Cuba to hold offshore licensing round in late 2017

havana-live-offshore-oil-gasHAVANA, Dec. 28  Cuba will restart its offshore hydrocarbon exploration campaign at the end of 2017 with a bidding round for several near-shore, shallow-water and deepwater blocks, an official of state-run oil company Cupet tells Argus.

Cupet has contracted Chinese geophysicist BGP Marine to shoot 25,000km of 2D seismic off the northwest, west and southwest of the island.

“The results of the survey will be presented to interested prospectors in the last quarter of next year,” the Cupet official said. “There is evidence of significant deposits in our territorial waters, despite the results of earlier efforts.”

A deepwater campaign ran aground in 2012 after foreign companies, including Spain’s Repsol, India’s ONGC, Norway’s Statoil, Malaysia’s Petronas, Russia’s Gazpromneft and Venezuela’s PdV found no commercially exploitable deposits.

Cuba’s effort to revive upstream interest coincides with a sharp decline in preferential oil supplies from ally Venezuela, sparking fuel shortages and power outages.

The US Geological Survey estimates that the Cuban side of the Gulf of Mexico could hold around 9bn bl of oil equivalent of technically recoverable resources. Cuba puts this figure at over 20bn bl.

Cuba hopes the round will attract “major” oil companies, including some from the US, the Cupet official said. There has been “an indication of interest” in Cuba’s oil sector from two US firms “that cannot be named.”

US participation in Cuba’s oil sector has been limited by Washington’s longstanding economic embargo on the island, and which capped the use of US-originated drilling equipment to 10pc.

“We anticipate greater US participation from this change,” the Cuban official said.

There is some uncertainty about the rapprochement under the incoming US administration of President-elect Donald Trump, who has signaled a tougher stance toward Havana.

Cupet said in 2015 that Venezuelan and Angolan state-run PdV and Sonangol would be the first to drill in 2017 after they conclude production-sharing terms.

PdV had been supplying around 80,000 b/d of crude and products to Cuba under preferential terms as late as 2015, but supply has been halved to roughly 40,000 b/d as PdV´s domestic production has fallen and an economic crisis deepens.

The dwindling imports from Venezuela supplement around 50,000 b/d of liquids and 20,000 b/d equivalent of natural gas, from Cuba’s onshore and shallow-water reservoirs.

Havana is looking to alternative crude suppliers such as Russia, Algeria and Iran to replace the Venezuelan oil.

Cuba is also hoping to boost production from two onshore and near-shore projects in the north by Russia’s state-run Rosneft and Australian independent Melbana Energy, formerly MEO Australia.

Rosneft and Cupet revised and reactivated a 2014 agreement to tap the near-shore Varadero – Eastern Central block “to identify opportunities for improvement of well pool operation and completion of wellwork aimed at enhanced oil recovery,” the companies said on 22 December.

Melbana is working to finalize plans for accelerated drilling on Block 9 by the end of March 2017, the company said.