Petrobras unit to explore block off Cuba

The international upstream arm of Brazil's state oil company has signed a contract with Cuba's state oil company covering exploration off the island nation. Petroleo Brasileiro SA (Petrobras), through its international subsidiary Braspetro, on Nov. 18 signed an exploration and production contract with Cubapetroleo. Exploration work will get under way on an unnamed block off Cuba's northern coast, about 300 km from Havana, in water depths of 20-500 m. Braspetro estimates that the

Nov. 30, 1998

2 min read

The international upstream arm of Brazil's state oil company has signed a contract with Cuba's state oil company covering exploration off the island nation.

Petroleo Brasileiro SA (Petrobras), through its international subsidiary Braspetro, on Nov. 18 signed an exploration and production contract with Cubapetroleo.

Exploration work will get under way on an unnamed block off Cuba's northern coast, about 300 km from Havana, in water depths of 20-500 m. Braspetro estimates that the area has a postulated oil resource of 500 million bbl of crude oil.

The exploration contract is divided in stages, totaling 6 years. The first, 9-month stage will consist of geological studies and reprocessing of existing seismic data. Depending on the results, Braspetro may follow up with a second stage, which will last 18 months and consist of exploratory drilling, at an estimated cost of $23 million. At the end of this stage, Braspetro has the option to work under a third stage and provide further unspecified investments.

The contract calls for the two companies to share revenues from any resulting crude oil production. Braspetro also is subject to a 30% income tax. Braspetro has targeted a rate of return from any successful oil development project of about 20%, depending on the price of crude oil at start-up and the volume of reserves discovered.

Petrobras CEO Joel Mendes Renno, who also signed the contract, said that the project is open to participation by other foreign oil companies.

Braspetro handles all of Petrobras's upstream operations abroad and produces about 60,000 b/d. Jose Coutinho Barbosa, Braspetro vice-president, told OGJ that this volume is likely to be boosted to 120,000 b/d by 2000, based on reserves already identified or under development.