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Posted March 23, 2005 by publisher in Business In Cuba

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Chinese oil drilling equipment has begun arriving in Cuba as state-run Cubapetroleo (Cupet) and its foreign partners prepare to significantly increase drilling along the northwest coast, industry sources said this week.

“Four service units and a small rig have arrived and we are waiting for more,” said a Cuban oil service manager, asking his name not be used.
There are currently five rigs operating along the northwest heavy oil belt, an 80-mile (128-km) stretch of coast in Havana and Matanzas provinces from whence come all of Cuba’s 70,000 to 80,000 barrels per day of heavy crude at 8 API to 18 API and with a high sulfur content.

The poor-quality oil is burned in modified power plants and factories.

Cuba imports a similar amount of oil and derivatives, with preferential financing, from Venezuela.

Canadian companies Sherritt International and Pebercan Inc. , in conjunction with Cupet, account for 60 percent of the output, plus 2 million cubic meters of natural gas per day. 

Most new wells are drilled vertically from the shore to as far as 2.5 kilometers out to sea.

President Fidel Castro said earlier this month that oil production and exploration would increase significantly this year.

“We have purchased from China a tremendous rig that can reach up to seven kilometers out to sea and contracted for two additional ones for May or June,” Castro said.

A Cupet official told Reuters that all three rigs, two with a capacity to drill seven-kilometer vertical wells and one five-kilometer well, would arrive soon, boosting drilling capacity by 40 percent.

Castro announced late last year the discovery by Sherritt and Pebercan of a new deposit in the area at 18 API, with an estimated 100 million barrels of oil, and plans to look at two similar nearby deposits.

Both companies are expected to lease Chinese rigs from Cupet.

Spanish oil company Repsol YPF has signed a risk contract to look for lighter oil in the deep waters of Cuba’s Gulf of Mexico economic exclusion zone.

Repsol reported last year that the first deep-water well drilled in Cuba discovered noncommercial quantities of good quality oil, and 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.

China’s giant oil and gas company Sinopec Corp. signed an agreement earlier this year to jointly produce heavy oil with Cupet in westernmost Pinar del Rio province, with drilling expected to begin in 2006.

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