ENERGY
Cuba could supply oil to U.S. in post-embargo future
Cuba could become an oil supplier to the United States in a post-embargo
era after the Castros.
BY WILFREDO CANCIO ISLA
El Nuevo Herald
Cuba has launched a bold policy of oil development that could turn the
country into an important supplier of fuel in the Caribbean -- and the
United States, should the embargo be lifted in the future.
But world economic turmoil might sidetrack Venezuela's commitment to
underwrite the multimillion-dollar projects in Cuban refineries and ports.
Cuba's oil strategy consists of processing about 350,000 barrels of
crude daily and supplying the big demand for oil byproducts in nearby
countries beginning in 2013, according to sources in the Ministry of
Basic Industry and the state-run oil firm Cuba Petroleo.
In a post-embargo era, one of the principal beneficiaries could be the
U.S., an importer of crude and derivatives with a refinement capacity
that covers 81 percent of its domestic demand.
However, the plans drawn up in 2005 during Venezuela's economic boom are
today in trouble.
A drastic fall in Venezuela's oil revenues during the first few months
of this year, operational difficulties in the state-owned Petroleos de
Venezuela (PDVSA), and the liquidity problems affecting Hugo Chávez's
government are not good news for the Cuban projects, which require a
$10.8 billion investment between now and 2015.
Chávez and Cuban President Raúl Castro will travel this week to
Basseterre, the capital of St. Christopher and Nevis, to participate in
the Sixth Summit of Petrocaribe.
The summit, which takes place Thursday and Friday, will be attended by
18 heads of state and will try to give ''a strategic response'' to the
crisis affecting the countries in the region. The agenda will include an
analysis of the projects underway in Cuba, Jamaica, Nicaragua and Haiti.
Cuba plans to go ahead with its development project even if the
estimates of valuable reserves of crude off Cuba's northwest coast fall
short. The area, called the Exclusive Economic Zone, is believed to
contain 4.6 billion barrels of oil and 9.8 billion cubic feet of natural
gas, according to a 2004 study by the U.S. Geological Service.
The zone covers an area of 70,000 square miles, divided into 59
exploration blocs, approximately 1,250 square miles each. In 2001, the
Cuban government began to sell concessions to foreign companies.
In October 2008, officials of Cuba Petraleo, or CUPET, estimated the
reserves at 20 billion barrels, but international analysts doubt that
estimate because the Cubans did not reveal their methodology.
REFINERY UPGRADES
In any case, the idea conceived by the Cuban government is to upgrade
several refineries and ports to be able to process 4 million barrels per
day that regional countries will need.
''Our project is intended not only to survive but also to make us
self-sufficient and allow us to develop further, even if the results of
the planned drillings are not the most encouraging,'' a CUPET engineer
told El Nuevo Herald. He asked for anonymity because he was not
authorized to speak about the topic. ''It is a project with a future,''
he said.
If in a 5- to-10-year period Cuba manages to raise its refinement
capacity to 350,000 barrels, it would be able to shed its dependence on
Venezuela. Cuba could also process crude oil from Russia, Angola, Brazil
and from Cuba's own deep-sea wells. ''The strategy is intelligently
designed because the future of the oil sector will depend on the
available capacity to refine crude oil and transform it into fuel,''
said Jorge R. Piñón, former president of Amoco Oil Latinoamerica and
researcher at the University of Miami's Center for Hemispheric Policy.
According to Piñón, instead of importing derivatives from Europe and the
Middle East, the U.S. and other neighboring countries would have a
competitive logistical center with unbeatable freight costs.
Other analysts are more skeptical about Cuba's plans.
''In a free market, this strategy is not profitable,'' said engineer
Eduardo del Valle, president of EGDV Consulting, an energy projects
consultant. ``The problem is that the decisions until now have been more
political than economic.''
REPORT SHEDS LIGHT
The initiative to consolidate an efficient system of refineries and
ports in Cuba appears in a report by the Venezuelan Oil Chamber, written
when a Venezuelan business delegation traveled to Cuba last October.
Cuba was expected to put up 50 percent of the capital in its joint
investments with PDVSA.
According to the document, the joint development plan envisions:
• Expansion of the Cienfuegos refinery, with an investment of $3.66
billion to boost its processing capacity from 69,000 barrels per day to
150,000 barrels per day. The project, which must end in 2012, includes
the manufacture of four storage tanks for crudes, derivatives and
distillates, and a plant to furnish gas to the refineries and
thermoelectrical plants.
• Expansion and repairs at the Hermanos Diaz refinery (formerly Texaco)
in Santiago de Cuba, at a cost of $850 million. Its capacity will be
increased from 22,000 barrels per day to 50,000 for the production of
high-quality gasoline. All work should be completed by 2013.
• Construction of a mega-refinery in Matanzas province with the capacity
to process 150,000 barrels per day with deep conversion (the processing
of heavy crudes). The construction will cost $4.33 billion and
operations will start in December 2015.
• Prospecting bays in Cienfuegos and Matanzas, costing $1.6 million.
• Refurbishing of the Amistad oil pipeline between Matanzas and
Cienfuegos, which has been unused since 1989.
Although not mentioned in the document, plans include the shutdown of
the Nico Lopez refinery (former Shell/Esso) in Regla, Havana Bay, which
at present processes about 25,000 barrels per day. A source linked to
the Ministry of Basic Industry said there are plans to dismantle the
Regla refinery in order to stop polluting Havana Bay and improve
Havana's appeal to tourists.
Cuba could supply oil to U.S. in post-embargo future - Nation -
MiamiHerald.com (8 June 2009)
http://www.miamiherald.com/news/nation/v-fullstory/story/1086753.html
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