China signs offshore drilling agreement with Cuba

Chinese Vice President Xi Jinping and Cuban President Raúl Castro

During the official visit that Chinese Vice President Xi Jinping recently paid to Cuba, CNPC President Jiang Jiemin and Cuba Petróleo (CUPET) CEO Raúl Pérez signed an expanded cooperative framework agreement between the two state-owned companies, from China and Cuba respectively.  Cuban President Raúl Castro and the Chinese Vice President presided over the signing ceremony.

The agreement is signed in Havana

This agreement includes the contracting of blocks N19, N20, N21, N22 and N30 at the western edge of Cuba’s exclusive zone, close to the maritime border with México. These blocks contracted by China are right beside four blocks leased by Petrovietnam, and four blocks that Sonagol, Angolan state company, is still negotiating.

A memorandum of understanding on cooperation in engineering construction was also signed during the ceremony; this MOU is for the $6 billion expansion of a refinery in Cienfuegos, which will process Venezuelan and Cuban crude.

North Cuba Basin

Cuba owns 112,000 sq km (43,240 sq mile), also known as the North Cuba Basin, which has been parcelled into 59 exploration blocks that are up for grabs for distant bidders, such as India, Norway, Spain, Brazil, Canada, among others. U.S. companies can only watch how this great business opportunity passes by, literally in front of them, due to the 50 year old economic and financial blockade their country imposes on Cuba.

A U.S. Geological Survey report published last year estimates that 4.6 billion barrels of oil and 9.8 trillion cubic feet of natural gas could lie within the North Cuba Basin, while initial test drilling results added to mounting oil prices indicate a promising prospect for the deep-water Cuban reserves.

In the United States the prospect of oil in Cuba’s territorial waters has stirred up the debate of whether the blockade, archaic and failed, should be lifted, or at least relaxed, as Republicans Jeff Flake and Larry Craig have suggested, so that U.S. companies do not lose out on valuable energy resources only 80 km (50 miles) off Key West. On the other side, staunch supporters of Washington’s traditional hostile approach to Cuba, led by House Foreign Affairs Committee Chairman Ileana Ross, a Republican of Cuban descent, and a hardliner who bitterly opposes any “concessions” to Cuba, introduced legislation last month that would penalize companies that spend $1 million or more developing Cuba’s offshore petroleum resources and block its principals from entering the U.S.

Chinese build oil rig

For both sides, the signing of this agreement between China and Cuba is really bad news; for the moderate, a priceless business opportunity escapes their hand; for the extremists, Cuba, as usual moves forward towards its development, regardless of their hate and opposition. This must be especially sad for Ileana Ross, who loses once more against Cuba.