Cuban Officials Try to Spark U.S. Investment in Petroleum Sector

Cuban officials asked a group of multinational oil companies last week to invest in Cuba's oil sector. Cuba's oil reserves are estimated at 3 billion barrels.

Speaking in Mexico City to a group of companies that included Exxon Mobil Corp. and Valero Energy Corp., 16 Cuban energy officials offered details about the country's potential. But the U.S. Treasury Department sought to break up the meeting, citing trade embargo violations, and both Exxon and Valero did not attend Saturday's meetings after being present in prior days.

The office of Louisiana Gov. Kathleen Blanco (D) said both Texas and Louisiana have all the services and supplies Cuba needs to expand its oil sector. "There is a market in Cuba. These people have cash, and they are willing and able to pay the bills," said Dane Revette, an energy industry director with the Louisiana governor's office. "U.S. companies need to find a way to get there."

Rafael Tenreyro of Cuba Petroleo, Cuba's national oil company: "Cuba has heavy oil, but we are positioned to find lighter oil in the heavy oil belt" (Eliza Barclay, Houston Chronicle, Feb. 5).

Last year, Castro said the firms Pebercan and Sherritt International had discovered fields with estimated reserves of 100 million barrels of higher quality crude than the country's smaller existing wells are producing. The 75,000 barrels per day of oil the country produces were too heavy and high in sulfur to refine into gasoline and instead are used in cooking oil and to fuel power plants. Since most U.S.-Cuba trade has been banned under the embargo and the Helms-Burton Act, U.S. companies are forbidden from investing in exploration in Cuba's territorial waters. But a discovery of commercially viable oil by international firms could lead to additional pressure to change the political calculations that have kept Cuba's products out of U.S. hands.

Many international oil companies see Cuba as an opportunity to discover oil in a largely untouched area of the productive Gulf of Mexico. An offshore exploratory well drilled by Spanish oil firm Repsol-YPF SA struck oil in the Yamagua-1 field in July 2004. While company officials said the well was not commercially viable, the fact that it produced oil had sparked renewed interest in Cuba's oil reserves. Other international oil companies have acquired blocks in the area and were performing seismic testing to identify potential supplies (Greenwire, Jan. 11, 2005).

"U.S. oil suppliers and services providers are invited to participate in Cuba's oil sector," said Manuel Marrero, a principal specialist for Cuba's economic ministry. He said that legal hurdles could prevent business partnerships between American companies and Cupet. "When we can look for services and suppliers in Houston, we certainly will," Marrero said.

"We're just here gathering information," said Joseph Newhart, with Exxon Mobil Exploration's new venture special project's division. Newhart was skeptical about whether there is credible evidence backing the Cuban government's claim that there are big oil deposits offshore. "The presentations were good, but we need more technical information like all the seismic data," he added (Eliza Barclay, Houston Chronicle, Feb. 4). -- LK

Reprinted from Greenwire with permission from Environment & Energy Publishing, LLC. 202/628-6500.