Monday, April 23, 2007

New refinery to turn long-time importer Cuba into oil exporter

Zee News

Havana, April 23: A modernized oil refinery is set to go on line in December, official media reported Sunday, in a shift due to turn imports-dependent Cuba into an oil exporter.

Overhauled with capital from a joint Venezuelan-Cuban company, the Cienfuegos refinery in south-central Cuba will meet the Caribbean country's own demands, and earmark 9,000 barrels of gasoline a day for export, Venezuela's communications and information ministry said in a release circulated here.

Vice President Carlos Lage confirmed the facility was set to start operations in December, the Juventud Rebelde newspaper reported Sunday. [Report in Spanish]

Lage said the refinery would process 65,000 barrels per day of petroleum by late this year or early 2008, the paper said.

In addition to its new processing potential, the Americas' only communist government also is betting big that black gold from its waters could once and for all eliminate the perpetual Achilles' heel of the local economy: energy.

Cuban authorities in late March said Havana was optimistic it could soon see a breakthrough in exploiting major oil reserves.

That could mark a sea change that would see the cash-strapped regime become a flush energy exporter, with ample funding to perpetuate itself.

"We are sure. We are convinced" that major oil reserves lie in the Gulf of Mexico just north of the island, Basic Industry Minister Yadira Garcia told reporters at the Geosciences Conference 2007 in Havana.

At the moment, Cuba gets cut-rate oil from Venezuela, its closest international ally and most important economic partner.

But depending on the relationship with Venezuela's President Hugo Chavez leaves the Cuban economy vulnerable to any change in that arrangement.

Yet "2008 is going to be very promising insofar as undersea seismic studies and drilling in areas of our economic zone," Garcia said at the time.

Next year, she added, "the drilling phase in the blocs we are working with Repsol" will start.

The Spanish multinational is just one of the firms elbowing in, along with Norsk Hydro, Canada's Sherrit, Malaysia's Petronas and India's Videsh.

Cuba has divided its exclusive zone into 59 blocs for exploration and production, 16 of which are contracted out. Repsol has six, Sherrit and Petronas have four each, while Videsh has two.

Eight more are under negotiation -- four with Venezuela's state-owned PDVSA and another four with an Asian country which Cuba has not disclosed. The other 35 are still up for grabs.

Repsol in 2005 was the first to break ground in the area, but the company determined the crude it discovered was not commercially exploitable at that time.

Repsol brought in partners in Videsh and Norsk Hydro to share the risk and to benefit from Norsk's technology, in order to keep exploring in its six blocs.

While US lawmakers opposed to Cuba's communist regime have warned drilling in waters between Cuba and US shores could present potential environmental concerns, some US multinationals are irked that the US economic embargo is keeping them from getting in on this potential gold rush.

Bureau Report

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