Oil has been discovered close to the United States coastline …. in Cuban waters.
Two Canadian-based companies — Sherritt International and Pebercan — made the find less than 100 miles south of Key West, Fla.
President Fidel Castro, speaking behind closed doors to Cuba’s parliament on Christmas Eve, estimated the find at 100 million barrels, a figure one of the two companies downplayed until it has a chance to delineate the field.
Pebercan said in a news release that the field could cover more than five square miles and claimed the crude is of a higher quality than oil being produced in the area. Sherritt has made no comment.
Online by 2006, says CastroBut Castro hailed what he said was Cuba’s first discovery since 1999, predicting it will be on stream by 2006.
He said the co-venturers plan to drill two test wells and explore three other potential prospects in 2005.
Currently, the island nation produces half of the 150,000 barrels per day it consumes, with the balance coming from Venezuela.
Cuba opened up the 29,000 square mile lease to foreign explorers in 1999, but only Spain’s Repsol and Sherritt have negotiated exploration contracts, while Brazil’s Petrobras is studying data from two deepwater blocks and two Chinese companies are reported to have shown interest.
Pebercan was incorporated in 1987 and has confined its operations to Cuba, where it holds 1.5 million gross acres and produced 12,800 bpd from gross proved and probable reserves of 67 million barrels.
Sherritt, with a market capitalization of C$1.18 billion, is a diversified natural resource company active in thermal coal production, nickel/cobalt mining, oil and gas exploration and electricity generation in Canada and Cuba.
It is the only firm to have been hit under the U.S. Helms-Burton law for mining on property expropriated from U.S. companies in 1959 by Castro.
The penalties prevented Sherritt’s directors and senior executives from entering the United States. Chairman Ian Delaney scoffed that he had no interested in traveling to the United States anyway.
In 1999, Sherritt was one of 40 companies named in a US$1.35 billion lawsuit, filed in a Miami court by two Cuban exile groups.
The plaintiffs said Sherritt was investing in a hotel complex east of Havana and was working with the Cuban government to pay workers only C$5 a month each while the government kept the rest.
Although Sherritt has enjoyed a robust cash flow over recent years, it has been urged by the investment community to diversify outside Cuba.
The week of Dec. 20 it teamed up with the huge Ontario Teachers’ Pension Plan to launch a C$1.8 billion bid for steelmaker Stelco — a move that has been welcomed by the Dominion Bond Rating Service.