CubaPLUS Magazine

The Cuban oil industry holds great promise for foreign investment, given that in the future it may become an important source of income, growth and development.

In support of this proposition Cuban government authorities are counting on two complementary mechanisms: broad seismic studies to target both deep and shallow water drilling possibilities, and the recently approved Law on Foreign Investment.

The new legislation makes the interest clear, allowing for international joint venture contracts to exploit natural non-renewable energy sources and their production. On this basis the portfolio of proposals held by the Cuban Petroleum Union (Cupet) —within the Ministry of Mining and Energy— includes both the results of explorations related to the exploitation of energy resources, and &secondary recovery" at already existing wells.

Such exploratory studies refer to geologically complex regions, where tectonic conditions make it difficult to extract oil, as compared to the USA, Russia, Argentina, Mexico and Canada, where such activities are less difficult and costly.

Cupet specialists say that since Cuba is not in a condition to assume such activities on its own, it must put an emphasis on the benefits available to foreign investors, now backed by a legal structure, with tax and financial benefits through the Foreign Investment Law.

As an example, Dr. Manuel Marrero, a geologist and oil adviser at the Ministry of Mining and Energy, said that in the next few months, an opening is expected for foreign investment in the central-eastern seas north of Cuba as far as the border with Haiti. Marrero said that this zone will be available the firms that want to share exploratory risk, and that it includes the Exclusive Economic Zone in the Gulf of Mexico (112,000 square kilometers) that reaches as far as Varadero. Before the end of the year, the rest of the seas to the north of the island will be opened up to exploration as well.

In regard to this strip, Marrero clarified that exploration has been underway there since 2000 —including deep water drilling, with four wells drilled so far. Another option for investors is secondary recovery, to take advantage of almost the entire capacity of the wells once their natural energy and production has been exhausted, using special methods to increase the potential total recovery.

Marrero explained that by the end of their useful life, only 30-35 percent of the crude deposits in these wells has been extracted, while some 65-70 percent remains in the well and is extracted through secondary recovery, which can increase the production to some 60 percent. In this respect, he commented that this is a strategic alternative and priority for Cupet that will soon begin with foreign companies at the Varadero oilfield, where currently only six percent of the accumulated oil has been extracted.

It’s essential that Cuba to stimulate foreign investment based on the real discovery of offshore oil, where the majority of our oilfields are, and from which the oil is being extracted through horizontal drilling", said Marrero. This means, he added, extending this achievement to deep-water wells, a goal with great significance for Cuba since it has historically been considered a non-oil producing country, but which is modestly increasing its own production and feels confident about the future of its oil industry.

In 1959, at the triumph of the Cuban revolution, oil production barely reached 50,000 tons. Today it has climbed to four million tons of fuel equivalents, which is why the most important share of the country&ás import substitution program is that volume of oil, accounting for 47 percent of the domestic demand.