Petrobras Opens Cuban Office

By Bruno De Nicola, Contributing Reporter

RIO DE JANEIRO – Brazil’s state-owned oil company Petrobras has announced the opening of its first Cuban office, in the island nation’s capital city, Havana. The Latin American petroleum giant will use its base to coordinate the efforts of a potential 600 square kilometer offshore oil drilling area in the country’s waters in the Gulf of Mexico. According to their contract with Cupet, Cuba’s state-run oil concern, Petrobras has until May 2010 to decide to drill.

In October 2008, President Lula met President Raul Castro in Havana to sign a series of economic and social accords between Brazil and Cuba. It was then that the two leaders agreed to sign a contract establishing an oil extraction partnership between Petrobras and Cupet. The agreement grants Petrobras permission to scan and extract oil from the designated area for a period of 32 years.

The region, labeled Block 37, is roughly twelve kilometers off the northern coast of Cuba and has an underwater depth ranging from 500 to 1600 meters.

Following the meeting with Lula, Cuban President Raul Castro positively stated that Mexico and the U.S. were already extracting oil in the very same region and that “for obvious reasons we have only been able to exploit land wells, which probably have a lower quality of oil than those under water.”

Cuba deeply relies on Petrobras’s open sea scanning, drilling skills and technology. The top Brazilian oil company manages to reach underwater wells at depths that a few years ago would have been unimaginable, boring holes with a state of the art inclined drill.

Over the past two decades, thanks to its developments in technology, Petrobras has established many partnerships around the world and is today extracting oil from 37 countries in South America, Africa and Europe.

Since October 2008 the Brazilian oil company has been scanning Block 37 for underwater wells. Petrobras opened the office in Havana in order to closely follow these operations. Petrobras’s Chief Operating Officer in Cuba, João Figueira, said that the area “has a very good geological position,” however if by May 2010 no oil is found, Petrobras will have the right to drop the 32-year contract.

“We need more data and more research, this kind of contract makes it easier for us,” adds Mr. Figueira, pointing out how the company must make costly decisions when it comes to drilling. Petrobras’s last geological study ended in June of this year.

Block 37 seems to have potential, and its geological conditions are likely to generate large amounts of oil. Yet as of now, the Brazilian oil company cannot report on quantity or quality.

Petrobras looked for oil for the first time in Cuba ten years ago, but their scanning operations lead to nothing. Advances in technology over the past decade may bring better results in this new venture.

Petrobras is the seventh oil company to explore the island’s territory, following the steps of groups such as Spain’s Repsol – YPF and Venezuela’s PDSVA, which are cooperating with Cupet to extract oil from 21 of the 59 open sea blocks in the Cuban area of the Gulf of Mexico.