According to Trading Charts, a financial online news service, the Santa Cruz oil site produced 1,000 tons of crude December 14-19 and promises to yield around 14 million tons of light, good-quality petroleum. Cuban state-owned Cubapetroleo, working with Canadian companies Sherritt and Pebercan, will drill two new test wells and continue exploration of three other potential deposits this year.

In 1999, Cuba opened up a 112,000-square-kilometer area of its waters in the Gulf of Mexico to foreign exploration, in hopes of tapping into similar oil reserves as those found off the gulf near the shores of Mexico and the United States. Brazil’s Petroleo Brasiliero SA, Canada’s Sherritt of Toronto and Pebercan of Montreal, and Spain’s Repsol YPF SA have since begun joint ventures with the Cuban state to contract blocks of this area for deep-water exploration. Joint ventures between the Cuban government and foreign companies—particularly Canadian firms—account for 60 percent of Cuba’s oil and gas output.

In the early 1990s Cuba’s trade on preferential terms with the former Soviet-bloc countries, which accounted for 85 percent of the island nation’s trade, was disrupted. Cuba’s economy went into a severe downturn commonly referred to in Cuba as the “special period.” Due to the rise of oil prices and lack of hard currency because of Washington’s economic war, Cuba has strived since that time to meet much of its domestic needs for petroleum through internal production.

According to the Washington-based Energy Information Administration, Cuba has more than tripled its oil production since 1991. Its natural gas production has also increased significantly. A July 29 Chicago Tribune article reported that Cuba currently produces about “75,000 barrels of oil a day, half of its current fuel consumption.”

Because of the poor quality of this domestic crude oil, however, Cuba has needed to modify its power stations to cope with the high sulfur content. Recent electricity blackouts in Cuba have been caused by the antiquated transmission lines and costly maintenance of these power plants, rather than by fuel shortages.

Cuba imports most of its higher-grade oil from Venezuela. The Caracas Accords signed in 2000 give 11 Caribbean nations preferential rates on oil imports. Under the Caracas deal, 80 percent of Venezuela’s oil shipments to Cuba are to be paid at world market prices within 90 days of delivery. The remaining 20 percent is sold by Venezuela on preferential terms: payable within 15 years, with a two-year grace period and interest rate of 2 percent.

In exchange, Cuba has offered free health care at its medical facilities for thousands of patients from Venezuela. Thousands of Cuban doctors are also currently serving on a volunteer basis in working-class neighborhoods across Venezuela. The Caracas Accords are scheduled to expire in 2005, but other trade agreements between the two nations are in the works.

The Canadian companies Sherritt and Pebercan are also planning to invest $1 billion in Cuba to increase nickel and cobalt production from 50,000 to 85,000 tons. The government of China has also reportedly agreed to loan up to $2 billion to Cuba for joint nickel and nickel-iron mining ventures. During a November visit to Havana by Chinese president Hu Jintao, Castro said China’s investments would help Cuba double its nickel output. Driven by its recent economic expansion, there is increased demand in China for this metal. Cuba, which has the world’s third-largest nickel reserves, currently accounts for half of China’s nickel imports.  
 
 
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