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Analysis: Cuba boasts of huge oil reserve

disclaimer: image is for illustration purposes only
by Carmen Gentile
Miami (UPI) Oct 22, 2008
Cuban energy officials say the communist island may have more than 20 billion barrels of oil in offshore deposits, more than twice what U.S. geological officials estimated.

Production at the allegedly giant reserves off the northern shores of Cuba could begin sometime next year, according to state-run energy company Cubapetroleo -- or Cupnet, as it is better known -- which released information about the findings.

Cupnet Exploration Manager Rafael Tenreyro Perez said their estimate, which more than doubles the size of the reserves predicted by American surveys to be 9 billion, is more accurate because of their precise knowledge of the seabed in the region.

Numerous foreign energy firms are eager to begin drilling off the coast of Cuba. However, U.S. petroleum companies are forbidden from doing business with the country because of the longstanding American trade embargo against the communist island.

Spanish firm Repsol has led a group of interested oil companies in already drilling the first test well. Brazilian oil giant Petrobras is a likely candidate to lead the drilling off Cuban shores because of its expertise in deepwater production.

Russia also figures to be a player in the race for Cuban oil. Earlier this week, following days of bilateral talks in Havana, Russian officials said they were eager to help Cuba rebuild its energy sector and would help the country acquire a fleet of oil tankers.

Relations between the former Cold War allies deteriorated after the collapse of the Soviet Union, though in recent months Moscow has signaled its interest in restoring those ties.

Last year Venezuela helped Cuba restore operations at a Soviet-era oil refinery, a relic of the Soviet Union's sway over Cuba until its decline in the late 1980s.

The refinery had been dormant since then, though with the help of Venezuela and some $136 million in repairs funded by Caracas, the plant went back online in December 2007.

The Camilo Cienfuegos refinery currently is operating at 60 percent capacity, according to the University of Miami's Cuban Studies program.

Cuban officials have lauded the return of operations at Cienfuegos, though some speculate the plant may still need more work before becoming fully operational, because of its longtime dormancy.

"It was a mess, that refinery," said Larry Birns, director of the Council on Hemispheric Affairs in Washington and noted expert on Cuba.

Meanwhile, five international oil companies have paid reserve fees to the Cuban government to secure exploration rights.

Last year, during the Non-Aligned Movement summit in Havana, Venezuelan President Hugo Chavez said Cuba's potentially lucrative offshore oil reserves one day could catapult the island onto the world petroleum stage and maybe even earn the country a place in the Organization of Petroleum Exporting Countries.

"Fidel is headed for OPEC," said Chavez jokingly during the meeting, which drew representatives from 118 countries, including more than 50 world leaders. "He is finding oil."

Some analysts are skeptical about the hype surrounding the supposed untapped oil wealth that could springboard Cuba from impoverished communist state to self-sufficiency and financial windfall.

"It's been a big smoke screen for a long time. ... The Soviets used to say there were large deposits off the shores of Cuba, though it hasn't been proven," Maurcio Claver-Carone, a member of the U.S.-Cuba Democracy Political Action Committee, told UPI.

Claver-Carone also contends that Castro used the basin as a means of promoting foreign investment in Cubapetroleo, Cuba's state-owned oil company.

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