Cuba says to drill for oil in deep water despite low prices

Cuba says to drill for oil in deep water despite low prices
(In 12th paragragh corrects month of change in sanctions to July, not
January)
By Jaime Hamre

Oct 21 (Reuters) - Cuba plans to drill exploratory deepwater wells in
the Gulf of Mexico by the end of 2016 or beginning of 2017 despite
current low oil prices, officials from the state oil monopoly said.

Cuba-Petroleo (Cupet) will drill exploratory wells as deep as 7,000
meters (223,000 ft) in waters of up to 3,000 meters in production
sharing contracts with Venezuelan state oil company PDVSA and Angola's
Sonangol.

"We will initiate a drilling campaign at the end of 2016 or the start of
2017," Osvaldo Lopez, Cupet's head of exploration, told Reuters on
Wednesday.

"The essential goal of the new drilling campaign is at least two deep
wells. There could be three. If there is a discovery there certainly
will be more than two," Lopez said on a tour of oil wells with
international industry representatives.

Experts believe billions of barrels worth of oil lie beneath the waters
off Cuba's northwest coast, but a host of companies that have drilled
over the years have come up dry.

Exploration has long been impeded by the U.S. trade embargo and is
further complicated at times of low oil prices such as the present.

Crude oil prices have fallen in half over more than a year and the most
recent forecasts project them going lower in 2016.

"We are working with several companies interested in studying the
possibilities, but the price of oil makes these processes drag out a bit
longer since companies cut their budgets," Cupet Deputy Director Roberto
Suarez told Reuters on Tuesday.

Cupet will also decide among several offers for seismic testing from
companies such as France's CGG SA and Norway's Spectrum ASA in the next
four to five months, Suarez said.

The potential of Cuba's oil industry has long been a subject of
fascination as a possible source of funding for its socialist
revolution, especially after the collapse of the Soviet bloc.

Venezuela has since become a benefactor, and interest has been raised
anew since the past year's diplomatic opening with the United States has
raised the possibility of U.S. exploration.

For now, the U.S. economic embargo remains in place but under a
relaxation of sanctions that took effect in July more rigs could become
available to Cuba. Cuba can now use products made with 25 percent U.S.
components, up from 10 percent previously.

Only one known deepwater rig in the world met the 10 percent threshold,
and Cuban officials said they knew of at least one that met the 25
percent standard.

As for exploration and production, Cupet does not currently have any
proposals from U.S. oil companies, Suarez said.

"This kind of company is very sensitive to legal matters, so they are
going to take it step by step," he said. "There's not going to be an
avalanche."

Cuba receives much of its oil from socialist ally Venezuela, which
continues to supply approximately 100,000 barrels of oil to Cuba per
day, Suarez said.

"Everything remains the same (with Venezuela) because those are state
agreements, not through the company," Suarez said. (Reporting by Jaime
Hamre; Editing by Daniel Trotta and Marguerita Choy)

Source: CORRECTED-Cuba says to drill for oil in deep water despite low
prices | Reuters -
http://www.reuters.com/article/2015/10/22/cuba-oil-idUSL1N12J1OE20151022