Brazilian President Luiz Inacio Lula da Silva met with acting Cuban leader Raul Castro Tuesday in Havana to ink the deal that would give Brazil's Petrobras access to Cuban waters, where it hopes to begin drilling in the next two years.
Joining Lula on his trip was Petrobras chief Jose Sergio Gabrielli. While Petrobras and Cuba already have a longstanding relationship, Tuesday's agreement marked the first time the Brazilian company would be granted access to the gulf area coveted by several nations, including China and India.
According to the U.S. Geological Survey, some 4.6 billion barrels of crude oil and 9.8 trillion cubic feet of natural gas may well be lurking below the ocean floor of the Northern Cuban basin. The reserves are said to possibly rival the estimated reserves in Alaska's Arctic National Wildlife Refuge.
That kind of crude would more than meet Cuba's daily oil intake -- about 205,000 barrels per day -- and provide enough excess to transform the country from being dependent on the largesse of Venezuela's Hugo Chavez to a global player on the oil market.
Several nations are already banking on Cuba's oil potential. China has invested an estimated $1 billion with the intention of exploring its offshore deposits, and India's state-run oil company has penned a deal with Cuba to explore offshore as well.
Said Cuban state oil President Fidel Rivero: "Important potential exists in this zone, and the idea is to study it."
Rivero noted Brazil was among those nations that have shown a commitment to Cuba by way of investments over the years and praised the South American nation for the deal signed Tuesday whereby Brasilia promised food, infrastructure, medicines and other essentials in exchange for drilling rights.
Some analysts are skeptical of Cuba's potential oil wealth.
"Cuba's oil potential is just that, potential," Larry Birns, director of the Washington-based Council on Hemispheric Affairs think tank, told United Press International.
That skepticism hasn't been enough, however, to dissuade nations from wanting to enter the Cuban petroleum race.
Last month Chavez traveled to Cuba for the grand reopening of a Soviet-era oil refinery.
The refinery has been dormant since the late 1980s, though with the help of Venezuela and some $136 million in repairs funded by Caracas, the plant is expected to go online Friday, according to Cuban state media.
The plant will reportedly be able to process some 65,000 bpd. Venezuela meanwhile sends about 100,000 bpd to Cuba as a discounted price, part of Chavez's Petrocaribe agreement for Caribbean nations.