The island of Cuba had proven oil reserves of 124 million barrels according to 2013 figures. There are varied estimates of total crude oil reserves that rely mainly on estimations of as-yet undiscovered offshore oil deposits in the North Cuba Basin. Cuba is one of three locations in the Caribbean (Barbados and Trinidad and Tobago are the other locations) which possess oil and natural gas reserves.
In 2008 Cuba announced its reserves of crude oil amounted to approximately 20 million barrels, mostly offshore in the Cuban shelf. If these estimates prove to be accurate, then Cuba potentially has one of the top 20 crude oil reserves in the world. The country currently has three producing oil fields offshore within five kilometers of its northern coast.
Cuba’s Oil Industry
Cuba Petróleo Union, known by the trade name CUPET, is the state-owned Cuban oil company responsible for the country’s oil and gas industry. In addition to operating a chain of filling stations that sell gasoline, the company is involved in refining and distributing the country’s petroleum products. It also takes part in the exploration for and development of new oil fields, including extraction of crude oil petroleum deposits. They are working on increasing their refining capacity plus reworking currently suspended wells.
Cuba’s Oil Production
The northern region of Havana to Villa Clara provinces is where current extraction is based. CUPET jointly produces crude oil through agreements with companies from Spain and Canada as well as with the People’s Republic of China plus others. As Cuba’s state oil company, CUPET has already signed contract agreements with ten countries for further oil exploration and development. Canada’s Sherritt International produced about 20,000 barrels of oil a day with total annual revenue of $269.2 million in 2014. Of 59 available licensed blocks, almost half are already contracted by companies from Australia, Brazil, Canada, China, India, Malaysia, Norway, Spain, Venezuela and Vietnam.
Currently about 80,000 barrels of heavy crude oil are produced daily by Cuba. Several companies have initiated oil exploration in Cuba over the last 15 years, discovering new deposits along the 80 mile stretch of coast in the provinces of Havana and Matanzas in the northwest. CUPET also has a cooperation agreement to import oil with the Venezuelan government. In exchange for Cuban doctors and “missions”, Venezuela provides Cuba with cheap oil.
Cuba’s Oil Exploration
CUPET began partnerships with Repsol-YPF of Spain when both parties determined that the island’s off-shore reserved should be able to produce a minimum of 4.6 billion barrels of oil. By 2010 Cuba’s leasing program for the north and west ocean floor blocks began. This leasing is taking place regardless of the fact that these fields are near the tourist areas of both Cuba itself and Florida. Cuba has no capability to handle a major oil spill and nobody wants another disaster like the BP spill of 2010.
Three deep-water exploratory wells were drilled in 2012 by the platform Scarabeo 9 from Italy for various oil companies, one of which was Spain’s Repsol. These test wells were completed in May, August and October of that year and all, to everyone’s disappointment, none discovered a commercial quantity of gas or oil. Due to this, Repsol relinquished its Cuban concessions. The deep-water drilling rig they were using was removed, postponing more detailed exploration programs for several years.
Both state-owned firms and private companies from Vietnam, Venezuela, Spain, Russia, Norway, India and Brazil have obtained leases. Due to their country’s current embargo against Cuba, no companies from the United States have participated.
New Partnerships and Future Exploration
Though Cuba’s deep-water exploration was halted in 2012, interest has never waned. MEO Australia qualified as a shallow water and on shore operator in Cuba in early 2013 and has been working to secure a Production Sharing Contract with Cuba since then. In mid 2015 MEO Australia obtained an agreement for Block 9 which covers 2,380 square kilometers (919 square miles) of northern coast farmland about 130 kilometers (81 miles) to the east of Havana. Australian incorporated company Petro Australis acquired a back-in option on the same block last September. This contracted Block is close to the vast Varadero oil field. These companies have committed to an initial exploration sub-period of 18 months to examine existing data on Block 9. Depending on what’s discovered, the company will decide whether or not to continue oil exploration.
The French oil and gas company Total signed a deal with Cuba in May of 2015 to explore for offshore oil with CUPET.
In late 2015 Leni Gas Cuba Limited (London Ticker: ISDX:CUBA), a business incorporated in the British Virgin Islands, acquired 15 percent of Petro Australis Limited as an entry point for the company into the Cuban oil and gas industry. Leni Gas Cuba signed a Cuba Block 9 Production Sharing with CUPET in September 2015. These companies all feel that Cuban oil is a good investment though current prices are depressed.
Angola thinks in the same vein as the above mentioned companies. Its state-run company Sonangol is working with the Cuban oil company to restart deep-water exploration in Cuba. Sonangol contracted for four blocks close to the United States’ maritime border in the Gulf of Mexico. The two countries will begin work on two of them in 2016.
Until Congress lifts the US Cuban embargo, American companies are not interested and cannot participate. Cuba has extended “an open invitation” to the US. Irregardless, there is sure to be heightened interest when the embargo is over.