NotiEn - A Newsletter on Energy Policy Issues in Latin America
June 30, 2011Vol 2, Issue 9

Central America, Cuba Focus on Energy Sectors to Boost Development; Mexico Finds Huge Gas Reserve

A NOTE FROM THE EDITOR

As Central America and Cuba look for opportunities to enhance their economic development, they are also looking for ways to increase their energy independence.  Cuba is seeking to develop its own source of crude oil, while Central American countries are looking at biofuels to provide an alternative source of energy.

 

In the case of Cuba, the island nation has for the past several decades relied heavily on outside benefactors, first the former Soviet Union and now Venezuela, to provide subsidized oil.  At present, Venezuelan imports still account for about 54% of Cuba's consumption of oil and natural gas.  But the Cuban government is trying to reduce its reliance on Venezuela by accelerating its production, tripling its refining capacity, and tapping potential reserves in its exclusive economic zone in the Gulf of Mexico.  To develop its oil reserves in the Gulf of Mexico, Cuba is seeking investment from foreign oil companies, but this plan has raised environmental and poitical concerns in the US.

 

Central American countries have also relied heavily on fossil fuels, including subsidized oil imports from Venezuela and Mexico.  But the recent increase in oil prices and a short supply of fossil fuels are forcing Central American nations to embrace and start exploring alternative sources of energy production, and many policymakers in the region are looking at what Brazil has done.  Honduras, in particular, appears poised to boost its biofuels industry, creating ethanol from African palm.  Central American governments are also considering other crops to produce biofuels. Jatropha curcas, a tree-like plant that grows in poor soil and has limited need for water, is becoming a strong option for El Salvador, Nicaragua, Guatemala, Costa Rica, Panama, and Honduras.

 

With a large supply of sugarcane, Cuba could also develop an ethanol industry.  But the government has strongly opposed the use of any food crops to develop energy, so this option is currently not one that is being followed. Like the rest of Latin America, Mexico is seeking to enhance its source of oil in the face of rapidly dwindling supplies.  In May of this year, the state-run oil company PEMEX announced the discovery of what it considers a "significant" reserve of natural gas in the deep waters of the Gulf of Mexico.  While the size of the reserve was impressive, some analysts pointed out that low prices, high extraction costs, and an uncertain global market for natural gas take some of the luster off the discovery. Another problem is that the discovery involves natural gas, not crude oil, which is what Mexico needs most at this point.

 

Carlos Navarro - Editor   

In This Issue...
A Note From the Editor
Cuba's Oil Plans Gather Speed with Foreign Aid Causing U.S. Concern
Biofuels Fighting for Space in Central America and Cuba
State-run Oil Company PEMEX Announces Discovery of Significant Natural-Gas Reserve in Deep Waters of Gulf of Mexico
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Cuba's Oil Plans Gather Speed with Foreign Aid Causing U.S. Concern - By Daniel Vázquez    

Cuba is accelerating its oil-sector investments to increase its production, triple its refining capacity, and tap potential reserves in its exclusive economic zone in the Gulf of Mexico through a strategy that is attracting foreign companies and motivating environmental as well as political concerns in the US.

 

This year, the island will produce about 28 million barrels of oil.  Cuba generated 21.4 million barrels in 2010, which in addition to natural gas represents 46% of its energy consumption.  Oil supplied by Caracas, Havana's main political and economic ally, meets the rest of the country's needs.

 

Cuba will start drilling exploratory wells this year in its exclusive economic zone (EEZ) of the Gulf of Mexico under contract with Statoil (Norway), which has formed a consortium with Repsol (Spain), OVL (India), Petróleos de Venezuela (PDVSA), PetroVietnam, Petronas (Malaysia), and Sonangol (Angola).

 

Cuba's EEZ covers a 112,000 sq km area, divided into 59 blocks, 22 of which are under contract to foreign oil companies.  Initially, they plan to drill five wells between 2011 and 2013 in the ultradeep waters off the northwestern coast of the island, near the beaches of the Florida Keys.   Read more... 

 

Biofuels Fighting for Space in Central America and Cuba
By
Adriana E. Sánchez, Special to NotiEn  

Brazil has found great success building its ethanol industry with the use of sugarcane, and there are suggestions that other countries in Latin America might replicate this feat, allowing them to use biofuels to increase their energy independence.  Central American countries and Cuba share some similarities with Brazil, and they are the ones often mentioned for potential growth in biofuels.  These countries face significant obstacles because of a lack of infrastructure and inadequate energy policies, which make them particularly dependent on foreign imports of fossil fuels to partially satisfy their populations' growing energy demand.

 

"Brazil started the ethanol infrastructure many years ago; Brazilians strengthened their agricultural research of sugarcane, have more than enough land to cultivate the crop, and have invested heavily in technology.  I don't believe Central America can imitate Brazil's model right now," Ismael Antonio Sánchez Figueroa, the chief energy expert of the Universidad Centroamericana José Simón Cañas in El Salvador, said during an interview with NotiEn.

 

Central America explores various biofuel options

Despite their limitations, the recent increase in oil prices and a short supply of fossil fuels are forcing Central American nations to embrace and start exploring alternative sources of energy production, and many policymakers in the region are looking at what Brazil has doneRead more... 


State-run Oil Company PEMEX Announces Discovery of Significant Natural-Gas Reserve in Deep Waters of Gulf of Mexico - By Carlos Navarro    
PEMEX

In late May, the state-run oil company PEMEX announced the discovery of what it considers a "significant" reserve of natural gas in the deep waters of the Gulf of Mexico.  While the size of the reserve was impressive, some analysts pointed out that low prices, high extraction costs, and an uncertain global market for natural gas take some of the luster off the discovery.

 

The natural gas was discovered while PEMEX was exploring for new supplies of crude oil at the Piklis-1 well, which, at a depth of 5.4 km, is the deepest that PEMEX has drilled to date.  The reserve appears to contain between 400 and 600 billion cubic feet of gas.

 

In announcing the discovery, Carlos Morales Gil, director of the PEMEX subsidiary Pemex Exploración y Producción (PEP), said the new find, when added to proven reserves in the nearby Lakach field, would greatly increase the PEMEX reserves.  By some estimates, recent discoveries could boost PEMEX deposits by almost 1 trillion cubic feet.  "Surely, we can produce 700 to 800 million cubic feet of gas per day from this zone," Morales told reporters.

 

The Piklis-1 well is in a zone known as Cordilleras Mexicanas, about 144 km northwest of the port of Coatzacoalcos in Veracruz state.

 

PEMEX used the semi-submersible Bicentenario platform to make the discovery.  The huge rig, leased from the Mexican company Gremsa, was constructed by South Korea's Daewoo Shipbuilding and Marine Engineering company. Read more... 

 
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NotiEn is an original newsletter with breaking news that analyzes and digests relevant and contemporary information in energy, alternative energy and energy policies in Latin America. A complimentary service provided by the University of New Mexico as part of LA-ENERGAIA Project funded by the US TICFIA Program