March2017-Flipbook

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Source: Portfolio of foreign investment opportunities of the Ministry of Foreign Trade and Foreign Investment 2016-2017. Unión Cuba-Petróleo (CUPET). CUPET is the state organization responsible for supplying the domestic market with fuels and lubricants, maximizing the use of domestic fuels, advanced technologies, and highly qualified human resources. CUPET is a vertically integrated entity, comprised of 41 enterprises, 36 domestic and 5 mixed. It is authorized to conduct all upstream as well as downstream operations using its own resources or in association with foreign enterprises. UNION ELECTRICA (UNE). The Electric Union is responsible for meeting the electricity needs of its clients. To do this it generates, transmits, distributes, and commercializes electricity to about 2.6 million clients. About 95% of the nation has access to electricity. UNE controls 3,267 MW of installed generating capacity from 17 thermoelectric plants situated throughout the country. It also controls the generation and distribution grids from power plants to consumers. CUBANIQUEL. CUBANIQUEL is responsible for the extraction and processing of nickel and cobalt. This managerial group has more than 50 years of experience in nickel mining and processing. It has production capacity of 70,000 tons per annum of nickel metal in three plants. Cuba has the second largest nickel and cobalt reserves in the world (about 26%), located in the Eastern region of the country, with proven reserves of 800 million tons and probable reserves of 2,000 million tons. heavily on investment in the energy sector. Without a modern and efficient energy system, all other strategic sectors of the island’s economy will suffer—which is why the Ministry of Energy and Mines has more projects in the latest investment plan than any other Cuban state entity. That ministry controls three strategic entities: The Electrical Union (UNE); Cubaniquel; and the Cuban Petroleum Union (CUPET). All three hope to attract the right partners to develop the 123 projects identified by the Cuban government for generating electricity, producing nickel, and extracting and processing oil and gas. Yet bringing such ambitious plans to fruition is a real challenge, given the current difficult scenario: rapidly shrinking shipments from Venezuela; falling world oil prices; declining nickel production and the abrupt collapse in world nickel prices; and rapidly growing consumption of electricity, prompted by an expanding private sector and tourism. All this has taxed Cuba’s antiquated energy grid, which must be upgraded and dramatically expanded to increase power generating capacity. Here’s a look at key projects now underway: NICKEL The nickel industry is going through a tough period. In the face of falling world nickel prices, investment has shriveled up at Moa Nickel SA, a 50-50 venture between Canada’s Sherritt International and Cubaniquel that’s been a financial bonanza since its establishment in 1994. It now owns the Moa extraction, processing and smelting operation, a refinery located in the Canadian province of Alberta, and an international marketing company. Statistics on nickel production and export reflect current difficulties. Beginning in 2000, nickel production began climbing steadily, exceeding 75,000 tons in 2005. In 2007, nickel export revenues surged past $2 billion. With world prices at $50,000 a ton, the nickel industry became Cuba’s main source of export revenue, surpassing both sugar and tourism. This led to plans for two new nickel refineries—one in partnership with Venezuela (worth $700 million) and another with China (worth $500 million). However, by 2010 both production and prices had fallen, sharply cutting into Cuba’s nickel export revenues. Consequently, neither investment materialized. In 2015, Cuban nickel exports came to only $521 million, a 75 percent drop from 2007 levels. Cuba remains one of the world’s largest nickel producers and exporters. It also supplies 10 percent of the world’s cobalt. Nickel is essential in the production of stainless steel and other corrosion-resistant alloys, such as those used in mobile phones, batteries, automobiles, engines, and aircraft turbines. Currently, Cuba has two refineries which must be upgraded in order to reduce production costs to compensate for the decline in nickel prices. Sherritt recently invested in a plant to produce sulfuric acid—a key input in nickel processing—with the aim of reducing production costs by 12 to 15 percent. Nickel prices have fallen mainly because of lower demand from China, the world’s top nickel consumer, and rising use of 82 CUBATRADE MARCH 2017
Cuban nickel production, 1975-2015 Cuban nickel production, 1975-2015 Cuban nickel production, (thousand 1975-2015 tons) (thousand tons) (thousand tons) Pedro Soto Alba nickel refinery in Moa is 50% owned by Sherritt International cheaper materials in steel alloys. Given this scenario, no major investments will materialize in this sector until world nickel prices recover enough to justify them. If nickel prices remain low, Cuba should try to reduce costs rather than boost production. OIL AND GAS PRODUCTION Value Value of Cuban of Cuban exports of nickel (millions usd), usd), 2004-2015 2004-2015 Value of Cuban exports of nickel (millions usd), 2004-2015 2,200.0 2081 2,200.0 2081 1,650.0 1,650.0 1434 1419 1347 1434 1419 1347 1151 1068 1151 1,100.0 1068 994 1011 1,100.0 994 1011 839 839 711 711 742 742 521 550.0 521 550.0 0.0 0.0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: Oficina Nacional de Estadística e Información (ONEI). Source: Oficina Nacional de Estadística Información (ONEI). Oil and gas account for 87 of the 123 energy and mining projects in Cuba’s current investment portfolio. In the last six years, Cuba’s annual oil production has remained constant at around 2.97 million metric tons. During this same period, gas extraction has risen by 16 percent; the Energas joint venture uses this gas to generate more than 1,875 GWh of electricity. Cuba extracts only 5 percent of its oil, according to government authorities, because CUPET lacks the technology for secondary recovery, which requires substantial investment. At present, CUPET extracts about 80 percent of Cuba’s oil production; Sherritt extracts the remaining 20 percent. Production comes mostly from the offshore fields of Puerto Escondido and Boca Jaruco, using directional drilling from onshore in the vicinity of Matanzas. Geologically, Cuba is framed on the south by the Caribbean volcanic arc and on the north by the North American platform. Cuba’s oil fields are located in an area between Havana and Matanzas, where the largest oil reservoir has been found, with reserves estimated at six billion barrels. According to Cuban government sources, nearly all of Cuba’s land mass has potential for oil production, as do offshore and deepwater areas. Cuba has dozens of petroleum deposits, most of them consisting of very heavy oil, although some medium, light, and extra-light deposits have also been discovered. Most are offshore, Natural gas extraction (MM m 3 ), 2004-2015 Natural gas extraction (MM m 3 ), 2004-2015 MARCH 2017 CUBATRADE 83
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MARTÍ AND YBOR: CUBA’S CENTURY O
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Arkansas’ Business Climate is Lik
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How do we move food from Hastings t
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A FIVE STAR DESTINATION FOR TOURISM
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Your Cuba Banking Provider Cash Man
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Representatives. The bill aims to e
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THE PILLSBURY DIFFERENCE A global l
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Figure 1. Number of flights from Un
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American wheat growers stand ready
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A container ship docks at the Port
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“WE GROW TRADE” is a registered
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Of all the economic possibilities i
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R STILL THE ONLY CUBE OF ITS KIND.
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CFI US-Cuba Trade Relations & Inves
Page 33 and 34: A Better Choice when traveling to C
Page 35 and 36: BEFORE THE EMBARGO, Cuba was the to
Page 37 and 38: Doing Business in Cuba - Market Ent
Page 40 and 41: MEDIA Cuba has become more open to
Page 42 and 43: GO GLOBAL MIAMI: Trade and Logistic
Page 44 and 45: FINANCE A PIPELINE TO CUBA'S PRIVAT
Page 46: Under the Bush administration, it b
Page 49 and 50: The lobby of the 516-room Dhawa Cay
Page 51 and 52: genetically-modified sugar beets to
Page 53 and 54: Cutting off trade with people so cl
Page 55 and 56: An anti-embargo demonstration outsi
Page 57 and 58: Until the conditions are met, the s
Page 59 and 60: Photo by Matias J. Ocner Photo byTi
Page 61 and 62: BEYOND THE PAROCHIAL One of the mos
Page 63 and 64: of Success A small private coffee p
Page 65 and 66: In the high mountain ranges of Guan
Page 67 and 68: A Special Report By Cuba Trade Maga
Page 69 and 70: eginning April 30, 2017!
Page 71 and 72: CONNECTION By Doreen Hemlock Tampa
Page 73 and 74: IN MARTÍ'S FOOTSTEPS Cuba’s Icon
Page 75 and 76: Departures from Miami, Tampa and Ke
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Page 81 and 82: The historic Colombia restaurant in
Page 83: investment report NICKEL, OIL, AND
Page 87 and 88: Solar panels installed at a Cuban f
Page 89 and 90: From a point of view of the conditi
Page 91 and 92: There is a Cuban entity that is an
Page 93 and 94: Though Hurricane Ike battered Gibar
Page 95 and 96: Locals get around town easily by bi
Page 97 and 98: EDITORIAL CALENDAR 2017 JANUARY/ FE
Page 100: EXPLORE CUBA. ALL OF IT. Now flying
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March2017-Flipbook

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