FIRST LICENSE ROUND IN 30 YEARS SHEDS LIGHT ON CUBA'S GEOLOGY

Cuba's first licensing round in 30 years has cast new light on geology and recent exploration results in the country. It is part of a privatization program aimed at reviving an economy that has been struggling since 1989 to make up for lost assistance from the former Soviet Union. Much of that help came in the form of subsidized crude oil and petroleum products. In 1989, Cuba used an average of 9?8,400 b/d of products, according to the East-West Center, Honolulu. The country imported

April 26, 1993

4 min read

Cuba's first licensing round in 30 years has cast new light on geology and recent exploration results in the country.

It is part of a privatization program aimed at reviving an economy that has been struggling since 1989 to make up for lost assistance from the former Soviet Union. Much of that help came in the form of subsidized crude oil and petroleum products.

In 1989, Cuba used an average of 9?8,400 b/d of products, according to the East-West Center, Honolulu. The country imported 172,000 b/d of Soviet crude and 98,000 b/d of products (OGJ, July 6, 1992, p. 64).

By the last quarter of 1991, almost no Soviet oil was available to Cuba.

The National Assembly of Popular Power last year changed the constitution to make private and foreign investment legal and to open the country to foreign trade.

The government now can shift land, sugar mills, factories, and other former state property to the private sector "when this leads to economic and social development and does not affect the economic, social, and political purposes of the state."

Cuba's transportation system is crippled by shortages of fuel and spare parts. Fuel problems also hurt agriculture and manufacturing.

"Despite all the economic difficulties that we are experiencing, we are able not only to survive but to prepare our own development project," Foreign Minister Ricardo Alarcon de Quesada recently told the Brazilian newspaper O Globo.

"Our strategy is based on joint ventures with foreign capital to find petroleum and to develop the tourist industry, plus the scientific development of the pharmaceutical and biotechnological industries."

WHAT'S OFFERED

In February, state owned Cubapetroleo SA (Cupet) described oil and gas licensing terms during promotion presentations held in London and Calgary.

U.S. companies can't invest in Cuba due to a trade embargo.

The country is offering production sharing contracts for 11 blocks-three offshore, seven onshore, and one onshore and off (Fig. 1 and map, OGJ, Mar. 22, p. 34). Block sizes range from 1,400 sq km to 6,000 sq km.

Companies and groups face no restrictions in the number of applications they can submit to Cupet.

Contracts will have maximum terms of 25 years with exploration periods of 4 years. The state will take 11% of production and tax net profits at the rate of 30%.

Simon Petroleum Technology Ltd. (SPT) of the U.K. is selling data packages under a contract with Cupet.

Cuba has signed eight contracts with international oil companies during the past 3 years.

France's Total and Cie. Europeene des Petroles negotiated a production sharing contract in 1990 calling for exploration of two on and offshore blocks in northern Cuba during 6 years.

Sweden's Taurus Petroleum AB holds a production sharing contract covering three blocks off southern Cuba. It has processed and interpreted 2,500 line km of seismic data and plans more seismic work.

Canada Northwest Energy signed its first contract in February 1992 and now has four contracts covering production operations and two covering exploration.

Braspetro, international arm of Petroleo Brasileiros SA of Brazil, suspended negotiations on a risk contract covering acreage along the northern coast. Braspetro is evaluating all projects outside of Brazil to concentrate on those promising quick returns.

WHAT'S BEEN FOUND

Cuba produces 15,000-18,000 b/d of mostly 11-35 gravity crude oil from five fields, although oil gravity reaches as high as 60.5 in Motembo field. The government wants oil production to double by yearend. Gas production averages 1.5 MMcfd.

About 25 fields have been discovered since exploration began in 1881, most along the northern coast (Fig. 2). The largest is Varadero field, where oil in place is estimated at more than 1.1 billion bbl.

The island nation has two main geological provinces. Most discoveries have been in the northern province in pre-Upper Cretaceous Campanian pays.

The southern province is part of the Caribbean plate.

About 1,600 wells have been drilled in Cuba, most of them old and shallow. They are in areas covering less than 5% of the country's prospective area.

Since 1960, the year after the revolution that brought President Fidel Castro to power, drilling has totaled more than 1.7 million m of hole, according to Cupet.

Seismic surveys shot during the period exceed 70,000 line km, 50% of the work offshore.