol signed in 2010. Cuba's program of deepwater
exploration was suspended after several foreign companies' drilling
efforts proved fruitless.

Those companies included Malaysia's Petronas, Russia's Gazprom Neft,
Spain's Repsol and Venezuela's PdV.

That work had been done with a drilling rig, called Scarabeo 9, which
was built in China for the Italian contractor Sapiem, a subsidiary of
Eni. Less than 10 percent of the rig's components were built in the
United States, satisfying the criteria of Washington's embargo on
Western companies doing business with Cuba, imposed in 1962.

The bulk of the Cupet-Sonangol deal was closed during a series of
meetings last week in the Angolan capital of Luanda during a visit by
Cuban Vice President Ricardo Cabrisas Ruiz, the Cupet official told
Argus Media. All that is left to be decided is "which of the blocks
contracted by Sonangol will be drilled, the sourcing of a rig and the
timing of the start of work," the official said.

Ruiz told Angolan state media, however, that production could begin as
early as next year. "The first hole would be ready for production
between 2016 and 2017, depending on the location of the platform," he
said after meeting with Sonangol CEO Francisco Lemos Maria.

Cuba is in the process of opening up its economy to foreign investment,
a process that could accelerate following the recent thaw in relations
between Havana and Washington. On July 20, the two countries reopened
their embassies, but the U.S. embargo remains in place for now.

The U.S. Geological Survey, which recently examined the potential for
Cuba's offshore energy reserves, reported an estimated 4.6 billion
barrels of crude oil and 9.8 trillion cubic feet of gas. About 75
percent of that is situated within 50 miles of Cuba's coast.

Before the embargo, U.S. companies had stakes in several Cuban oil
refineries, but today such companies are showing little interest in
investing in the island's energy industry, despite invitations from
Havana, the Cupet official said.

"We want to ensure all is in place for interested companies if and when
the United States lifts its damaging economic embargo on our country."

It may take months if not years to reach any agreement to lift the U.S.
embargo because, despite the normalization of relations between Havana
and Washington, the two governments still are at odds on many issues,
including whether the United States should return its naval base at
Guantanamo Bay to Cuban control.

"It is important we continue to fight for the lifting of the trade
embargo and financial restrictions," Ruiz said.

By Andy Tully of Oilprice.com

Source: Cuba Hoping To Kickstart Offshore Oil & Gas Industry |
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