By Guillermo Parra-Bernal
Sept. 10 (Bloomberg) -- India's biggest state-controlled oil exploring company won permission from Cuba to drill for crude in its waters, part of an effort by the Caribbean island's communist regime to become oil self-sufficient in coming years.
Financial terms of the agreement weren't disclosed.
India's Oil & Natural Gas Corp. will seek oil in the N-34 and N-35 blocs of Cuba's economic exclusive zone in the Gulf of Mexico, state-controlled oil company Union Cuba Petroleo said. ONGC, as the Indian company is known, becomes the seventh company to explore for oil offshore in Cuba.
Leader Fidel Castro partially opened the industry to foreign investment in June 1999 to cut dependence on imports of oil after years of power blackouts and fuel shortages. Castro, 80, aims to save about $1 billion this year by reducing electricity in households and factories and giving a better, more efficient use to the nation's existing energy resources, in a move that he dubbed ``the energy revolution.''
The blocs have an estimated size of about 4,300 square kilometers (1,660 miles) and are located in western Cuba, according to a report by Cuba's state news wire AIN.
Cuba produces about 80,000 barrels of oil a day of heavy crude with a high content of sulfur, which it uses mainly to generate electricity, according to data by Cuba Petroleo, known as Cupet. The country meets most of its petroleum needs thanks to an energy accord signed with Venezuela in 2002, in which the South America nation sells about 100,000 barrels of oil a day to Cuba at preferential prices.
The New York Times reported in May that Cuba plans to drill for oil in its portion of the Florida Straits. The Cuban government invited U.S. companies to bid, the newspaper said, adding that bids would have run afoul of the U.S.'s trade embargo against the Communist-run island.
Other foreign companies operating in Cuba's oil industry are Repsol-YPF SA, Malaysia's Petroliam Nasional Bhd and Sherritt International Co. of Canada.
The Cubans also agreed this year with Petroleos de Venezuela SA to upgrade the Cienfuegos refinery in the Caribbean island in a joint venture where the communist nation owns a 51 percent stake. Improvements at the facility may allow the refining of at least 70,000 barrels of oil a day.
To contact the reporter on this story: Guillermo Parra-Bernal in Havana, Cuba at the 14th Summit of the Non-Aligned Movement or at email@example.com
Last Updated: September 10, 2006 16:47 EDT