Deepwater Offshore Cuba Peaks Oil Major's Interest

Four European oil firms are reportedly negotiating with Cuba to carry out deep-water exploration of the island's Gulf of Mexico waters, and at least two are likely to sign contracts early next year, Cuban oil officials were reported as saying. In a separate development, Brazil's state oil firm Petrobras had also started drilling an exploration well in north-central Cuban coastal waters whose results will be announced in January or February.

The exploration efforts formed part of a strategic program by Cuba's communist government to boost domestic oil and gas production and so reduce costly oil imports, whose high prices this year have badly strained Havana's stretched finances. Dr. Manuel Marrero of Cuba's Basic Industry Ministry said the ministry was pleased with the response it had received so far to its campaign to seek foreign partners to explore Cuba's 112,000 sq. km Exclusive Economic Zone in the Gulf of Mexico.

"Four important European companies are negotiating with Cuba for the first exploration blocks in the Gulf of Mexico," Marrero, who is the ministry's senior petroleum adviser, said.

He expected at least two to sign firm contracts in the next three months. He also hoped that agreements with the other two could be concluded by the middle of next year. Marrero, citing a confidentiality policy, declined to name the companies involved. But foreign oil industry sources said one of them was the Spanish group Repsol YPF. Since opening up its Gulf of Mexico waters for exploration in the second half of 1999, Cuban experts have made individual presentations of the zone to several major European oil firms. Besides Repsol, these included Shell, Norsk Hydro, Premier and British Borneo, Italy's Agip, and France's Elf and TotalFina.

Marrero said Cuba's current exploration hopes were focused on the wildcat well being drilled by Brazil's Petrobras with Canada's Sherritt International Corp. from an offshore key 20 miles (30 km) north of central Ciego de Avila province. "We're very hopeful about the result of this well, although it is high-risk," he said.

He added a major strike here could substantially improve Cuba's energy supply situation but, echoing the caution already expressed by Petrobras representatives, he stressed it was a pioneer well being sunk in a largely unexplored area.

Before starting to drill the Felipe 1X wildcat in mid-November, Petrobras engineers said prior seismic studies had identified a large potential oil-bearing structure that could contain possible reserves of up to 700 million barrels. Marrero said that further west on the coast, a network of oil and gas pipelines was being built across Cuba's main producing area, the so-called North Cuban heavy oil belt that covers 120 miles (200 km) of onshore and offshore areas.

"In the next three years, exploration in this zone will be intensified to increase our oil reserves," Marrero said. Sherritt and another Canadian company, Pebercan, would be working with Cuba's state oil firm Cupet in this area. - (Reuters)