Petrobras has relinquished Cuba oil block

Petrobras has relinquished Cuba oil block - official
Thu Mar 10, 2011 12:41pm EST
* Petrobras found poor prospects, wants to focus on Brazil
* Decision a blow to Cuba's offshore oil hopes
* Spain's Repsol planning to bring offshore rig to Cuba
By Marc Frank

HAVANA, March 10 (Reuters) - Brazilian oil giant Petrobras (PETR4.SA)
has withdrawn from an offshore oil exploration block in Cuba's waters
that it leased amid great fanfare in 2008, a Brazilian official said on
Thursday, citing poor prospects.

Marco Aurelio Garcia, foreign policy adviser to President Dilma
Rousseff, told reporters in Havana exploratory work off Cuba's northern
coast had not shown good results and that Brazil wanted to concentrate
on its own oil fields.

Asked if state-run Petrobras had abandoned the offshore Cuba block, he said:

"Yes, that was already decided some time back. Petrobras withdrew from
that (block). We're sorry, but the truth is you have to work with
tangible elements and there wasn't any security of that in this block".

The decision appeared to be a blow to Communist-ruled Cuba's hopes for
an oil bonanza from still-untapped offshore fields it says hold 20
billion barrels of oil.

Petrobras signed up for one of Cuba's 59 offshore blocks in October 2008
in a Havana ceremony attended by then Brazilian President Luiz Inacio
Lula da Silva and Cuban President Raul Castro.

Lula, a close ally of former Cuban leader Fidel Castro, had vowed
Petrobras would find oil for the Caribbean island, heavily dependent on
imports from oil-rich socialist ally Venezuela.

The Petrobras block was just offshore from Cuba's biggest oilfield, east
of Havana.

Garcia apologized for Brazil deciding to drop its Cuban block. "We're
very sorry and the truth of things is that ... Brazil will have to
concentrate on our prospecting," Garcia said in a press conference. "You
know that we now have big reserves, maybe one of the biggest reserves in
the world."

CUBA HOPES RIDING ON REPSOL

Experts believe Brazil may have more than 50 billion barrels of oil
buried under a thick layer of salt as much as 4.4 miles (7 km) below the
ocean's surface.

Cuba's offshore oil hopes now ride even more heavily on Spanish oil
company Repsol YPF (REP.MC) , which is expected to bring a Chinese-built
drilling rig to Cuba in August.

Repsol, in partnership with Norway's Statoil (STL.OL) (STO.N) and
India's ONGC (ONGC.BO) l, plans to drill at least one well, then pass
the rig over to Malaysia's state-owned oil company Petronas.

The oil industry is watching the Repsol project closely and if it finds
significant reserves, more companies are likely to want to explore in
Cuban waters.

Repsol drilled an offshore well in Cuba in 2004 and said it found oil,
but that it was "non-commercial."

It said at the time it planned to drill more wells, but is believed to
have had difficulty finding a rig that did not violate the 49-year-old
U.S. trade embargo against Cuba.

The embargo limits the amount of U.S. technology that can be used in
equipment employed in Cuba. It also prevents U.S. companies from
operating on the island.

Garcia said Brazil wished Cuba well in its search for oil. "There are
other companies like Repsol and from China that are trying (to drill for
oil) and I hope they find it," he said.

The U.S. Geological Survey has estimated Cuba has about five billion
barrels of oil offshore. (Additional reporting by Jeff Franks; Editing
by Pascal Fletcher and David Gregorio)

http://www.reuters.com/article/2011/03/10/cuba-oil-petrobras-idUSN1014172920110310