Petrobras gets more time to decide Cuba oil plans

Petrobras gets more time to decide Cuba oil plans
Thu May 6, 2010 12:53pm EDT
By Jeff Franks

HAVANA, May 6 (Reuters) - Cuba has given Brazil's state-owned oil
company Petrobras (PETR4.SA) (PBR.N) a six-month extension on its May
deadline to decide whether it will drill a well in Cuban waters, a
Petrobras spokesman said on Thursday.

Petrobras, which has rights to one of 59 exploration blocks in Cuba's
part of the Gulf of Mexico, was supposed to notify state-owned oil
company Cubapetroleo (Cupet) this month of its intentions but needed
more time, said spokeswoman Paula Almada.

"Given the geological complexity of the block area, it was negotiated
with Cupet a six-month extension ... to finish the work of geology and
geophysics," she told Reuters.

She was responding to questions sent to Joao Figueira, head of the
Brazilian oil giant's Cuba operations.

Petrobras signed up for its Cuba block in October 2008 in a Havana
ceremony attended by Cuba's President Raul Castro and Brazilian
President Luiz Inacio Lula da Silva.

The company got what was considered a prime block, hugging Cuba's
northern coast next to the island's most prolific onshore oil field at
Varadero, east of Havana.

Figueira told Reuters last July that Petrobras had completed its seismic
work in the block and was studying the results.

The area showed good prospects, he said, but it remained to be seen if
it had sufficient accumulations of oil to make wells profitable.

"The challenge and uncertainty are related to reserve distribution, size
and production per well," Figueira said.

Petrobras' involvement was seen as a boost to Cuba's hopes to finally
tap into offshore fields it estimates contain 20 billion barrels of oil.

The only exploration well in its waters so far was drilled by Spanish
oil company Repsol in 2004.

Repsol has not yet drilled a second well, but on Wednesday a spokeswoman
for Saipem (SPMI.MI), the offshore drilling unit of Italian oil company
Eni SpA (ENI.MI), told Reuters Repsol has contracted for one year a
drilling rig her company has under construction in China.

She would not confirm where the rig will operate, but advertisements
seeking to hire its crewmembers have said it will come to Cuba.

Repsol has declined to comment. (Reporting by Jeff Franks; Editing by
Tom Brown and David Gregorio)

http://www.reuters.com/article/idUSN061318820100506?type=marketsNews