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In contrast to the defacto moratorium on offshore drilling in the US, Cuba is moving ahead with its off-shore program, creating a new opportunity in the Gulf but with potentially serious ramifications for the United States. Cuba’s off-shore oil reserves represent a significant opportunity for the island and its foreign investors, but the potential of Cuban deepwater offshore reserves will materialize in the next 3-5 years only if the country manages to forge successful financial and technical partnerships with foreign companies. Cuba has significant oil and gas reserves in its off-shore waters, particularly in its north coast facing the Gulf of Mexico that could rank it with other key hemispheric producers. The U.S. Geological Survey in its 2004 “Assessment of Undiscovered Oil and Gas Resources, North Cuba Basin” estimated reserves of 4.6 billion barrels of oil and 9.8 trillion cubic feet of natural gas. If this assessment is correct, Cuba would rank alongside Latin American producers of petroleum such as Ecuador and Colombia-- although not at the levels of either Mexico or Venezuela. Today’s GR Energy and Climate Brief assesses Cuba’s nascent offshore drilling program, which is promising, but dependent on foreign support from neighboring countries – specifically Mexico and the United States – both of which have expressed concerns over jurisdiction, liability, and the pooling of costs.
Source: ESRI; Global Exchange
Reducing Cuban Dependency on Foreign Oil
Cuba is currently highly dependent on foreign oil, but recent finds have piqued hopes that the country could one day be a net exporter. Until 1989, the Soviet Union provided Cuba with all of its petroleum needs and even allowed Cuba to resell Russian oil. Since the rise of Hugo Chavez to the presidency of Venezuela, Chavez has been providing Cuba with 100,000 barrels per day at very advantageous terms. In 2010, Cuba produced about 21 million barrels of oil from its land wells, approximately the same volume as it extracted the previous year, representing a little more than a third of its annual energy needs. However, in April of this year, the Cuban government announced plans to drill five deep water oil wells in the Gulf as soon as this summer, expressing confidence in plans to expand national production. Manuel Marrero, a Cuban government official, said the wells were to be drilled between 2011 and 2013.
Turning Abroad for Technical Assistance on Exploration, Drilling and Refining
Cuba does not have the technology for deep water exploration and has had to turn to foreign partners to exploit its reserves. Partnership with foreign companies means that Cuba will receive only a portion of the revenues from the extracted oil.
See full article here.
Jaime Suchlicki is Emilio Bacardi Moreau Distinguished Professor and Director of the Institute for Cuban and Cuban-American Studies, University of Miami. He is the author of Cuba From Columbus to Castro now in its fifth edition.
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