LowVI Energy Politics & Supply Security12 October 2026, Monday
Cuba opens oil and gas fields to foreign firms on 40-year terms
Cuba published Decree-Law 135 on Oil and Gas in issue 85 of its Official Gazette on 12 October. The law takes effect on 19 October and offers foreign and private companies production-sharing contracts of up to 40 years.
The new law replaces the 1938 Fuel Minerals Law and Law 635 of 1959. According to the Rio Times, production-sharing contracts will run for up to 40 years, with a 10-year extension, while concessions will last 30 years plus 10. Granma reports that the implementing regulation cuts the minimum working-capital requirement from 20 million dollars to 5 million dollars. Cost recovery can reach 65% of gross output onshore and in shallow water, and 75% in water deeper than 300 metres.
Abigantus León, investment director at the Ministry of Energy and Mines, said the rules widen the opening to foreign investment. Pérez Cardoso, an executive at Cupet, said refineries and terminals would remain under state control but were open to negotiation with private capital. Granma is the organ of the Communist Party of Cuba, and its report gives no production or investment figures.
The Rio Times notes that US companies cannot sign these contracts while the US embargo and Treasury rules remain in force. Title III of the Helms-Burton Act allows lawsuits in US courts against non-US companies that use confiscated American property. Cuba's current oil output and demand could not be verified from an official source as of 12 October.
Talay assessment
Bottom line
The law is Cuba's attempt to answer its fuel shortage from the supply side, but the binding constraint is sanctions, not legislation. The US embargo and the risk of Helms-Burton litigation will keep the Western majors away. The likeliest entrants are small operators able to carry sanctions risk, along with Cuba's own private firms. Nothing in the data supports expecting higher output in the near term.
Likely effects
- Cuban fuel supplyUncertain6 months+
Cutting the capital requirement to 5 million dollars may draw in smaller players, but new fields take years to produce; reliance on imports continues through the winter.
- Sanctions complianceNegative1–6 months
The risk of Title III suits under Helms-Burton forces Canadian and European firms to run legal due diligence before signing any contract.
- Regional energy tiesUncertain1–6 months
With the US seizing fuel cargoes bound for Cuba, the law gives Havana's search for new partners its first comprehensive rulebook since 1959.
Possibilities, ranked
- 1Interest stays limited60%
In the first months only small firms able to carry sanctions risk apply, and no major tender is launched.
Watch: The first tender or registration notice from Cuba's National Office of Mineral Resources
- 2A Russian or Chinese firm enters30%
A state company already under sanctions signs a contract for an offshore block.
Watch: A production-sharing contract signed in Havana with a Russian or Chinese energy company
- 3Washington pushes back10%
The US announces new sanctions or visa restrictions targeting companies that invest in Cuba's energy sector.
Watch: A new OFAC or State Department decision on Cuban energy
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Minimum working capital▲ $20m → $5m
- Deepwater cost recovery▲ up to 75%