Updated 01:41 AM EST, Fri, Nov 15, 2019

Cuba's Oil Sector a Promising Prospect Despite Depressed Prices

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Cuba has been facing different crises these days. From the food crisis that cannot feed enough of its own citizens, to a migrant crisis that is putting Cubans in danger, the country is struggling as their lack of cash worsens.

However, not all is lost. Cuba and the US restored diplomatic relations after five decades of hostility, lifting the embargo and even establishing embassies in each other's countries.

There's also good news for Cuba's oil sector. According to UPI, independent oil company MEO Australia announced a number of wells drilled near the coast of Cuba have started to recover oil. The area, called Block 9, showed data that gave the company confidence for potential prospects in the Latin American country.

Oil reserves in Cuba were estimated last year to come to about 4.6 billion barrels of crude oil and 9.8 trillion cubic feet of natural gas. These vast reserves are said to be located within 50 miles from the Cuban shores. The island currently produces about 80,000 barrels of oil per day, and according to Sherritt International, the only foreign company producing in the island says that estimate costs would set back investors to a mere $9 per barrel.

As mentioned by Rig Zone, the initial analysis identified the presence of "structural trends on Block 9," with a significant number of additional structure being identified during the initial interpretation of seismic data. The wells were able to recover more than 30 barrels of light oil in Guadal-1, 20.5 barrels on Marti-5, and 22 barrels in Bolanos-1. Of course, it should be noted that these wells were drilled between the years 1970 to 1991.

In a press release as cited by Stock Market Wire, MEO thinks that the first half of 2016 will see positive news from Block 9, including a strong early mover advantage that could help strengthen the diplomatic relations between US and Cuba.

Peter Stickland, MEO's CEO, said that Block 9 is currently their biggest priority. He shared, "Interpretation of the data that has been received so far suggests a rich petroleum system is present, that there are a number of old wells that have tested oil and there are a significant number of prospective structural trends in Block 9."

Leni Gas Cuba chair David Lenigas noted, "The low operating cost environment in Cuba support strong profitability levels even in depressed oil price conditions and the improving diplomatic relations with the U.S. is expected to drive substantial foreign investment over the coming years."

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