Cuban Oil - Black Gold or Black Hole?

Cuban Oil: Black Gold or Black Hole?
By Suzanne O'HalloranPublished October 14, 2015 FOXBusiness

Cuba has oil and gas. That is certain, say geologists. The big question
is just how much. Chris Schenk, Geologist at the U.S. Geological Survey,
was one of the first to assess the island's natural resources. By
Schenk's estimate Cuba has at least 4.6 billion barrels of undiscovered
oil and 9.8 trillion cubic feet of undiscovered natural gas. Both are
considered significant enough to pique the interest of any major energy
company in the world. "People are always interested in where the oil
is," Schenk told FOXBusiness.com. The challenge is finding and tapping
those resources, which are said to be primarily in the North Cuba Basin
on the northwestern part of the island.

U.S. President Barack Obama and Cuban President Raul Castro sat down at
the United Nations in late September as part of the ongoing efforts to
thaw relations that began earlier this year. Even before the two
countries started talking the Cuban government was laying the groundwork
to attract partners to harness its natural resources using modern
technology. Last year, Cuba's Ministry of Foreign Trade and Investment
announced it was seeking $8 billion in foreign investment as reported by
the USGS. 86 of 246 planned projects are in the petroleum sector for
both on and offshore blocks.

"It's another Gulf of Mexico play, a possible extension of what the
industry has achieved in that region," said Richard Sawaya, Vice
President of USA*Engage, during an interview with FOXBusiness.com. His
organization, a broad-based coalition, is an advocate for normal
commercial relations among countries and supports the lifting of
sanctions against Cuba. However the natural resources industry may not
be as aggressive in Cuba as they might have been back in 2014 when oil
prices were hovering around $100 a barrel. Prices have fallen 50% since.

"Given what has happened to oil prices it would be hard for me as a
veteran of the industry to see exploratory work as high on the list" for
major energy companies, he said. Sawaya was a longtime executive at
Atlantic Richfield Company (ARCO) which was acquired by BP (BP) in 2000.

Still, Sawaya notes there will be conversations. Drilling giant
Halliburton (HAL) is just one of the major U.S. energy companies eyeing
Cuba. A spokesperson tells FOXBusiness.com that they are closely
monitoring the discussions between the U.S. and Cuba.

Canadian oil company Sherritt International, which has been operating in
the region for 20 years, tells FOXBusiness.com executives are watching
the developments with great interest. Sherritt currently produces
34,000 tons of nickel annually and 18,000 barrels of oil a day. "We have
found Cuba to be a good stable environment for our business," said Scott
Tabachnick, Senior Manager, Investor Relations and Communications, at
Sherritt, adding, "What's good for Cuba tends to be good for Sherritt."


Suzanne O'Halloran is Managing Editor of FOXBusiness.com and is a
graduate of Boston College. Follow her on Twitter @suzohalloran

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