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Posted July 08, 2009 by publisher in Cuba-World Trade

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Cuba and a consortium of foreign oil companies have again postponed plans to drill for oil in the island’s still-untapped oil fields in the Gulf of Mexico, diplomatic and industry sources said this week.

Cuba had announced the consortium, led by Spain’s Repsol-YPF, would drill in June or July, but now it is uncertain when work will begin in the waters that Cuban oil experts say may contain 20 billion barrels of oil.

“The project has been postponed until a further date for more study,” said a foreign oil industry source with direct knowledge of the plans. “It is premature to say when drilling might begin, later this year or next,” he added.

A European diplomat said he had first-hand knowledge that drilling was postponed at least until the end of 2009, if not into 2010. Neither source wished to be identified. Cuban authorities were not immediately available for comment.

Repsol drilled a test well 20 miles (32 km) off Cuba’s northern coast in 2004 and said it discovered traces of high quality oil, but that it was not commercially viable at the time. Since then, there have been several announcements that a second well would be drilled, but each time the project has been put off without explanation.

It was not clear if the latest postponement had to do with difficulties obtaining and moving a drilling rig, the cost of the project compared with the current price of oil, or other factors.

The US trade embargo against communist-run Cuba is said to be a factor in the repeated delays because of US regulations that threaten sanctions against companies doing business with Cuba if their drilling equipment contains more than 10 percent American technology.

Cuba has divided its share of the gulf into 59 blocks, 21 of which are already under lease to seven companies. Repsol has an agreement with Cuba’s state oil monopoly Cubapetroleo for exploration of six offshore blocks in partnership with Norway’s StatoilHydro and ONGC Videsh of India. PDVSA, the national oil company of Venezuela, has said it plans to sink its first exploratory well in Cuba’s offshore fields next year. Other companies with blocks are Vietnam state oil and gas group Petrovietnam, Malaysia’s state-run Petronas and Brazil’s Petrobras.

Manuel Marrero Faz, oil advisor to Cuba’s Ministry of Basic Industry, said earlier this year Cuba was in negotiations to lease another 23 blocks to firms including China National Petroleum Corporation, Angola’s national oil company and a Russian consortium.

Cuba says it produces the equivalent of 80,000 barrels a day of oil and gas, or about 50 percent of its energy needs. It depends on ally Venezuela for the rest. The US Geological Survey has estimated that Cuba’s offshore reserves are likely around 5 billion barrels of oil and 10 trillion cubic feet of gas. Cuba experts say their estimates are higher because they have more information about the geology of the region.

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