India's ONGC to sign Cuban oil exploration deal

HAVANA, Sep 8 (Reuters) India's Oil and Natural Gas Corp. (ONGC) has successfully negotiated rights to two Cuban deep-water blocks and will sign with Cuba's state oil company at the weekend, an Indian diplomat said on Friday.

''We have agreed to explore blocks 34 and 35 and will sign the agreement with Cuba Petroleo (Cupet) on Sunday,'' a senior diplomat said.

Cuba's Gulf of Mexico 43,250-square-mile (112,000-square-km) off-shore zone was divided into 59 blocks for foreign exploration in 1999.

ONGC Videsh, the overseas arm of the state-run exploration company, is already a partner with Spain's Repsol-YPF and Norway's Norsk Hydro in six blocks in an area where three years ago Repsol found indications of good quality oil.

The two new blocks are just below the other blocks and closest to the northwest coast where heavy crude is pumped from on shore.

Canada's Sherritt International has also signed for four blocks in Cuban waters.

The possibility of striking oil just 90 miles (144 km) off U.S.

shores at a time of soaring fuel prices and rising global demand has set off a political debate over whether U.S. companies, sidelined by American sanctions, should be allowed to explore there.

The U.S. Geological Survey estimated that the North Cuba basin could contain some 4.6 billion barrels of oil, with a high-end potential of 9.3 billion barrels.

U.S. companies are barred from exploring for oil in Communist Cuba under trade sanctions enforced against President Fidel Castro's revolutionary government since 1962.

Industry experts said Cuba will have to find large deposits of light oil to make it worthwhile extracting oil so deep under water.

Cuba invited U.S. exploration at a meeting with oil industry executives in Mexico City in February.

Cuba produces 60,000 barrels per day of poor-quality oil and imports about 98,000 bpd of oil and derivatives from its ally Venezuela.

China's giant oil and gas company Sinopec Corp. signed an agreement last year to produce heavy oil with CUPET in Cuba's westernmost Pinar del Rio province from on-shore wells.

China is renting towers for directional drilling in oil fields run by Canadian companies Sherritt International and Pebercan Inc.

along the northwest coastal oil belt producing heavy oil and gas used to generate electricity.

Reuters DKB GC1023