1. Cuba’s Energy Situation: Supply Perspective Chip Groat Interim Dean Jackson School of Geosciences The University of Texas at Austin

4. Cuba Energy Consumption (World Resources Institute)

5. Oil consumption by area

6. Oil production by area

7. Major oil trade movements

8. Major gas trade movements

10. Cuba Energy Resource Production and Consumption Oil Production – reports vary Oil Production – reports vary –Cupet reports 67,000 bpd –52,000 bpd (EIA) or 19 million bpy –Reports from unidentified sources: 80,000 bpd 80,000 bpd 60,000 bpd 60,000 bpd Oil consumption is 120,000 bpd (43.8 million bpy) Oil consumption is 120,000 bpd (43.8 million bpy) Natural gas production is 14 bcf/yr Natural gas production is 14 bcf/yr –Consume it all, import none

11. Cuba’s Principal Partner in Latin America is Venezuela Fidel Castro and Hugo Chavez have a close relationship Fidel Castro and Hugo Chavez have a close relationship Energy Interactions Energy Interactions –Venezuela sends 90,000 bpd of oil to Cuba 25% or more of this is free 25% or more of this is free –Cuba produces 80,000 bpd of oil (another source reports 60,000 bpd) –Cuba consumes 120,000 bpd of oil –Exports the surplus of 50,000 bpd Venezuela is assisting in upgrading a refinery Venezuela is assisting in upgrading a refinery

12. CUBAN OIL FACILITIES Cubapetroleo (Cupet) is the national oil company of Cuba in charge of: W Exploration - Production Commercialisation W Refining and Lubricants production Technical Services W Gas supply International Negotiations WResearch and Development Engineering W W W W

13. Cuba’s Energy Resource Base Cuba does not have abundant onshore energy resources Cuba does not have abundant onshore energy resources –Oil reserves, all onshore, are estimated at (EIA): 750 million bbl in 2006 750 million bbl in 2006 120 million bbl in 2007 120 million bbl in 2007 Produce approximately 19 million bpy Produce approximately 19 million bpy No coal (import a small amount) No coal (import a small amount) Sugar cane for use in making ethanol or bagasse for power generation Sugar cane for use in making ethanol or bagasse for power generation

15. Oil and Gas Potential Oil potential in North Cuba Basin (principally offshore): Oil potential in North Cuba Basin (principally offshore): –USGS estimates 4.6 billion bbl undiscovered oil and 9.8 tcf natural gas (mean) –Cubapetroleo says 20 billion bbl oil potential U.S. reserves are 21 billion bbl U.S. reserves are 21 billion bbl Mexico reserves are 11.7 billion bbl Mexico reserves are 11.7 billion bbl

17. North Cuba Basin Undiscovered Resources (USGS, 2004)

18. Cuba’s Partners In Oil and Gas Development Cuba has signed agreements with countries to assist in oil and gas development Cuba has signed agreements with countries to assist in oil and gas development –Venezuela –Brazil –Russia –China Has partners for development of specific blocks Has partners for development of specific blocks –Canada, France, Spain, Sweden

19. OPPORTUNITIES IN DEEPWATER GULF OF MEXICO THE CUBAN GOVERMENT HAS DECIDED TO OFFER ITS DEEPWATER SECTOR OF THE EXCLUSIVE ECONOMIC ZONE OF CUBA IN THE GULF OF MEXICO TO FOREIGN INVESTMENT.

20. CUBAPETROLEO (CUPET) STATE OWNED COMPANY AUTHORIZED TO CARRY OUT EXPLORATION AND PRODUCTION OF HYDROCARBONS BY ITSELF OR IN ASSOCIATION WITH FOREIGN COMPANIES CUPET FALLS WITHIN THE ORGANISATION AND RESPONSABILITY OF THE MINISTRY OF BASIC INDUSTRY, WHICH ALSO CONTROLS MINING, ELECTRICITY, NICKEL AND COBALT, CEMENT, CHEMICAL, PHARMACEUTICAL, GLASS, PAPER AND RUBBER INDUSTRIES.

21. 17 BLOCKS UNDER LICENCE WITH COMPANIES FROM CANADA, FRANCE, SWEDEN, SPAIN AND OTHER COUNTRIES.17 BLOCKS UNDER LICENCE WITH COMPANIES FROM CANADA, FRANCE, SWEDEN, SPAIN AND OTHER COUNTRIES. SINCE 1991 MORE OVER 650 MILLION USD IN EXPLORATION -PRODUCTION ACTIVITIES FINANCED BY FOREIGN COMPANIES.SINCE 1991 MORE OVER 650 MILLION USD IN EXPLORATION -PRODUCTION ACTIVITIES FINANCED BY FOREIGN COMPANIES. OIL PRODUCTION AT PRESENT: 67000 BOE/day CURRENT STATUS OF ONLAND AND SHALLOW WATER BLOCKS

22. BLOCKS AVAILABLE FOR NEGOTIATION IN DEEP WATERS

23. NEW MODEL OF PSA ALL THE OIL AND GAS PRODUCTION WILL BE SHARED BETWEEN CUBAPETROLEO AND THE CONTRACTOR. ALL THE OIL AND GAS PRODUCTION WILL BE SHARED BETWEEN CUBAPETROLEO AND THE CONTRACTOR. THE SPLIT OF THE PROFIT OIL WILL DEPEND ON THE INTERNATIONAL OIL PRICE

24. Shared resources with Cuba

25. Adquisición sísmica en aguas profundas Adquisición 1986 Adquisición 2000 Adquisición 1984 Reprocesadas en DIGICUPET N1 N2 N3 N4 N5N6 N7 N8 N9 N10 N11 N12 N13N14 N15 N16 N19 N20 N21N22N23 N24N25 N30 N31 N32N33 N34N35 N42 N43 N44N45 N49 N50 N51 N53 N54 N58N59 S5 S6S7 S13S14 N17N18 N29N28N27N26 N36 N37 Shared resources with Cuba

26. POZOS 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

27. What Lies Ahead? Hydrocarbons Hydrocarbons –What will stimulate significant activity in the North Cuba Basin? Cuba’s view of the role of resources there Cuba’s view of the role of resources there –Fuel internal development? –Export? Oil price impact Oil price impact –$150/bbl oil vs $40/bbl Transboundary resource development issues Transboundary resource development issues –Methane hydrates Assessment is first step Assessment is first step

28. What Lies Ahead? Similarly, what will stimulate development of biofuels beyond bagasse? Similarly, what will stimulate development of biofuels beyond bagasse? –Ethanol from sugar cane Future role of alternative technologies Future role of alternative technologies –Hydroelectric –Solar –Wind Demand growth and access to technology are key factors Demand growth and access to technology are key factors