Growing promise of Cuban oil deposits

“Cuba could be a major regional player in oil,” Jorge Piñon, Amoco’s former Latin American head, told reporters last week. Two international conferences opening in Havana on March 20 testified to the high visibility of oil these days in Cuba.

Technical issues were on the agenda at the First Congress on Oil and Gas, “Petrogas 2007,” items like “deep water exploration” and “transport and refining of heavy crude.” A parallel convention on earth sciences unfolded nearby with geologists, mining experts and geophysicists from 20 countries.

Interest in oil stems from the discovery recently that Cuba possesses extensive oil deposits lying off its northern coast. And onshore production, centered in adjacent inland areas, has increased sevenfold from 1990 to a current rate of 85,000 barrels a day, according to Cupet, Cuba’s state oil company. Geologists predict that by 2010 Cuba will be producing 5 million tons annually, or at least 100,000 barrels a day.

The U.S. oil industry is watching. A Forbes magazine article earlier this month sees “the beginning of a Cuban oil rush.” The excitement began in 2004 when data from explorations by Spain’s Repsol Company became available. The American Association of Petroleum Geologists called the offshore deposits a “significant find.” The U.S. Geological Survey estimates the total to be from 4.6 billion to 9.3 billion barrels — two-thirds the amount deposited in northern Alaska.

According to Cupet geologist Rafael Tenreyro, “We have just recently started and we are seeing the tip of the iceberg. Our intent is to continue to explore and discover great oil fields.” Cuba also possesses large deposits of natural gas.

This year a consortium of Spanish, Norwegian and Indian companies will start drilling in the Florida Straits. Production will begin in three years. The Cuban government has awarded exploration rights to Malaysian, Chinese and Venezuelan companies. China’s Sinopec company has contracts to sell drilling equipment to the involved companies.

Ernesto Plasencia, a Cuban commercial attaché in Washington, announced, “American energy companies and investment are welcome in our country.”

The National Petrochemical and Refiners Association represents 450 U.S. companies. Last week spokesperson Charles Drevna called upon Washington to remove restrictions imposed by the U.S. economic blockade on oil operations in Cuba. He derided Washington’s “Alice in Wonderland approach,” pointing out that Cuban missiles are gone and that Cuban oil resources “will be developed and produced — the question is by whom.”

Senators Larry Craig (R-Idaho) and Bryon Dorgan (D-S.D.) will be reintroducing an amendment to a Senate energy bill that exempts U.S. oil operations in Cuba from embargo regulations. Jeff Flake (R-Ariz.), an outspoken critic of U.S. restrictions on travel to Cuba, may soon introduce a congressional bill permitting sales of U.S. services and equipment to oil companies working in Cuba.

True to form, the representatives of right-wing Cuban Americans in Congress are not budging. On March 14, Sen. Mel Martinez (R-Fla.) introduced a bill targeting Cuban development of oil and natural gas resources. Under the bill, foreigners involved with Cuban oil projects would be denied visas for U.S travel. Foreign companies investing over $1 million would be sanctioned.

Rep. Ileana Ros-Lehtinen (R-Fla.) is expected to introduce a similar bill in the House.

As of 2006, Cuba’s internal oil needs amounted to 170,000 barrels a day. Venezuela is supplying almost 100,000 of the total. More than 90 percent of Cuba’s own crude oil, which is heavy, is used directly as boiler fuel in the electrical power, nickel and cement industries. The remainder, diluted with Venezuelan oil, is sent for refinery processing.

Cuba has embarked on campaigns of energy conservation and the use of alternative fuels that officials say will be expanding. Agricultural products, for example, are converted into alcohol as a source of energy. Ulises Rosales, minister in charge of sugar production, announced March 19 that all but one of Cuba’s 49 sugar mills supply waste material for electricity generation.

Participants at the earth sciences conference learned of a Canadian-Cuban joint venture that collects natural gas during the process of crude oil extraction, removes pollutants and uses the gas to generate 15 percent of Cuba’s electricity and to provide cooking fuel for 1 million people.

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