Brazil's Petrobras weighs Cuba oil prospects

* Good prospects offshore, but profitability unclear

* Company has May 2010 deadline for decision on well

HAVANA, July 16 (Reuters) - Brazil's state-owned oil company Petrobras PETR.SA PBR.SA has completed seismic work in its leased Cuban offshore bloc and is studying whether to drill a well, the head of its Cuban operations said on Wednesday.

Under terms of the lease, the company has until next May to make the decision, Joao Figueira said in a press conference at Petrobras's newly opened Havana office.

He said the bloc, located east of Havana and offshore from Cuba's most prolific onshore oil field, has good prospects, but it remains to be seen if it has sufficient accumulations of oil to make wells profitable.

"From a geological standpoint it's pretty well located in terms of oil generation," he said. "The challenge and uncertainty are related to the reserve distribution, size and production per well."

Cuba has said its offshore territory may contain 20 billion barrels of oil, but nothing has been produced from its waters so far.

It has divided its offshore zone into 59 blocs, 21 of which have been leased to a total of seven companies. Petrobras' bloc hugs Cuba's northern coast

Spain's Repsol-YPF (REP.MC), part of a consortium with Norway's Statoil Hydro (STL.OL) and ONGC Videsh (ONGC.BO) of India, drilled an exploratory well in 2004 and said it found traces of high quality oil.

But a planned second well has been postponed repeatedly due to problems that include difficulty getting a drilling rig that does not violate restrictions of the United States' 47-year-old trade embargo against Cuba.

PDVSA, the national oil company of Venezuela, Cuba's socialist ally, has said it plans to drill an exploratory well in Cuban waters next year.

Other bloc holders include Vietnam state oil and gas group Petrovietnam and Malaysia's state-run Petronas (PETR.KL).

Figueira said Petrobras sunk a well in 2001 to probe Cuba's offshore, but drilled it using an onshore rig based on an island.

The well, located almost 200 miles (320 km) east of the current bloc, was a dry hole, he said. (Reporting by Jeff Franks; Editing by Walter Bagley)