Brazilian state-owned oil company Petrobras signed an agreement with Cuba to explore for oil in the country's still untapped offshore fields, which Cuban energy officials say may hold more than 20 billion barrels of reserves.
Petrobras agreed to make an initial investment of $8 million to begin exploration of the block, just off Cuba's northern coast east of Havana. The contract gives Petrobras seven years to explore and 25 years to produce oil and gas in a production-sharing contract with Cuba. Cuba has divided its offshore area in the Gulf of Mexico into 59 blocks, 29 of which have been leased for exploration to companies from around the world, but not the US due to prohibitions under the US trade embargo against Cuba. Brazil got block 37 near the onshore fields from which Cuba currently produces most of its 60,000 barrels per day of oil. The fields include onshore wells that use horizontal drilling to draw oil from reservoirs several miles offshore. Petrobras' block covers 1600 square kilometre and includes waters 1640 feet (500 metres) to 5250 feet deep. Brazilian President Luiz Inacio Lula da Silva and Cuban President Raul Castro attended the signing ceremony in the Cuban capital.
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