DYOR is important, mostly to help you decide whether to take a...

DYOR is important, mostly to help you decide whether to take a long term stand or a short term profit. I leave mapping and interpretations to those far more knowledgeable than me. What I’ve done for my own information is researched Cuba’s historical oil, present production, refineries and capacities and energy needs. It’s all out there, however I’ll post some results of what I’ve learned for hopefully a more balanced view.

1. Historically Cuba oil is a heavy crude with a sour (high Sulfur) gas content. why is that applicable? Well oil is basically valued at about 60% of Brent price. The gas is more expensive to convert.

2. Cuba currently produces about 30% of their daily requirements.
They have four refineries. All are very much in need of upgrades. However the bulk of tech is owned by USA, so not going to see investment from there. One of the refineries was upgraded about 9 years ago by China. There were also suggestions that Cuba needed more storage facilities as well. IMO Overall I got the impression from various articles that Cuba’s energy infrastructure needs extensive refurbishments with presently limited avenues to rectify such.

IMO Cuba need to be able to have the ability or resources in place to enable export of oil before getting that sort of investment from China. The political ramifications of that with the USA may not be pretty. With Florida being a crucial voting State, and high anti Cuba voting block, there is no easy answer to the myriad of problems to see the USA withdraw their Sanctions. Least of the problems is outstanding compensation claims from companies and private sector claimants originating back to the revolution. The best chance I see at forcing USA to the table is if Cuba had world impacting oil resources.

3. Venezuela, who is a Cuba supporter and oil supplier, has it own problems at the moment. Why is that important? It puts more pressure on Cuba to meet their energy needs whether from internal or external avenues. There may be volatility. However that may ensure that fast track to production is on the cards if the wells are as viable as presently touted.

4. Melbana said they had encountered lighter oils, don’t confuse that with light crude, not until results are in. As I said historically Cuba produces a heavy crude. The lighter it gets, the better the value. The analysis results will have a impact on bottom line.

5. It is most likely that the PRC is a 50/50 with Cuba Gov. One article I read had MAY share of production at 12.5%. However that was a news article so not conclusive. I’d suggest guesstimate possibility is about 15%.

6. If wells are productive enough (present betting is they may be), then pipelines to refineries system may mitigate production costs. Production Cost of heavy crude from onshore wells is around $15usd per barrel. Offshore apparently around $40.

7. Alleged Tax breaks if we go forward are good. The general consensus from most reports I could find were that Cuba’s present PRC’s were generous.

8. Overall Cuba needs Oil and Gas. So a ready customer is there. Only difficulty (see 2) may be in crude oil to product conversion. If it needs to be exported first, then costs per barrel rise.

9. At the end of today, everyone awaits logging and analysis results. Until they are in, I’m ignoring any bullish or bear comments.


GLTA