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Cuba Diversifies – But Energy Focus Still on Oil

The Cienfuegos refinery was revived in 2007. Credit: Jorge Luis Baños/IPS

HAVANA, Mar 4 2013 (IPS) - Cuba continues to focus heavily on oil for its energy needs, through agreements with partners like Venezuela, with the hope of discovering commercially exploitable wells in the Gulf of Mexico.

But it is also starting to take steps to diversify energy sources, as part of the ongoing economic reform process.

Investments in the Camilo Cienfuegos refinery will upgrade the waste treatment plant and create automated systems in the truck loading yard in order to cut losses in handling, the plant’s director, Humberto Padrón, told IPS. He also said the refinery would be expanded, to double its processing capacity.

The old Soviet-built refinery, located on the bay in the city of Cienfuegos, 230 km southeast of Havana, was revived in 2007, after years of neglect. It forms part of a petrochemical complex located in one of the special development zones given a boost by the government of Raúl Castro as part of an attempt to bolster the lagging economy.

The reactivation of the refinery, made possible by an agreement between the Cubapetróleo (Cupet) and Petróleos de Venezuela SA (PDVSA) state-run companies, cost some 180 million dollars.

The plant is currently operated by the Cuban-Venezuelan consortium Cuvenpetrol, and only processes crude purchased from Venezuela, with a daily output of 65,000 barrels.

Camilo Cienfuegos is the biggest of the three refineries in Cuba. The other two are located in Havana and in Santiago de Cuba, 850 km southeast of the capital.

The plan is to initially increase production to 85,000 barrels per day prior to the construction of additional installations, and to 150,000 barrels per day after the expansion is completed, Padrón said.

Engineers from China and Italy are now designing the expansion plan, which will be presented to foreign investors in search of financing, Ricardo Caballero, executive president of Cuvenpetrol, told foreign correspondents in early February.

In 2011, the then vice president of China, Xi Jinping, who is set to become president this month, reached a preliminary accord during an official visit to Cuba to finance the expansion of the refinery and the construction of a liquefied natural gas plant.

But Caballero clarified that no agreement had yet been reached with any potential partner for financing the expansion project. The government hopes to find investors within the next six months.

Some five billion dollars in investment is needed for the construction project, which will provide work for engineers and construction workers for four years.

The expansion will double the refinery’s payroll from the current 868 people, which includes 118 women.

Additional petrochemical works are also planned at Cienfuegos. Cuvenpetrol is seeking financing for the liquefied natural gas plant, while Cuvenpeq SA, another Cuban-Venezuelan consortium, hopes to build an ammonia-urea plant.

Caballero said the expansion of the refinery may make it capable of processing other kinds of crude, besides Venezuelan, such as deep-sea reserves found in 2012 in the first prospecting in Cuban waters in the Gulf of Mexico, which so far have proven to be economically unrecoverable.

In January 2012, the Scarabeo 9 drilling rig was brought to Cuba from Asia to sink an exploratory well into the seabed in the Gulf of Mexico. Cuba estimates that there could be up to 20 billion barrels of oil reserves in a 112,000-square kilometre area, although the United States projects a total of about five billion barrels.

But in November, Cuba’s Ministry of Basic Industry announced that the rig would be removed from Cuba, after three failed attempts to find a commercially viable well, financed by PDVSA, Spain’s Repsol, PC Gulf – a subsidiary of Malaysia’s Petronas – and Gazpromneft of Russia.

After this harsh blow, Cupet reported that the Moscow-based firm Zarubezhneft would explore for oil off north-central Cuba using the Norwegian-owned Songa Mercur drilling platform. The Russian state-run company is drilling a 6,500-metre well in an endeavour that is expected to take six months.

The Cuban government has not lost hope that the country will manage to become self-sufficient in energy. In another important development zone, around the port of El Mariel in the province of Artemisa, bordering Havana, the plan is to create a support base for future oil industry activity.

But the need to diversify the energy supply is increasingly seen as a priority in Cuba’s current economic reform process.

The province of Cienfuegos has begun to tap renewable energy sources, the head of the provincial government, Mairelys Pernía, told IPS.

A one megawatt solar park is being built in the province, where there are other projects in the pipeline as well, Pernía said.

The Centre for Local Development Studies (CEDEL) is preparing training sessions for municipal authorities to learn about the alternatives and achieve a more sustainable energy mix.

According to CEDEL researcher Ricardo Berriz, this step forward is “essential for development planning in the country.” The government institution is currently working with 20 of Cuba’s 168 municipalities, which are discussing what energy sources they could harness, depending on local conditions, he told IPS.

“If we move towards a more diverse energy mix, our country will not only be more independent in terms of energy, but we will solve many environmental problems as well,” he said.

To illustrate, he mentioned biodigesters that turn animal waste into clean energy and can be incorporated into production chains.

Half of Cuba’s energy needs are covered by crude oil and natural gas extracted from land wells and shallow water wells. The rest, nearly 100,000 barrels per day, is imported from Venezuela.

In 2011, only 3.8 percent of the electric power generated in Cuba came from renewable sources.

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