Brazil's Cuban Investment

Brazilian President Inacio Lula da Silva has visited Cuba before, but this trip brought a commitment of hefty investment: some $1 billion for development projects. Moreover, Petrobras officials who joined Lula for the visit signed an agreement with Cuba’s state oil company Cupet to foster oil exploration off the coast of Cuba in the Gulf of Mexico.

Brazil is not the first country to take an interest in Cuba’s offshore oil reserves. Since the late 1990s, when Havana sectioned off 59 blocks for foreign oil exploration, companies from Venezuela, Norway, Great Britain, Vietnam, Canada, India, China, and Malaysia began operations or penned agreements  to tap into Cuban oil reserves. The U.S. Geological Survey estimates the area could hold 4.6 billion barrels of undiscovered oil. Over the past two decades, Cuba witnessed a dramatic increase in oil production, from 16,000 to 76,000 barrels a day between 1984 and 2006.

Petrobras and Cupet have long had a relationship, but the new deal opens the door for the first time to Brazilian exploration in the Gulf, with Petrobras hoping to begin exploration within two years. The deal also promises training to boost Cuban expertise in oil exploration and to support a joint venture involving construction of a lubricants plant in Havana.

The Brazilian president’s meeting with ailing Fidel Castro attracted a flurry of media attention. Although Lula described the Cuban leader as being in good health, Castro made a video appearance saying he lacked the strength to campaign publicly for parliamentary elections.