The Cuban government has opened the door to the participation of private investors, both domestic and foreign, in businesses related to refineries, storage facilities, and fuel marketing, as part of a reform of the oil legislation aimed at attracting capital and increasing hydrocarbon production.
The new legislation, which will come into effect on October 19, expands the hiring options and allows for greater participation of Cuban private companies and foreign firms in various activities within the oil industry.
The opening provides for the possibility of negotiating investments in strategic facilities that remain under state control, including refineries and large fuel depots, as explained by executives from the Unión Cuba-Petróleo (CUPET) in statements reported by Cubadebate.
The change is supported by the , published on October 12 in the Official Gazette, along with its regulation, Decree 184.
Refineries and large depots may enter into negotiations
One of the most significant aspects of the reform is the possibility of incorporating private capital into oil infrastructure projects that the State considers strategic.
Irenaldo Pérez Cardoso, deputy director of CUPET, explained that the negotiation opportunities are not limited to oil exploration and extraction, but can also include refining, storage, and marketing of fuels.
The official specified that facilities such as oil wells, refineries, and large storage infrastructures, including the supertanker bases in Matanzas, will remain under state control.
However, this condition does not prevent certain facilities from being subject to agreements with national or foreign investors to incorporate private capital into specific projects.
According to Pérez Cardoso, the conditions of these operations will depend on various factors, including the resources provided by the participants and the terms negotiated between the parties.
The measure does not imply the privatization of the refineries nor the sale of the major fuel depots, but rather the possibility of establishing economic participation formulas under the appropriate authorizations and regulations.
Article 53 of the Decree-Law stipulates that refining activities may be carried out either individually or through partnerships with natural and legal persons, both domestic and foreign, provided that the participants are duly authorized.
On its part, the , which regulates the new oil legislation, establishes that refineries will be able to market their products wholesale, either directly or through specialized companies.
It also includes retail sales, although subject to specific approvals and authorizations.
The authorities did not announce during the presentation any specific contracts for private investment in a refinery or strategic storage facility.
Cuba authorizes new oil concessions
The reform also introduces new alternatives to attract foreign investors interested in the exploration and exploitation of oil and gas.
Since the early 1990s, Cuba has allowed the participation of foreign companies in its oil industry, primarily through production sharing contracts with state entities.
Now, the legislation includes oil concessions, a modality that allows investors to carry out exploration and exploitation activities in designated areas, under the conditions set by the Cuban authorities.
Pedro Abigantus León, Director of Investments and Oil and Gas Business at the Ministry of Energy and Mines (MINEM), explained that this alternative could be more appealing to certain foreign companies.
The concessions will have a maximum duration of 30 years, with the possibility of an extension for another ten, subject to approval by the competent authorities.
On their part, shared production contracts may be extended for up to 40 years, also with the option for an additional decade.
These concessions are specifically designed for the exploration and exploitation of deposits.
Participation in activities such as refining, transportation, or storage will be governed by the applicable modalities and authorizations for each business.
The new legislation replaces provisions that had as their fundamental precedents a law from 1938 and another from 1959, which are considered outdated by Cuban authorities.
Cuban private companies will be able to engage in more oil-related ventures
The opening also expands opportunities for the national private sector, including micro, small, and medium enterprises, private companies with more than 100 employees, and self-employed workers, in accordance with applicable regulations.
One of the notable changes highlighted by CUPET is the possibility for several Cuban private companies to collaborate in raising capital and participate in larger-scale projects.
However, Pérez Cardoso clarified that some partnership modalities still require supplementary provisions that will need to be approved gradually.
Private participation in the oil sector did not begin with this legislation either.
The executive acknowledged that there are currently private economic actors who import and transport fuels, as well as having their own facilities to store them.
It was also explained that the transportation of hydrocarbons has undergone changes with the incorporation of trucks operated by private carriers, alongside the methods traditionally used by CUPET, the rail system, and maritime transport.
The presence of these new participants necessitates the establishment of certification and supervision procedures for activities related to the importation, distribution, handling, storage, and marketing of petroleum products.
The official indicated that other provisions are being developed to clarify the conditions that private operators must meet.
The legislation also establishes a priority for domestic suppliers of goods and services when their bids meet the technical requirements, delivery times, and competitive prices demanded by the industry.
The State will maintain control over oil resources
Despite the new opportunities for private investors, the legislation maintains state ownership over oil and gas reserves.
The Decree-Law establishes that the resources of the subsoil remain the socialist property of the entire people, in accordance with the Cuban Constitution.
In addition, exploration and exploitation activities require specific authorizations. The State retains the authority to determine the conditions for investor participation and to deny certain permits for reasons of national security.
Companies interested in operating in the sector must meet requirements for technical capacity, industrial safety, and environmental protection.
CUPET has indicated that the inclusion of new players will be gradual and that pilot projects may be developed before certain participation modalities are expanded.
The new regulation also requires specialized controls to prevent fires, spills, and other accidents associated with the handling of hydrocarbons.
Pérez Cardoso acknowledged that having a more flexible legal framework does not eliminate the challenges of attracting foreign capital. Among the obstacles he mentioned were the geopolitical situation and the U.S. restrictions that impact economic operations with Cuba.
For now, the reform establishes the legal conditions to negotiate new projects, but its impact on production and supply will depend on the actual investments being made, the operations being authorized, and the necessary resources being incorporated.
Some modalities, especially partnerships between national private companies, will still have to wait for the approval of complementary regulations.
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