You've probably heard by now that Fidel Castro is about to become Cuba's "ex-presidente." But did you know that a publicly-traded Canadian oil company is extracting oil in Cuba from fields under 50 km from Havana?

Toronto's Sherritt International Corporation has been drilling in Cuba since 2002, and their stock got a "geopolitical bounce" this week as Castro announced his plans to step down.

None other than the United States Geological Survey estimates that Cuba holds reserves of 4.6 billion barrels of oil, and 9.8 trillion cubic feet of natural gas in its Gulf of Mexico waters. That's nearly two-thirds the amount in the Arctic National Wildlife Refuge, which American companies are drooling over!

In this era of declining U.S. domestic oil production and political change around the world, can we Americans afford to ignore this bounty a mere 70 miles from Florida?

Tapping Into Cuban Oil

Sherritt hasn't had to ignore the reality of Cuban oil, and shares (TSE:S) gapped up by about 8% in Tuesday's trading precisely because investors know that the company is already drawing 60,000 barrels per day from our neighborhood Reds.

With a political thaw between Washington and Havana now possible, Sherritt's stake and local expertise become much more valuable.

Along Cuba's northern coast, the country holds significant "near-shore" reserves. That means that unlike deepwater offshore fields, which are becoming more economical and technically viable as oil hovers around $100 per barrel, Cuba's reserves can be tapped from land.

What Sherritt is doing is called directional drilling, and you may remember the method from a couple decades back, when Saddam Hussein accused the Kuwaitis of "slant drilling" for Iraqi oil, giving him a major pretext for his 1990 invasion.

In that case, it was a cause for war. In this case, the Castro regime welcomes Sherritt's tilted pipes to fuel state-run power plants.

Cuba wants energy investment, and plenty of countries and companies are happy to provide it.

4.6 Billion Barrels of Cuban Oil

Even the United States Department of Energy can't play dumb when it comes to Cuba's oil reserves. The Energy Information Administration says that any new production is "dependent on the discovery of substantial new reserves," but the official EIA profile of Cuba goes on to note "considerable excitement over exploration in Cuba's offshore basins, especially in the Gulf of Mexico."

If you're a Yanqui (Spanish for Yankee) oil company, though, you've had to restrain your glee while watching private and state-owned oil companies from around the world horn in Cuba's offshore potential.

Beyond what Sherritt has done, oil companies from Malaysia, India, Spain, Brazil, and of course friendly socialist Venezuela have all cooperated with Cubapetroleo (Cupet) in exploiting their huge petroleum potential.

Investment in Cuba's Vast Oil Reserves

There is a range of oil in Cuba's territorial waters, from light sweet crude to heavy oil that takes a heck of a lot of refining to become usable.

But consider the billions of investment dollars pouring into the Canadian oil sands ("tar sands"), as well as new political realities in places like Libya, where Col. Muammar Qaddafi has come in from the cold in the past few years and brought Africa's largest reserves with him.

In Libya's case, as in Cuba's, we're only at the beginning of a tidal wave of investment into that country's oil industry. The one difference is Washington's cozy new attitude towards Tripoli.

How long will it be before relations with Cuba thaw and give American companies access to Cuban oil?

Luckily, you don't have to wait. Sherritt stock prices are set to continue their rise on this major news, and you can get in now.

Regards,

Sam Hopkins

www.energyandcapital.com