Russia secures re-entry into Cuban oil sector with new contracts

HAVANA, July 30 (UPI) -- Russia has secured re-entry into Cuba's potentially promising energy sector with contracts that give Russian oil company Zarubezhneft access to the exclusive economic zone in the Gulf of Mexico and possibly other parts of the energy industry.

Russian Deputy Prime Minister Igor Sechin, who met with Cuban President Raul Castro and other officials during a visit this week, said the contracts heralded an era of "new opportunities for Cuba as well as Zarubezhneft."

Neither the Russian RIA-Novosti and Itar-Tass news agencies nor the Cuban media gave much away in their dispatches on the deal. But Zarubezhneft's Web site made clear Russia saw the signing as a resumption of close collaboration in the energy sector.

"Considering the work experience in Cuba in Soviet times," the company Web site said, Russia is looking to collaborate with Cupet, the Cuban state oil company, in oil prospecting, oil recovery and sale of Russian equipment and parts for the Cuban oil industry.

Itar-Tass said Sechin's team signed four contracts between Zarubezhneft and Cupet in the oil production sphere but gave no other details.

Oil industry analysts see Cuba on the cusp of an energy bonanza, even if Cuba's own estimates of 20 billion barrels of offshore oil reserves prove to be closer to U.S. Geological Survey estimates of 5 billion barrels of oil and 10 trillion cubic feet of natural gas.

Only one test well has been drilled so far. That well was drilled by Spain's Repsol-YPF, which so far has delayed work on a second test well.

Cuba has divided its offshore area into 59 blocs, and has contracted out 21 to seven different companies.

During Sechin's visit Russia also secured a new foothold in Cuba's agriculture and construction industries with $150 million in credits for the purchase of Russian equipment needed in areas hit by three consecutive hurricanes last year.

Industry sources said the credits would ensure large parts of Cuban agriculture and building industry would become reliant on Russian machines and spare parts in the long term.