By Laurie Goering. Tribune staff reporter.
Chicago Tribune. April 3, 2001
HAVANA -- Oil shortages have long been Cuba's nemesis.
When the Soviet Union pulled out a decade ago, the country's oil supply
disappeared almost overnight, halting traffic across the country. Last year,
high world oil prices forced Cuba to shutter energy-intensive industries and cut
production at others. Even so, the island spent $500 million more on fuel than
it had projected, sinking its economic growth to 5.6 percent,more than two
points below projections, according to government officials.
However, Cuba is fighting back. After several years of investment to boost
domestic energy production and launch offshore oil exploration with
international partners, the island is moving toward its longtime dream of energy
self-sufficiency, at least in electrical generation.
"We have a clear strategy to meet our energy requirements. That's
something we didn't have 10 or even five years ago," said Felipe Perez
Roque, Cuba's foreign minister.
So far this year, Cuba has been producing 70,000 barrels of oil per day,
more than 40 percent of its overall needs. Last year, Cuba produced 18 million
barrels of oil, nearly double 1998 production, said Jose Luis Rodriguez, Cuba's
economic minister.
The expansion is evident along Cuba's northern coastline, where dozens of
red and green pumping rigs nod along the beachfront. "Petroleum, yes;
inefficiency, no," reads a sign painted on a wall fronting oil holding
tanks near Guanabo, east of Havana.
Cuba's domestic production doesn't begin to match the former imports of
nearly 220,000 barrels a day during the subsidized Soviet era, but it represents
a major advance for the island.
The oil, a heavy sulfur-laden crude, has been used primarily to power the
country's electrical generators and meet growing demand for power by both
industry and a flood of tourists.
In the 1990s, only 25 percent of Cuba's electrical needs were met by burning
domestic oil. Last year the figure hit 52 percent, Rodriguez said, and the
country expects in the next year or two to fill 70 percent or perhaps as much as
90 percent of its electricity demand with domestic oil.
"Cuba now imports two-thirds of its energy needs, but by the end of
this year we expect to reduce that to one-third," Perez Roque said.
Producing oil at home is vital for the cash-strapped island, which has
struggled to finance oil imports. According to Rodriguez, Cuba is able to
produce its own oil at about a quarter of the cost of buying imported crude.
Cuba's import woes were eased somewhat last year after Venezuela--run by
Fidel Castro's best friend in the region, President Hugo Chavez--cut a deal with
the island to supply 53,000 barrels of crude a day at favorable financing rates.
The agreement quickly turned Venezuela into Cuba's top trade partner, displacing
Spain.
But with world oil prices at high levels, Cuba still feels the pressure to
cut imports.
"Substitution doesn't just represent a big savings for the country but
also lowers the cost of production for industries (such as cement production)
and eliminates uncertainty about whether imported fuel will arrive on time or
not because of financial and credit difficulties the country faces," Cuba's
Opciones magazine noted in a February edition.
In an effort to further boost its domestic energy production, Cuba has begun
for the first time capturing natural gas, which used to be burned off as a waste
product of oil production.
This year, after a $300 million investment in technology to capture natural
gas for electrical generation and for cooking gas--a joint project with foreign
partners--Cuba expects to produce 600 million cubic meters of natural gas, the
equivalent of 3 million barrels of oil, according to Castro.
Much of the energy is being directed to Varadero to supply booming tourist
demand in that northern beach city. The island also hopes to soon begin
supplying 40 percent of its own cooking gas needs, Perez Roque said.
Combining oil and natural gas, the island hopes to reach a domestic energy
production equivalent to 36 million barrels of oil annually by 2005, according
to Cuban officials.
The island's leaders also are looking offshore. Brazil's Petrobras and
Canadian Sherritt International have been drilling test wells in the shallow
waters off Cuba's Ciego de Avila province since 1999 in hopes of finding
reserves they hope might reach 500 million barrels.
So far, however, the consortium has yet to make any strikes, said Nancy Roy,
a spokeswoman for Toronto-based Sherritt.
Cuba also recently opened the first blocks of a 42-square-mile deepwater oil
exploration zone in the Gulf of Mexico to Spanish-based Repsol YPF, and is in
negotiations with other foreign companies to begin exploration in the remaining
blocks, Cuban officials said. | 