Canada's Sherritt expands power generation in Cuba

HAVANA, June 6 (Reuters) - Canadian mining and energy company Sherritt International Corp (S.TO) said on Wednesday it plans to increase electricity generation in Cuba to 500 megawatts using gas from coastal oil fields.

This is part of Sherritt's $1.25 billion investment plan to expand its nickel, oil and gas, and electricity businesses in Cuba over the next three years, executive chairman Ian Delaney said.

Cuba's acting president Raul Castro attended the opening of new units at a combined-cycle generation plant at Boca de Jaruco, one of two built by ENERGAS, a joint venture between Sherritt and the Cuban state.

Delaney said work will start immediately on the next phase to raise installed capacity to 500 MW from 376 MW at present.

"Cuba is our favorite place in the world in which to work and we look forward to many more years of partnership," Delaney said.

Sherritt is the largest foreign investor in Cuba, where its business has been boosted by skyrocketing nickel prices.

The Toronto-based company is Cuba's major partner in the production of oil and gas off along the coast east of Havana and is looking for opportunities to export the heavy crude.

Sherritt signed up in 2002 for exploration of four deep-sea blocks in Cuba's Gulf of Mexico waters, where a noncommercial deposit of light oil was discovered by Spain's Repsol-YPF (REP.MC) in 2004.

Cuba produces 65,000 barrels a day of poor-quality heavy oil, which is burned in aging thermoelectric power plants, and 920 million cubic meters of associated natural gas.

Cuban Vice President Carlos Lage said his power-deficient country will continue building combined cycle generators as more natural gas is discovered.

"Investment in power generation and oil production in association with foreign companies is a top priority for our country," Lage said at the opening.