Brazil inks deal to hunt for, produce oil in Cuba (Updated)

© AP 2008-11-01 04:05:01 - HAVANA (AP) - Brazil's state-run oil company signed an agreement Friday to explore for oil in deep Caribbean waters north of Cuba that officials in Havana say could contain 20 billion barrels of crude. Under the deal, Brazil's Petroleo Brasileiro SA would spend seven years on exploration and _ if the reserves are confirmed _ 25 more producing oil and natural gas recovered at a site north of the world-famous beach resort of Varadero, 80 miles (130 kilometers) from Havana. The agreement calls for an initial investment of $8 million by Petrobras. After an exploration phase of 18 to 24 months, more funds from Petrobras and its Cuban counterpart, Cuba Petroleo, could come, depending on how much oil can be exploited. «I don't understand why it took so long to sign this agreement,» said Brazilian President Luiz Inacio Lula da Silva, who presided over a signing ceremony for the deal with Cuban President Raul Castro. «There's a geological study process and I hope the results will be positive and we will search at whatever depth. The agreement gives Petrobras control of one of about 60 offshore plots in the Gulf of Mexico that Cuba has established for exploration by international companies. Cuba suggested earlier this month that its offshore reserves potentially could produce 20 billion barrels of oil, more than double previous estimates. Castro joked Friday that «God would not be so unfair to us as to not let us hit anything» while exploring in the Petrobras block. Silva also said that Castro will travel to Brazil in December, a trip that would be his first official overseas visit since succeeding his older brother Fidel as Cuba's president in February. When asked about that trip, the younger Castro appeared to confirm he would make, saying he would «soon see» the Brazilian people in their country. Brazil is Cuba's second-largest Latin American trading partner, behind Venezuela. Brazil-Cuba trade generated $483 million through September, already surpassing $450 million for all of 2007, according to official figures. Silva left Cuba on Friday afternoon, but told reporters at the airport that he met for two hours with Fidel Castro, 82 and ailing, who has not been seen in public since undergoing emergency intestinal surgery in July 2006. «I'm leaving happy having seen Fidel,» he said. In comments released later by the Brazilian government, Silva said he thought the older Castro brother «is of an extraordinary mind, as lucid as he ever was. «I even told Fidel that when I arrived to visit him I thought he seemed exhausted. And after half an hour of conversation, it seemed like I was the one who was sick and he was fine,» Silva said. Fidel Castro called the meeting «friendly and respectful» in an essay published online Friday night by Cuban state media, and said he requested Silva make time to see him «despite his busy schedule. Cuba's government did not immediately release images of the encounter. When Silva came to Cuba in January, the pair spoke behind closed doors, after which official media released images of the encounter that provided one of the few hints about Fidel Castro's health this year.

A big oil discovery could bring new prosperity to Cuba, which currently produces 60,000 barrels per day from offshore wells, but imports 90,000 bpd from Venezuela to meet its energy needs. State-owned Cubapetroleo, or Cupet, stunned the oil world two weeks ago when it said it believes it has at least 20 billion barrels of oil offshore, or more than the generally accepted top estimate. Cuba has divided its offshore area in the Gulf of Mexico into 59 blocks. Petrobras' block covers 1,600 square kilometers and includes waters 1,640 feet (500 meters) to 5,250 feet (1,600 meters) deep. Petrobras is one of the world's top offshore oil producers. HSH/RA Original source at PressTV