OFFICIAL VOICE OF THE COMMUNIST PARTY OF CUBA CENTRAL COMMITTEE
Cupet has prioritized modernizing existing refineries and improving the quality of fuels produced domestically. Photo: www.trabajadores.cu

Aware that the energy sector is one of the 12 areas prioritized for foreign investment, Granma International takes a look at the strategic lines the country has charted for the oil industry this the current year.

It is well-known that 99% of the country's oil production takes place in the region between Havana and Matanzas, where despite being under exploitation for almost 50 years, oilfields still contain reserves of some six billion barrels.

Also mentioned in GI previously is the fact that the country generates 95% of its electricity using fossil fuels, and that the greatest part of the country's territory, coastal and deep waters offers prospects for oil exploration.

Moreover, despite the ongoing development of renewable energy resources, oil is being called upon to play a determinant role in the replacement of imports.

What then are the alternatives, to address what Minister of Economy and Planning

Ricardo Cabrisas described in the National Assembly of People's Power, last December, as "serious limitations" in the supply of fuel?

In what ways, one might ask, can the country find ways to halt the tendency toward decreasing production of crude oil, given the decline in areas under exploitation for decades, where no new fields have been found since the beginning of the century?

On one hand, the 2016 economic balance sheet, and that planned for 2017, have allowed for some growth in the supply of electricity and gas. According to Cabrisas, given insistence on efficiently using energy resources, an increase of almost 7% in consumption was possible.

On the other hand, 2017 production is projected to approach 3.538 million tons of oil and gas equivalent - a figure which over the past few years has been closer to four million - along with growth of 4.2% in the generation of electricity, as compared to the previous year.

It is expected that residential consumption will represent 58.8% of the country's total, and that usage of liquefied gas, fuel oil, and kerosene for cooking will be maintained.

In terms of renewable energy, an increase is projected, fundamentally due to the contribution made by sugar cane biomass and expansion of photovoltaic parks.

BIOMASS AND OTHER RENEWABLE SOURCES

The country has a solar panel production facility in the province of Pinar del Río. Photo: TELESUR

A change in Cuba's energy profile, like the revitalization of the oil industry, will depend significantly on the country's ability to attract international investment to the energy sector.

For example, to reach 2030 with 24% of the country's energy needs met with renewable resources, when the current figure is 4%, will require a greater contribution from biomass.

With a look toward providing more electricity to the national electrical grid, the country's 2016-2017 Portfolio of Business Opportunities for foreign investment includes as possibilities 19 bioelectric plants in sugar mills, which would operate eight months a year with sugar cane biomass, and the rest of the year with residual woody biomass. These could reduce emissions of carbon dioxide into the atmosphere by 1.7 million tons, given less combustion of fossil fuels.

In terms of the promising potential for eolic energy in Cuba, noteworthy is a proposed network of 88 automatic stations measuring wind speeds at a height of 50 meters in 32 areas around the country, along with 12 weather stations which could gather information at altitudes of up to 100 meters.

Based on studies by the Electric Union, included in the portfolio of investment opportunities is the improvement of the country's 13 functioning eolic parks, which could cut emissions by some 900,000 tons of carbon dioxide.

Likewise, an analysis of the potential for solar energy in the country has allowed for the identification of areas with the best prospects for the construction of photovoltaic parks, while the portfolio prioritizes those which could be built as part of the isolated electrical systems serving tourist resorts on remote keys.

The country has a facility producing solar panels located in Pinar del Río, which is seeking international partners to finance an increase in production.

Meanwhile, the construction of 74 small hydroelectric plants associated with the country's reservoirs, rivers, and canals have been planned, looking to reduce carbon dioxide emissions by 230,000 tons by lowering the use of fossil fuels.

Related investment opportunities include the fabrication of turbines, other components, and replacement parts.

Also highlighted as options for investment is the production of clean energy with the significant volume of organic waste generated by the pork, beef, and poultry industries, as well as residuals from sugar mills and food processing plants, which would additionally reduce water contamination.

At the close of 2016, the volume of potentially useful organic residuals was estimated at more than 490 million cubic meters, from the meat and food industries, along with solid waste generated in urban areas.

A MORE EFFICIENT OIL INDUSTRY

2017 production is projected to approach 3.538 million tons of oil and gas equivalent. Photo: Courtesy of Cupet.

Experts have noted that given the predominant use of domestic crude and fuel oil in the generation of electricity, the industry has been able to guarantee stability on the national grid, without depending entirely on imported resources.

Although dozens of fields have been discovered in Cuba, the majority of them contain extra heavy oil. While light, medium, and very light oil does exist, information in the portfolio of investment opportunities - updated for the second time in 2016 - indicates that "fields are located principally offshore and are reached from the mainland via horizontal drilling, which allows not only access to the field, but greater productivity, as well."

While Cupet seeks to modernize its existing refineries and raise the quality of domestically produced gasoline to meet international standards, the company is focusing its efforts on the search for new oilfields; enhanced recovery in those long under exploitation; stable production; and the development of fields in the country's Exclusive Economic Zone in the Gulf of Mexico.

Discussing the main opportunities the company has proposed, Cupet adjunct director Roberto Suárez listed as options shared production contracts in offshore blocs, coastal waters, or on land, and those for improving or increasing production; work on non-conventional sources; oil infrastructure; the development of technical and financial services; as well as the provision of specialized supplies.

Among these priorities, particular emphasis has been placed on increasing storage capacity and improving operational logistics, he said.  

The expert recalled that the National Office of Mineral Resources regulates such activity, as the state entity authorized to approve investors considering participation in the country's oil industry, adding that every contract is approved and protected by a government resolution.

In terms of refining, proposed projects include work on Cuba's four existing refineries: one in the central region devoted primarily to the production of high-quality asphalt with domestic crude; one in Cienfuegos, a joint venture between Cupet and Petróleos de Venezuela, S.A., which is currently undergoing an investment process; and those of Santiago de Cuba and Havana.

EXPLORATION

This past November, Cupet signed a contract with the Chinese company BGP to begin a non-exclusive 2D seismic testing effort in Cuban waters, to initiate a project central to the industry's development plans, which includes the acquisition, processing, and interpretation of data gathered in 25,000 kilometers of high resolution seismic lines in areas of the Gulf Exclusive Economic Zone, as well as areas in waters off the northern, central, and southern coasts.

The project undertaken with one the world leaders in this type of testing will require approximately 12 months, and is the largest of its kind to be conducted in Cuba to date, and will allow for the identification and evaluation of areas with potential for exploration.

With the same bedrock and geology found in other Gulf of Mexico oil fields, the 20 blocs in Cuba's Exclusive Economic Zone could potentially produce between 10 and 20 million barrels.

CUPET ALSO LOOKING TO MARIEL

Suárez also reported that Cupet has established important objectives in the Mariel Special Development Zone (ZEDM), saying that the company is available to work with potential partners on new projects.

He noted that Cupet has signed four important agreements for projects in the ZEDM, including the construction of a plant to produce lubricants with the latest technology; one for synthetic asphalt and special solutions; installations for the storage and supply of gas; and a new fuel terminal, which could serve both ships as well as companies in the Zone. The first three of these projects will be carried out as joint ventures, while the last will be undertaken by Cupet on its own, Suárez reported.