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Posted December 28, 2004 by publisher in Business In Cuba

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By Marc Frank | Reuters

An oil deposit with an estimated 100-million-barrel reserve has been discovered off Cuba’s coast by Canadian companies Sherritt International Corp. and Pebercan Inc., President Fidel Castro said.

“We have a new oil discovery ... the first since 1999,” Castro said during a closed-door speech to parliament deputies, parts of which were carried on Saturday by official media.

“The oil has a density of 18 API ... and contains less than 5 percent sulfur,” he said on Friday, pointing out it was of better quality than the heavy crude associated with the area, which averages 16 API and 8 percent sulfur.

Cuban oil production was 26 million barrels (71,300 bpd) in 2003 and 653 million cubic meters of gas, the government said, with oil output down slightly in 2004.

Cuba consumes a minimum 150,000 bpd, according to the government, importing fuel on preferential terms from Venezuela.

Cuban crude comes from onshore wells that dot the northwest coast along Havana am Matanzas provinces.

The poor-quality oil is burned in modified power plants and factories and the gas is used to generate electricity and for cooking fuel.

The new Santa Cruz field, 33 miles east of the capital, will go into production in 2006, Castro said, while the Canadian firms will drill two new test wells, and explore three other potential deposits nearby in 2005.

Foreign companies, mainly Sherritt International and Pebercan, have joint ventures and production agreements with state oil monopoly Cubapetroleo (Cupet) and account for around 60 percent of Cuba’s oil and gas output.

Cuba wants to provide for 60 percent of its minimum energy needs of 150,000 bpd by 2006, according to the Basic Industry ministry.

The forecast does not include any discovery of better-quality oil in Cuba’s Gulf of Mexico waters.

Spanish oil company Repsol YPF reported the first test well ever drilled in the deep-water was not commercially viable, but the company plans to drill again in 2006.

The 43,250-square-mile (112,000-square-kilometer) area was opened to foreign exploration in 1999. To date, Repsol and Sherritt International have signed exploration contracts, taking six blocks and four blocks, respectively, off the northwest coast.

Brazil’s Petrobras is also looking at existing data from two deep-water blocks, and two Chinese companies are also studying various blocks.

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