Cuba and the oil challenge

HAVANA, Cuba, Sep 19 (acn) The Cuban Oil Company CUPET considers that increasing oil and gas production is its main challenge as the country´s power output depends to a large extent on diesel and fuel oil imports, according to directives with the local company.

A recent article published on Granma newspaper cites CUPET Drilling director Osvaldo Lopez as saying that Cuba produces 45 thousand barrels of oil daily, nearly all that amount is used to generate electricity, some 45 percent of the country´s total output. The production of each barrel costs between 13 and 14 dollars.

Other sources for electricity production include gas, some 14.1 percent; biomass processed at sugar plants, some 3.7 percent, and barely 0.8 percent power output from renewable energy sources, and the remaining percent comes from imports.

Cuba is currently producing three million cubic meters of gas a day, out of which two millions are used to generate electricity and the rest is used as kitchen fuel in the residential area, particularly in western Havana city.

According to the executive, the local demand of electricity is expected to increase from this year on due to factors such as the growing investment levels in the country, the emerging private sector, the increasing number of tourists, a larger number of domestic appliances, the growth of the industrial sector and also due to climatic conditions causing growing warming each year.

Where Does Cuba Keep its Oil?

Cuban drills 99 percent of its oil reserves in the so-called Northern Strip of Crude Oil (FNCP Spanish acronyms), a 750 square-kilometer area located between the western city of Havana and Varadero tourist resort, a zone highly exploited for over forty years and with a reported output of more than 245 million barrels of oil over the past 15 years.

Cited in a recent article on Cuban media, the assistant director of Cuba´s Oil Company CUPET, Roberto Suarez, said that many fields are currently declining, while the expansion of others has allowed keeping constant oil extraction levels of the past 12 years. The geographical area is considered under a strategy to boost oil exploration works, since there are still reserves to exploit, said Lopez.

Cuba does not have enough financial resources to operate off-shore fields, whose development can translate into investment projects calculated at billions of dollars. The cost of a single oil well can range from 200 to 300 million dollars in a water column of more than 15 thousand meters, but in order to develop a field you need to drill at least ten oil wells, add to that the cost of underwater facilities, surface or floating and operation platforms.

Then, this means that the production cost of an oil barrel in Cuban water could reach 20 or 35 dollars, an at present crude oil sells at 45 or 50 dollars a barrel, which reveals that viability of such process is quite low, said Lopez.

Cuban oil exploration from now to the year 2020 will concentrate in areas of Havana and towards its west, since research says that success probabilities in those areas reach from 17 to 18 percent, a high level for this activity. The strategy includes the drilling of five or six exploratory in-land wells and production wells will be opened in areas with positive results, Lopez noted.

Future plans up to 2030 include increasing the recovery of existing reserves by introducing improved recovery technologies, achieving sustained growth of national oil production, stepping up exploration, evaluation and development of reserves in the Exclusive Economic Zone in the Gulf of Mexico and begin the exploration in the central-eastern zone of the country.