Report says lifting US embargo against Cuba would help energy firms

By the OGJ Online Staff

WASHINGTON, DC, Dec. 17 -- A study issued Monday concluded that lifting the US trade embargo against Cuba could provide US energy firms $2-3 billion/year in new revenue.

The report was from the Cuba Policy Foundation, Washington, DC, which has been lobbying to get the embargo removed. Authors were Amy Myers Jaffe, with the Baker Institute for Public Policy at Rice University, Houston, and Ronald Soligo, a Rice economics professor. They wrote the report as consultants, not Baker Institute representatives.

Jaffe and Soligo predicted that Cuban energy demand per capita in 2015 would be similar to comparable countries in the region such as Jamaica and Costa Rica. Oil demand could increase 148,000-184,000 b/d, and would have to be met by additional imports or increases in domestic hydrocarbon production.

The study said Cuba's offshore waters could provide yield natural gas that could be exported to Florida by pipeline or converted to products in a gas-to-liquids plant.

Gasoline refining capacity would have to increase by 30,000-38,000 b/d to bring Cuban usage in 2015 to current Jamaican or Costa Rican levels, but higher population growth rates or GDP growth rates would increase those requirements move.

The paper said, "Though Cuba may not have the energy potential of some of its Caribbean or Latin American neighbors, there is continued interest from foreign oil firms in exploring for crude and natural gas on the island. Between 1991 and 1999, foreign investment in oil exploration and production in Cuba increased by about $600 million. While the growth potential is not considered large, the country's geographic position near to growing markets in the US and Mexico make it an interesting possible entrepôt for energy project development."

The study said that combined with a base oil import market of 100,000 b/d or more, high-end growth possibilities of the Cuban oil import market potential could represent gross sales business value of $1.4 billion to $1.62 billion/year beyond the next decade.

"Electricity sector expansion could also represent a substantial business opportunity for American firms." The report said Cuba may need additional electric generating capacity of 48-107 Mw by 2015, but if demand grows at 4%/year, Cuba will need another 478 Mw of capacity by 2015.

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