Castro gets best possible economic news: Venezuela’s PDVSA to search for oil off Cuba

Venezuelan state oil giant PDVSA will prospect for, pump and refine oil from Cuba’s Gulf of Mexico economic zones, the company announced, in a potential boon for Cuban communist President Fidel Castro.

Spain’s Repsol-YPF, PDVSA and many of its rivals are looking for new oil fields around Cuba, one of the jost under-exploited areas in the world.

If they were to make a major find, or several significant ones, the shift could turn regional geopolitics upside down, potentially turning Castro’s cash-strapped, oil import-dependent regime into a prosperous oil exporter able to fund itself well into the future.

The announcement came as Venezuelan President Hugo Chavez paid a visit to Cuba to bolster the countries’ economic cooperation, and open a PDVSA office in Cuba with Castro looking on.

Spain’s oil leader Repsol-YPF also has been prospecting off Cuba, while US multinationals are shut out due to US sanctions against Cuba.

PDVSA will work with Cuba "in prospecting and production (on new wells located in territorial waters) as well as in refining and marketing," PDVSA said in a statement. There was no immediate word on any start date for prospecting work.

In addition, PDVSA was to launch with Cuban firm CUPET a lubricants plant, and build a facility for storing residual petrochemicals — 600,000 barrels a day — in Matanzas, east of Havana, and an oil port, the company said.

PDVSA also will take part in the reopening of the oil refinery and terminal in Cienfuegos, on Cuba’s southern-central coast, a facility built with Soviet technology in 1990 but which long since ground to a halt due to its high energy consumption.

The Venezuelan giant framed the Cuban deal in regional terms, despite its overwhelming potential significance to Castro’s government and economic plans.

"The strategic location of PDVSA Cuba, in Havana, will make it possible to launch other businesses and projects critical to the progress of Petrocaribe," the PDVSA statement added, referring to a Venezuelan regional business and oil-diplomacy initiative.

Led by Castro since 1959, Cuba has been in dire economic straits since the collapse of the former Soviet bloc, which once provided subsidized food and fuel.

Energy has been the Achilles heel of Cuba’s economy for years, and Havana has been unable to complete a Soviet-technology nuclear reactor that was planned for Juragua in Cienfuegos province.

With its oil-burning plants, Cuba has had to rely on Venezuelan imports, while its own crude — which is high in sulfur — has required costly cleaning to be used.

Venezuela, Latin America’s only member of the OPEC oil cartel, in 2000 agreed to deliver 53,000 barrels of crude a day to Cuba, with a special credit rate for Chavez ally Castro. But that number has soared to 80,000-90,000 barrels a day, PDVSA chief Rafael Ramirez said here.

Venezuela is the world’s fifth-largest oil exporter with a daily production of 2.6 million barrels.

In January, Brazilian ambassador Tilden Santiago said Brazil’s state oil giant Petrobras, also now boosting energy cooperation in Cuba, could team up with Canada’s Sherritt or Repsol as it moves to explore two new prospecting zones off Cuba.

After passing on two zones earlier selected for it to explore in 2002, "Petrobras is waiting to find out its (new) designated zones to carry out deep-water offshore prospecting," the Brazilian ambassador said at the time.

Last July, Repsol-YPF said its first well drilled in Cuba was not worth exploiting commercially. But Repsol officials have said they planned to review their studies, with future drilling expected later this year.
Copyright © 2005 Agence France Presse.