Foreign Investment Opportunities

Until 1990 Cuba imported 12 million to 13 million tonnes of oil per year from the Soviet Union in exchange for sugar at favorable terms of trade. When Soviet supplies stopped, Cuba had to source oil on the world market.

Today Cuban total consumption is approximately 8 million tonnes of oil equivalent per year of which approximately 40% is produced in Cuba. This amounted to around 65,000 barrels per day in 2005 and is expected to increase by 5% in 2006 as investment in secondary recovery methods to extract more oil from existing wells as well as some production from new wells comes on stream.

Since 2002-2003, PDVSA has supplied a significant part of Cuba's consumption requirements. In 2006, these imports reached approximately 105,000 barrels per day. Prices have an upper ceiling of US$ 28-32 per barrel and approx 50% of the import bill is to be paid on credit over
17 years.
Cuba's current oil production is mainly (though not exclusively) heavy oil laden with sulfur and gas, which has been found onshore or in shallow waters, especially around the North coast of the Matanzas province.
Oil production is benchmarked to a world price index for this type of oil (Gulf Fuel Oil No. 6). The higher international price of oil has encouraged further investment and exploration in and around current fields, although the type of oil produced does not have its price closely correlated to more common oil types, such as IPE Brent crude.
A contract was signed on April 11, 2006 to create a joint venture company, PDV-CUPET between the Venezuelan oil and gas company (PDVSA) and CUPET which will develop and modernize the Soviet-built refinery in Cienfuegos. Initial investment will be US$ 80 million with output estimated to reach 70,000 b/d within 2 years.

Sherritt's major investment

The expansion of domestic oil output has been facilitated by over US$500 million of foreign investment since 1990. Sherritt produces 30,000 bpd at present and has budgeted US$ 140 million to support an expansion and enhancement plan for 2006. Montreal junior Pebercan is also gearing up further development of its Santa Cruz field in Cuba's Block 7 after positive results from initial wells.

Exploration in the Mexican Gulf

Repsol YPF contracted one of the world's largest deep-sea drilling rigs to perform deep sea exploration in July 2004. They found oil, but not in commercial quantities. During 2006 Cuba's exploration activity in the Gulf of Mexico attracted significant attention in the US. At its closest point drilling activity could take place within 50 miles of Key West raising commercial concerns from the US oil industry at being shut out of potentially lucrative contracts and raised the possibility of an oil exemption to the embargo. A large recent find on the American side by Chevron and Devon Energy highlights the potential rewards.

* Experts see vast potential in the deep waters of the Gulf. "one of the great oil and gas provinces of the world…",

Given that an international maritime conference established Cuba 's exclusive economic zone (EEZ) in 1977 (see below) the ability for US to interfere seems limited.
Cuba has split its EEZ into a 69 blocks (see left) of which 16 have been taken up by oil companies from Spain (Repsol YPF), India (OLV), Malaysia (Petronas) Norway (Norsk-Hydro) and Sherritt with further interest reported from Petrobras.

* CEO of BP as quoted in the Dallas Morning News -2002