Thursday, January 31, 2008

Brazil makes inroads in Cuba, inks E&P agreement

Brazil makes inroads in Cuba, inks E&P agreements

Eric Watkins
Senior Correspondent

LOS ANGELES, Jan. 30 -- Brazil's state-owned Petroleo Brasileiro SA
(Petrobras) has signed agreements with Cuba's Compania Cubana de
Petroleo (Cupet) for cooperation in oil and gas exploration and
production, research and development, and human resource cooperation.
Studies also will be undertaken for agreements concerning facilities
maintenance. The agreements give Brazil a foot in Cuba's energy door
that Venezuela has, until recently, partially blocked.

Petrobras, which has expertise in deepwater exploration and production,
said the agreement "foresees the assessment of the offshore blocks in
the Cuban sector of the Gulf of Mexico, as well as technical and
economic analyses for the construction of a lubricant factory in Havana."

Cuba hopes its exploration in the deepwater Gulf of Mexico will result
in discoveries enabling the country to become self-sufficient in oil
production. The US Geological Survey says Cuba's GOM areas could contain
4.6-9.3 billion bbl of crude and 9.8-21.8 tcf of gas (OGJ, Jan. 21,
2008, p. 41).

Brazil also extended Brazilian credit to Cuba for food, medicine, and
hotel and road construction.

Brazil's official Agencia Estado news agency said the agreements
coincide with political transition in Cuba a year and a half after Cuban
President Fidel Castro transferred power to his brother Raul due to
health problems.

Agencia Estado said the aid program has a long-term strategy: Brazil
sees Cuba as a growing market and a transshipment point in a "privileged
location" near Florida, and it wants to be in a positive position "when
trade opens up as part of Fidel's succession process."

Venezuela-Cuban pacts
Venezuela is Cuba's biggest trading partner in South America, and Brazil
wants to recover ground lost to Hugo Chavez. Since 2003, Chavez has been
selling petroleum to Cuba at subsidized prices in exchange for the
island's sending physicians, nurses, and hospital equipment to Venezuela.

"It was because of Venezuela that Cuba's negotiations with Petrobras in
the past reached an impasse," said Agencia Estado.

On Dec. 22, 2007, Chavez and Raul Castro signed 14 energy agreements in
Havana, including a $122 million loan for Cuba to buy tankers to
transport crude oil and products from Venezuela.

Plans also call for Venezuela and Cuba jointly to increase the capacity
of Cuba's 65,000 b/d Cienfuegos refinery to 150,000 b/d. Built in 1990
with Soviet technology and mothballed in 1991, the refinery reopened
Dec. 21, 2007, following Venezuela's renovations. Cuba also will reopen
an oil pipeline from the refinery to Matanzas.

Cuba has endured a 50-year US economic embargo that precludes US firms
from investing in such projects.

Contact Eric Watkins at,-inks-E&P-agreements/

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