Australian oil sleuths are still evaluating Cuba’s Block 9

HAVANA — With more than 25 years’ experience in the exploration of oil and gas, Peter Stickland is a man with proven knowledge of geology. He is a member of the European Association of Geoscientists and Engineers and the Petroleum and Exploration Society of Australia.

Also, and no less important for Cuba, he is the executive director of MEO Australia, a company that holds 100 percent of the rights of exploration for hydrocarbons in Cuba’s Block 9 and recently announced the possibility of “significant findings” in the zone.

For the purpose of discussing these possible findings and their meaning for a Third World country like ours, Stickland granted this interview to Progreso Weekly.

A press release from MEO Australia says that the company signed a Production Sharing Contract with Unión Cuba Petróleo (CUPET) on Sept. 3, 2015. With whom exactly was this contract signed and what does it allow MEO to do?

“MEO signed the Production Contract (PSC) with the national company Cubapetróleo/CUPET. The meeting was presided by Mr. Juan Torres Naranjo, CUPET’s director general.

“The purpose of the contract is to facilitate the exploration and exploitation of any hydrocarbon that may be found in Block 9, through the funding and execution of operations by MEO, according to the terms of the PSC. The document allows our company a period of 8.5 years of exploration, with different sub-periods to carry out research, the acquisition of seismic data, and the drilling of wells.

“In case that hydrocarbons suitable for commercialization are found, the development and production may continue for a total period of 25 years, according to the contract.”

What data did MEO use to choose Cuba as a target for investment? What factors led MEO to think that it would be possible to find oil in that sector?

“MEO engaged in a worldwide search through areas with an important potential for undiscovered oil and gas, and identified Cuba as an attractive country for the search for oil and gas. We came to this conclusion on the basis of the available geological data and our observations that little exploration was conducted in that country in the past 50 years approximately.”

How have the likely benefits in the contract been distributed? In general, how does this type of contract work?

“So far, we have not published the specific terms of the contract. But I can make the following general observations.

• Within the framework of the PSC, MEO is responsible for all the expenses, assuming the risk that the exploration might not result in commercial rewards.
• The PSC defines the rules to split the revenues from the production in Block 9 between MEO and CUPET. In general, MEO recovers its costs and receives part of the profits, while CUPET (which owns the natural resource but assumes no cost) receives the remainder of the profits.
• MEO is obligated to pay corporate taxes in Cuba according to the existing laws.
• These terms are similar to those of other PSC in other parts of the world.”

In its press releases, MEO stresses the fact that Block 9 is situated in a naturally productive zone, because it’s near the oil fields of Varadero and Motembo, and also because of its proximity to the Gulf of Mexico, one of the world’s mega-regions of oil wherein Cuba represents an unexplored extension of the southeastern margin.

Why haven’t these fields been explored in the past? Or why weren’t they found previously by other oil companies?

“Oil exploration can be a difficult business. There are many areas in the world where several years passed and many drillings were made before their true potential was found. The area in the North Sea between England and Norway is a good example of this.

“The geology of Block 9 is complex and seems to be an area where it’s difficult to acquire good seismic data. As a result, to correctly interpret the potential for oil and gas can be a challenge.

“We have tried to understand all the work carried out in the historic exploration of that zone. We have done some new studies and have looked at the geology ‘with fresh eyes,’ on the basis of our experience in similar geological zones in other parts of the world.”

You have talked about three “plays,” only one of which has been fully studied. What are the perspectives on the other two?

“We are still evaluating the other two. Once we arrive at a logical conclusion of the results, we’ll be in a condition to supply an update.”

How do you evaluate the experience of negotiating with the Cuban authorities? 

“We found that this negotiation with the Cuban authorities was professional and exhaustive.”

According to your long experience, which are the main benefits and impacts on underdeveloped countries when a search like this one is successful?

“While we have identified some thrilling possibilities in Block 9, we still haven’t made any discoveries. We expect that that may occur in one to two years.

“But when a good finding materializes, it can bring a series of benefits for the host country:

• The revenues from the oil production for the host country can help finance the government’s programs.
• Job opportunities are created for the local population associated with the project. This can happen both directly and indirectly. There’s also the training and transfer of skills from the contractor to the local employees.
• Particularly with respect to the oil and gas, a good discovery can help the host country gain energy self-sufficiency.

“Remember that Australia itself was a colonial country that gained its independence in 1900. Australia had no petroleum and oil industries almost until the 1960s but then we had some ‘booms’ in the form of good discoveries.

“In many cases, these were helped by foreign investment to help develop the resources. As Australian citizens, we have seen the benefit of these discoveries and investments in our country.

“Many of the employees of MEO Australia acquired skills and work experience that were vital in international enterprises and now enjoy the opportunity to contribute positively in MEO and Cuba.”

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