The Cuban government has opened the door to the participation of private investors, both national 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 contracting modalities and allows greater participation of Cuban private companies and foreign firms in various activities within the oil industry.
The opening allows 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 storage facilities will be able to 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 deems strategic.
Irenaldo Pérez Cardoso, deputy director of CUPET, explained that negotiation opportunities are not limited to oil exploration and extraction, but can also encompass refining, storage, and marketing of fuels.
The official specified that facilities such as oil wells, refineries, and large storage infrastructures, including the Matanzas supertanker bases, 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, among other factors, on the resources contributed by the participants and the terms negotiated between the parties.
The measure does not imply the privatization of the refineries or the sale of the main fuel depots, but rather the possibility of establishing economic participation formulas under the corresponding authorizations and regulations.
Article 53 of the Decree-Law states that refining activities may be carried out individually or through partnerships with natural and legal persons, whether national or foreign, as long as the participants are duly authorized.
On its part, the , which regulates the new oil legislation, establishes that refineries may sell 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 any specific contracts for private investment in a refinery or strategic storage facility during the presentation.
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 incorporates oil concessions, a modality that allows investors to engage in exploration and extraction activities in designated areas, under the conditions established by 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 relevant authorities.
For their part, production-sharing contracts may be extended for up to 40 years, also with an 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 were fundamentally based on a law from 1938 and another from 1959, which the Cuban authorities deemed outdated.
Cuban private companies will be able to participate in more oil businesses
The opening also expands opportunities for the national private sector, including micro, small, and medium-sized 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 partner together to raise capital and participate in larger scale projects.
Nonetheless, Pérez Cardoso clarified that some forms of association still require complementary 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, in addition to having their own facilities for storage.
It also explained that the transportation of hydrocarbons has undergone changes with the incorporation of trucks operated by private carriers, alongside the means traditionally used by CUPET, the railway system, and maritime transport.
The presence of these new participants necessitates the establishment of certification and supervision procedures for activities related to the import, distribution, handling, storage, and marketing of petroleum products.
The official indicated that other regulations are being developed to clarify the conditions that private operators must meet.
The legislation also gives priority to domestic suppliers of goods and services when their bids meet the technical requirements, delivery timelines, 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 of oil and gas reserves.
The Decree-Law establishes that the resources of the subsoil continue to be the socialist property of the entire people, in accordance with the Cuban Constitution.
Furthermore, exploration and exploitation activities require specific authorizations. The State retains the authority to determine the conditions under which investors may participate and to deny certain permits on grounds 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 extended.
The new regulations also require 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 the geopolitical situation and the U.S. restrictions that affect economic operations with Cuba.
For now, the reform sets the legal conditions for negotiating new projects, but its impact on production and supply will depend on whether investments are realized, operations are authorized, and the necessary resources are incorporated.
Some modalities, especially the partnerships between national private companies, will still have to wait for the approval of complementary regulations.
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