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Cuba claims oil jackpot

IT HAS faced almost half a century of sanctions from the US, but last month the country claimed it could be sitting on oil reserves that surpass even those of its neighbour to the north. At a conference in Havana, Rafael Tenreyro Perez, the exploration manager for state-owned energy firm Cubapetroleo said the country's oil reserves could be more than 20bn barrels. If true, it would double previous estimates of the offshore potential.

The US Department of Energy's Energy Information Administration last year estimated the country's reserves to be just 0.75bn barrels. The US Geological Survey has been more optimistic, saying the North Cuba basin could hold up to 9.3bn barrels and 21.8 trillion cubic feet of natural gas. Cubapetroleo says its data are better and newer.

Drilling on new prospects would begin next year, Cubapetroleo said, after more seismic data become available. However, the declaration is not based on any new finds, but on comparisons of the geology with that elsewhere in the Gulf of Mexico.

The announcement came as a surprise to many observers. Last month, Cubapetroleo said Sherritt International, a Canadian energy company that was enthusiastically exploring offshore Cuba, had cancelled its contracts in the country, after concluding that exploration and production is no longer viable. Sherritt's assets were in seven production-sharing contracts on oilfields in an exclusive economic zone off the north coast of the island. A host of other companies, including Petrobras and Repsol YPF, continue to operate in the zone.

Cubapetroleo took that news in its stride and said the zone could contain far more oil even than 20bn barrels. Its initial "modest" estimate could be expanded, because in such structures "there are almost always one or two super-large deposits of 12bn-15bn barrels". Some analysts suggest that if the reserves exist, they could lie in prohibitively expensive deep-water areas, adding that Cubapetroleo's latest estimate could be part of an effort to attract investment to the country.

A rush to explore in Cuba could be opposed by the US. Politicians in Florida are already seeking to prevent activity that will see rigs operating in Cuban waters, but just 50 miles or so from the Florida coastline. Unless a ban on drilling in the US offshore is lifted – as some politicians in the country hope – US firms are not allowed to operate at such proximity to their own shoreline. Nor, according to sanctions law, may they do business in Cuba.

Repsol YPF is likely to be the first company to test Cubapetroleo's reserves estimates, with a well to be drilled next year. Cuba produces 60,000 barrels a day (b/d) of oil at present and imports another 93,000 b/d from Venezuela at discount rates.

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