HAVANA, 11 August (Reuters) Cuba has shifted its focus away from offshore oil, concentrating on renewable energy and improving output from onshore wells due to a lack of interest by foreign companies for further deepwater exploration, sources close to the industry say.
With so much oil readily available around the world, oil companies including those from allies China and Russia see little incentive in drilling off the Caribbean island, delaying the Cuban dream of oil wealth that could inject vigor into its socialist revolution. With the U.S. trade embargo of Cuba further complicating drilling plans, the country is seeking investors in renewable energy such as biomass and wind while attempting to increase output from existing onshore and shallow water wells.
Russia’s state-run Rosneft and the China National Petroleum Company (CNPC) separately agreed last month to help Communist-run Cuba extract more oil along the traditional northwest heavy oil belt, but did not sign on to deepwater exploration. The northwest heavy oil belt is a 200-mile (320-km) stretch of the northern coast from Havana to Villa Clara and reaching up to 3 miles (5 km) offshore.
It produces poor quality oil that meets 40 percent of the country’s needs. Rosneft and CNPC will also support the horizontal drilling of new wells from shore and join Canadian firm Sherritt International and another Russian state-run oil company, Zarubezhneft, which are already carrying out similar work.
Cuba had hoped Russia and China, whose presidents visited in July, would explore deepwater offshore fields that it says may hold 20 billion barrels of oil and end its dependence on socialist ally Venezuela. Venezuela sends 115,000 barrels of oil per day to Cuba under favorable terms.
“The Cubans have stopped talking about offshore oil exploration in the state-run media and in private appear more interested in new recovery methods for existing wells, biogas projects and windmill farms,” a European diplomat said. Three deepwater wells drilled in 2012 by Spanish, Norwegian, Indian, Malaysian, Russian and Venezuelan firms came up dry.
All but the Norwegian state firm Statoil ASA and Venezuelan state oil company PDVSA have pulled out, and those companies are inactive. Future drilling has been postponed for the foreseeable future.
A BIG GAMBLE
Difficult geology from hard rock encountered while sinking the wells, alternative prospects elsewhere and U.S. sanctions that require oil rigs to carry less than 10 percent U.S. technology are discouraging further drilling, according to Western diplomats. “Exploration is not a one-shot deal, but in Cuba due to many factors it is. Drilling is like playing once at a roulette wheel with $100 million chips,” said a diplomat whose country was involved in exploration.