Cuba’s Energy Situation: Cuba’s Energy Situation: Supply PerspectiveSupply Perspective

Chip GroatChip GroatInterim DeanInterim Dean

Jackson School of GeosciencesJackson School of GeosciencesThe University of Texas at AustinThe University of Texas at Austin

Cuba Energy Consumption(World Resources Institute)

Oil consumption by area

Oil production by area

Major oil trade movements

Major gas trade movements

Cuba Energy Resource Cuba Energy Resource Production and ConsumptionProduction and Consumption

• Oil Production – reports varyOil Production – reports vary– Cupet reports 67,000 bpdCupet reports 67,000 bpd– 52,000 bpd (EIA) or 19 million bpy52,000 bpd (EIA) or 19 million bpy– Reports from unidentified sources:Reports from unidentified sources:

•80,000 bpd80,000 bpd•60,000 bpd60,000 bpd

• Oil consumption is 120,000 bpd (43.8 Oil consumption is 120,000 bpd (43.8 million bpy)million bpy)

• Natural gas production is 14 bcf/yrNatural gas production is 14 bcf/yr– Consume it all, import noneConsume it all, import none

Cuba’s Principal Partner in Latin Cuba’s Principal Partner in Latin America is VenezuelaAmerica is Venezuela

• Fidel Castro and Hugo Chavez have a close Fidel Castro and Hugo Chavez have a close relationshiprelationship

• Energy InteractionsEnergy Interactions– Venezuela sends 90,000 bpd of oil to CubaVenezuela sends 90,000 bpd of oil to Cuba

•25% or more of this is free25% or more of this is free– Cuba produces 80,000 bpd of oil (another Cuba produces 80,000 bpd of oil (another

source reports 60,000 bpd)source reports 60,000 bpd)– Cuba consumes 120,000 bpd of oilCuba consumes 120,000 bpd of oil– Exports the surplus of 50,000 bpdExports the surplus of 50,000 bpd

• Venezuela is assisting in upgrading a refinery Venezuela is assisting in upgrading a refinery

CUBAN OIL FACILITIES

Cubapetroleo (Cupet) is the national oil company of Cuba in charge of:

Exploration - Production Commercialisation Refining and Lubricants production Technical Services Gas supply International Negotiations Research and Development Engineering

Cuba’s Energy Resource Cuba’s Energy Resource BaseBase• Cuba does not have abundant onshore Cuba does not have abundant onshore

energy resourcesenergy resources– Oil reserves, all onshore, are estimated at (EIA):Oil reserves, all onshore, are estimated at (EIA):

• 750 million bbl in 2006750 million bbl in 2006

• 120 million bbl in 2007120 million bbl in 2007

• Produce approximately 19 million bpyProduce approximately 19 million bpy

• No coal (import a small amount)No coal (import a small amount)

• Sugar cane for use in making ethanol or Sugar cane for use in making ethanol or bagasse for power generationbagasse for power generation

Oil and Gas PotentialOil and Gas Potential

• Oil potential in North Cuba Basin Oil potential in North Cuba Basin (principally offshore):(principally offshore):– USGS estimates 4.6 billion bbl USGS estimates 4.6 billion bbl

undiscovered oil and 9.8 tcf natural gas undiscovered oil and 9.8 tcf natural gas (mean)(mean)

– Cubapetroleo says 20 billion bbl oil Cubapetroleo says 20 billion bbl oil potentialpotential•U.S. reserves are 21 billion bblU.S. reserves are 21 billion bbl

•Mexico reserves are 11.7 billion bblMexico reserves are 11.7 billion bbl

North Cuba BasinUndiscovered Resources

(USGS, 2004)

Cuba’s Partners In Oil and Gas Cuba’s Partners In Oil and Gas DevelopmentDevelopment

• Cuba has signed agreements with countries Cuba has signed agreements with countries to assist in oil and gas developmentto assist in oil and gas development– VenezuelaVenezuela– BrazilBrazil– RussiaRussia– ChinaChina

• Has partners for development of specific Has partners for development of specific blocksblocks– Canada, France, Spain, SwedenCanada, France, Spain, Sweden

OPPORTUNITIES INDEEPWATER GULF OF MEXICO

THE CUBAN GOVERMENT HAS DECIDED TO OFFERITS DEEPWATER SECTOR OF THE EXCLUSIVE ECONOMIC

ZONE OF CUBA IN THE GULF OF MEXICO TO FOREIGNINVESTMENT.

CUBAPETROLEO (CUPET)

STATE OWNED COMPANY AUTHORIZED TO CARRY OUTSTATE OWNED COMPANY AUTHORIZED TO CARRY OUTEXPLORATION AND PRODUCTION OF HYDROCARBONS BYEXPLORATION AND PRODUCTION OF HYDROCARBONS BYITSELF OR IN ASSOCIATION WITH FOREIGN COMPANIESITSELF OR IN ASSOCIATION WITH FOREIGN COMPANIES

CUPET FALLS WITHIN THE ORGANISATION AND CUPET FALLS WITHIN THE ORGANISATION AND RESPONSABILITY OF THE MINISTRY OF BASIC INDUSTRY, RESPONSABILITY OF THE MINISTRY OF BASIC INDUSTRY,

WHICH ALSO CONTROLS MINING, ELECTRICITY, NICKEL AND WHICH ALSO CONTROLS MINING, ELECTRICITY, NICKEL AND COBALT, CEMENT, CHEMICAL, PHARMACEUTICAL, GLASS, COBALT, CEMENT, CHEMICAL, PHARMACEUTICAL, GLASS,

PAPER AND RUBBER INDUSTRIES.PAPER AND RUBBER INDUSTRIES.

• 17 BLOCKS UNDER LICENCE WITH COMPANIES 17 BLOCKS UNDER LICENCE WITH COMPANIES FROM CANADA, FRANCE, SWEDEN, SPAIN AND FROM CANADA, FRANCE, SWEDEN, SPAIN AND OTHER COUNTRIES.OTHER COUNTRIES.

• SINCE 1991 MORE OVER 650 MILLION USD IN SINCE 1991 MORE OVER 650 MILLION USD IN EXPLORATION -PRODUCTION ACTIVITIES FINANCED EXPLORATION -PRODUCTION ACTIVITIES FINANCED BY FOREIGN COMPANIES.BY FOREIGN COMPANIES.

OIL PRODUCTION AT PRESENT: OIL PRODUCTION AT PRESENT: 6700067000 BOE/day BOE/day

CURRENT STATUS OF ONLAND AND SHALLOW WATER BLOCKS

BLOCKS AVAILABLE FOR NEGOTIATION IN DEEP WATERS

NEW MODEL OF PSA

• ALL THE OIL AND GAS ALL THE OIL AND GAS PRODUCTION WILL BE PRODUCTION WILL BE SHARED BETWEEN SHARED BETWEEN CUBAPETROLEO AND THE CUBAPETROLEO AND THE CONTRACTOR. CONTRACTOR.

THE SPLIT OF THE PROFIT OIL WILL THE SPLIT OF THE PROFIT OIL WILL DEPEND ON THE INTERNATIONAL OIL DEPEND ON THE INTERNATIONAL OIL

PRICEPRICE

Shared resources with Cuba

Adquisición sísmica en aguas profundas

Adquisición 1986Adquisición 2000

Adquisición 1984

Reprocesadas en DIGICUPET

N1

N2N3

N4 N5 N6

N7 N8 N9 N10

N11 N12 N13 N14 N15N16

N19

N20 N21 N22 N23N24 N25

N30 N31 N32 N33 N34 N35

N42 N43 N44 N45

N49 N50 N51

N53 N54

N58 N59

S5S6 S7

S13 S14

N17 N18

N29N28N27N26

N36N37

Shared resources with Cuba

Shared resources with Cuba

POZOS PERFORADOS EN LA ZEE CUBA EN EL GOLFOPOZOS PERFORADOS EN LA ZEE CUBA EN EL GOLFO

NOTE: These well were drilled not by Cupet, but by the Glomar Challenger Vessel under the DSDP

What Lies Ahead?What Lies Ahead?

• HydrocarbonsHydrocarbons– What will stimulate significant activity in the What will stimulate significant activity in the

North Cuba Basin?North Cuba Basin?• Cuba’s view of the role of resources thereCuba’s view of the role of resources there

– Fuel internal development?Fuel internal development?– Export?Export?

• Oil price impactOil price impact– $150/bbl oil vs $40/bbl$150/bbl oil vs $40/bbl

• Transboundary resource development issuesTransboundary resource development issues

– Methane hydratesMethane hydrates• Assessment is first stepAssessment is first step

What Lies Ahead?What Lies Ahead?

• Similarly, what will stimulate development Similarly, what will stimulate development of biofuels beyond bagasse?of biofuels beyond bagasse?– Ethanol from sugar caneEthanol from sugar cane

• Future role of alternative technologiesFuture role of alternative technologies– HydroelectricHydroelectric– SolarSolar– WindWind

• Demand growth and access to technology Demand growth and access to technology are key factorsare key factors