Sinopec signs up for oil production in Cuba

China's oil and gas giant Sinopec has signed an agreement with Cuba's state-run Cubapetroleo (Cupet) to jointly produce oil on the Caribbean island, the Cuban government announced.
"A joint production contract was signed on Sunday for one of the potential petroleum producing zones of the country," said a brief statement. A source in Cupet said the production area was on the coast of western Pinar del Rio province.

Sinopec, China's second largest oil and gas giant, is one of the most important firms to enter a production agreement with the Cuban state oil monopoly. China National Petroleum Corporation and China National Offshore Oil Corp. have also been talking with Cupet, Cuban officials said.
Canadian companies are producing heavy oil and gas from coastal reserves, while other multinationals are looking for lighter oil in the deep waters of Cuba's Gulf of Mexico economic exclusion zone.

Spanish oil company Repsol-YPF reported last year that the first deep-water well drilled in Cuba discovered non-commercial quantities of good quality oil, and the company plans to drill again in 2006.
The 43,250-square-mile (112,000 sq km) area was opened to foreign exploration in 1999. To date, Repsol and Canada's Sherritt International have signed exploration contracts, taking six blocks and four blocks, respectively, off the northwest coast. Brazil's Petrobras is also looking at seismic data, but has discarded as uninteresting two of the three blocks offered by Cuba, a Brazilian diplomat said.

Cuba produces around 80,000 bpd of heavy crude at 8 degrees API to 18 degrees API and with a high sulphur content, 60 % in conjunction with Sherritt and Canadian company Pebercan. Various companies have explored for oil in Cuba over the last 15 years with the only new discoveries along the northwest heavy oil belt, an 80 mile (128 km) stretch of coast in Havana and Matanzas provinces.
President Fidel Castro recently announced the discovery by Sherritt and Pebercan of a new deposit in the area at 18 degrees API, with an estimated 100 mm barrels of oil, and plans to look at two similar nearby deposits.

Cash-strapped Cuba consumes about 150,000 bpd, of which 53,000 bpd of oil and oil products are imported from Venezuela on generous financing terms under a wide-raging cooperation accord.
The island nations wants to cover 60 % of its energy needs by 2006.