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Cuba to drill five new oil wells by 2013

Oil prices mixed after China rate hikes
New York (AFP) April 5, 2011 - Oil prices edged lower in New York Tuesday on rising US crude inventories and prospects of a Chinese demand slowdown as Beijing tightened interest rates again to cool its economy. New York's main contract, West Texas Intermediate (WTI) light sweet crude for May, slipped 33 cents to close at $108.34 a barrel. Earlier though London's Brent North Sea crude hit a new two-year high, as the fight for control of Libya gave no hint at when the North African state's valued light crude exports to European refineries would resume.

Brent for delivery in May hit $122.89 a barrel -- the highest level since August 2008 -- before settling at $122.22, a rise of $1.16 from Monday's closing price. "Outside influences may indicate higher energy prices across the board" said Rich Ilczyszyn of Lind Waldock, citing "the same suspects" of Middle East tensions and Brent's surging prices. "But ... the WTI definitely has supply on hand," he added.

US crude oil inventories have increased by about 20 million barrels since the beginning of the year, including 10 million just in March. Analysts expect the US government's next weekly report on petroleum stockpiles, due Wednesday, will show another increase. Ilczyszyn said "it is time" for the oil rally to take a breather. "High sustained oil prices would be terrible on the economy." China's move could take of the upward pressure. Beijing said Tuesday it would raise one-year deposit and lending rates by 25 basis points, its fourth rate hike since late last year.

The latest move takes the one-year deposit and lending rates to 3.25 percent and 6.31 percent. "A rate hike was to be expected at some point," noted VTB Capital analyst Andrey Kryuchenkov. Traders would also be waiting to see how efforts by Libya's rebels to export crude go. The rebels were set Tuesday to begin exporting oil for the first time since mid-March after a tanker capable of holding $100 million worth of crude docked at an eastern port.
by Staff Writers
Havana (AFP) April 5, 2011
Cuba on Tuesday announced plans to drill five deepwater oil wells in the Gulf of Mexico beginning this summer, expressing confidence that its efforts will be rewarded with major new energy finds.

"We're about to move to the drilling phase," said Manuel Marrero, an official with the government authority tasked with overseeing Cuba's oil sector.

"We're all really hopeful that we will be able to discover large reserves of oil and gas," said Marrero, who added that the ventures would be undertaken with the help of unspecified foreign companies.

He said the deepwater wells were to be drilled between 2011 and 2013, and would be in waters ranging in depth between 400 meters (a quarter mile) and 1,500 meters (1.6 miles). He did not specify which countries would be among the foreign partners working with Havana on the project.

Some studies estimate Cuba has probable reserves of between five and nine billion barrels of oil in its economic zone in the Gulf of Mexico. Cuban authorities have said their crude reserves are as high as 20 billion barrels.

In 2010, Cuba produced 21 million barrels of oil, about the same as it had extracted the previous year, representing a little less than half of its annual energy needs.

Cuba depends on Venezuela for the rest of its oil imports of about 100,000 barrels per day. Any cut to Venezuelan supplies could spell political and economic disaster for Havana.

The only one-party communist regime in the Americas, Cuba has long been plagued by energy dependence that amounts to its economic Achilles' heel.

Havana used to depend on the eastern bloc for cut-rate oil, and plunged into economic chaos and blackouts when it was cut off after 1989.

Locking in energy independence, aside from potentially turning Cuba from a cash-strapped developing nation into a flush oil exporter, could help project its current regime years into the future.

On Monday, Rafael Tenrreyro, the head of state oil form Cupet's exploration branch, said Cuba was anxiously awaiting a platform made in China for one of its offshore efforts.

"At some point this summer it should be getting here," Tenrreyro told reporters, referring to the next few months' time.

Despite the BP oil spill tragedy in the gulf, Tenrreyro insisted "safety is more than guaranteed. Cuban institutions have made sure that is the case."

Cuba's economic zone in the Gulf, just a stone's throw from the US state of Florida, is divided into 59 blocs. Of those 20 are ventures with Repsol (Spain), Hydro (Norway), OVL (India), PDVSA (Venezuela), Petrovietnam and Petronas (Malaysia). Petrobras (Brazil) recently pulled out and Sonangol (Angola) recently signed on.

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