Marc Frank in Havana, 0:23, Wednesday 24 November 2010. China National Petroleum Corp has won a bid to expand a Cuban oil refinery in a deal that could be worth as much as $6bn,making it one of the communist island's largest investments to date. The refinery, jointly owned by state-owned Cubapetroleo (CUPET) and Venezuela's Petroleos de Venezuela (PDVSA) is located in central Cienfuegos province on Cuba's southern coast and forms part of Havana's efforts to explore for offshore oil.">Marc Frank in Havana, 0:23, Wednesday 24 November 2010. China National Petroleum Corp has won a bid to expand a Cuban oil refinery in a deal that could be worth as much as $6bn,making it one of the communist island's largest investments to date. The refinery, jointly owned by state-owned Cubapetroleo (CUPET) and Venezuela's Petroleos de Venezuela (PDVSA) is located in central Cienfuegos province on Cuba's southern coast and forms part of Havana's efforts to explore for offshore oil.">

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China group's Cuba oil deal

 Marc Frank in Havana, 0:23, Wednesday 24 November 2010. China National Petroleum Corp has won a bid to expand a Cuban oil refinery in a deal that could be worth as much as $6bn,making it one of the communist island's largest investments to date.

The refinery, jointly owned by state-owned Cubapetroleo (CUPET) and Venezuela's Petroleos de Venezuela (PDVSA) is located in central Cienfuegos province on Cuba's southern coast and forms part of Havana's efforts to explore for offshore oil.

The refinery will be expanded from its current 65,000 barrels a day capacity to 150,000 b/d and will eventually include a petrochemical complex and a liquefied natural gas terminal.

Huanqiu Contracting and Engineering Corp, a unit of CNPC, will be the manager of the project, which will be financed largely by Chinese banks and backed by guarantees from Venezuelan oil revenues, people familiar with the project said.

Chinese construction equipment has begun arriving, with earth moving scheduled to begin next year, although Cuban projects are often delayed.

None of the parties involved have commented on the deal.

PDVSA is also expected to be one of several companies to drill exploration wells in Cuba's Gulf of Mexico waters next year, after the arrival of an Italian-owned but Chinese-built rig that gets around a US ban on the use of more than 10 per cent of its technology in Cuban projects.

Spanish oil company Repsol YPF (Madrid: REP.MC - news) , Malaysia's Petronas, Gazprom (GAZP.ME - news) of Russia (OMXR.EX - news) and India's Oil and Natural Gas Corporation also plan to begin drilling next year. US oil companies cannot bid for Cuban drilling rights due to the 50-year embargo.

The US Geological Survey estimates that Cuba has about 5bn barrels of oil offshore, although Havana says it could have 20bn barrels.

Venezuela is now a partner in almost all of Cuba's downstream infrastructure through the 50-50 joint venture between PDVSA and CUPET, called Cuvenpetrol, which includes a planned 150,000 b/d refinery in Matanzas province, east of Havana.

Work has also begun on upgrading Mariel, a large port on the north coast near the capital.

The Brazilian government has pledged $600m to develop Mariel over the next four years, and COI, a subsidiary of Brazil's Grupo Odebrecht, has been working there since 2009 to prepare it as the logistical centre for offshore oil drilling.

Singaporean port operator PSA International has won a bid to be overall project manager of Mariel's modernisation, which might include a container terminal, and it is in negotiations with Cuba's military-run Universal (Frankfurt: 859669 - news) , people familiar with the matter said.

Source: http://uk.finance.yahoo.com/news/China-group-Cuba-oil-deal-ftimes-184461...

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