Cuba Publishes New Oil and Gas Decree, Production Sharing Contracts Up to 40 Years

en.Wedoany.com Reported - On October 12, Cuba's Ministry of Energy and Mines published Decree No. 135 on "Oil and Natural Gas" and its supporting Implementing Regulation No. 184, establishing a legal framework covering oil and gas exploration, development, refining, transportation, storage, and sales, and allowing domestic and foreign enterprises and individuals to participate in related business activities in accordance with the law. The new regulations will take effect on October 19, under which oil and gas production sharing contracts may have a maximum term of 40 years, extendable by 10 years if conditions are met, and petroleum concessions may have a maximum term of 30 years.

The new decree was approved by Cuba's Council of State on September 3 and published on October 12 in Issue No. 85 of the Official Gazette. The decree simultaneously repeals the 1938 Fuel Minerals Law and Law No. 635 of 1959, and retains state ownership of underground oil, natural gas, and associated resources. The scope of application of the new regime includes onshore oil and gas blocks, seabed areas, the continental shelf, and the exclusive economic zone.

Under Article 21 of Decree No. 135, investors may participate in oil and gas exploration and development through production sharing contracts, petroleum concessions, oilfield service contracts, and other cooperation models permitted by law. Production sharing contracts may be awarded through bidding or directly granted under prescribed exceptions; petroleum concessions shall in principle be awarded through public or restricted bidding. Relevant exploration and development activities must be approved by the Council of State, after which the Council of Ministers shall grant the corresponding rights.

The new regulations clarify the division of project approval and regulatory responsibilities. The Ministerio de Energía y Minas is responsible for industry policy and regulation, while the Oficina Nacional de Recursos Minerales is responsible for oil and gas exploration and development regulation, concession bidding, and license registration. Authorized enterprises and oilfield service providers must complete registration before carrying out relevant activities. After obtaining exploration and development rights, investors must also carry out resource assessment, reserve calculation, and development plan approval in accordance with the regulations.

The new decree requires oil and gas production facilities to take measures under normal operating conditions to avoid direct natural gas venting and flaring, and sets out provisions on operational safety, environmental impact assessment, and pollution remediation. For existing contracts and agreements, the new decree provides that the terms and conditions already agreed upon shall not be affected by the entry into force of the new law.

Implementing Regulation No. 184 further sets out the procedures for oil and gas exploration and development applications, enterprise qualification certification, license registration, production sharing contracts, and concession awards. At the same time, the regulations provide that domestic suppliers of goods and services enjoy procurement priority, provided that quality, delivery deadlines, and competitive price requirements are met.