Oil diplomacy is under way in Latin America. We recently speculated that Venezuela’s President Hugo Chavez was wooing the Portuguese to spite the Brazilians. Now, the Brazilians are turning the tables.
What else can be said when Brazilian President Luiz Inacio Lula da Silva shows up in Havana to see Fidel Castro?
And don’t forget, Lula’s visit comes on the heels of one by Chavez in late December. On that occasion, Chavez and acting Cuban President Raul Castro signed 14 energy agreements during the PetroCaribe summit in Havana.
Chavez and Castro signed the series of deals on Dec. 22, 2007, in the energy, mining, and oil sectors, including a $122 million loan for Cuba to buy tanker ships to transport crude oil and oil products from Venezuela.
Two agreements will see the southeastern Cienfuegos refinery more than double its capacity to 150,000 b/d, as well as reopen an oil pipeline from the refinery to Matanzas.
Ailments and oil
Brazilian officials said the main purpose of Lula’s brief visit to Cuba was to see his ailing friend Castro. Castro, 81, has not been seen in public since emergency surgery forced him to cede power to his younger brother Raul in July 2006.
According to reports, Fidel’s condition and exact ailment are state secrets, but those ailments did not prevent Lula and the Brazilians from getting their foot in the door, too.
“We’ve begun seismic analysis ahead of drilling operations,” Petroleo Brasileiro SA Pres. Jose Sergio Gabrialli said at the signing ceremony that saw Lula and Raul Castro inking agreements for a number of projects, including joint oil exploration in the Gulf of Mexico.
Energy independence
Cuba hopes that exploration by foreign companies in deep waters of the gulf will result in discoveries that will enable the country to become self-sufficient in oil production.
The Cubans are not alone in thinking there’s oil and gas in their deepwater offshore. According to the US Geological Survey, Cuba’s area could contain 4.6-9.3 billion bbl of crude and 9.8-21.8 tcf of gas.
Fidel Rivero, president of Cuba’s state oil company, said Petrobras already had already invested heavily in Cuba, but that the new agreement allows it to explore in the gulf for the first time.
“Important potential exists in this zone, and the idea is to study it,” he said. He added that Cuba and Brazil would decide in the coming months just where oil prospecting would take place in 35 of the 59 areas Cuba has set out in its gulf territorial waters.
“They’ve got specialists and top technology,” Rivero said of his Brazilian colleagues. “They’re world leaders in deep water drilling.”
The Brazilians are indeed leaders in deepwater drilling and that really spells the difference in their appeal to Cuba. While Chavez touts projects that require dependency on his country’s oil, Lula is offering Cuba help in becoming energy independent.
