* Oil production increases 11 percent to 3 million tonnes
* Natural gas declines 7 percent to 1 million cubic meters
* Oil output up so far this year
By Marc Frank
HAVANA, June 13 (Reuters) - Cuban oil production increased 11 percent last year as new wells came on line, though natural gas used to generate electricity declined 7 percent, the National Statistics Office reported on its website.
Oil production was just over 3 million tonnes, compared with 2.73 million tonnes in 2009, the report said, while natural gas output was 1 million cubic meters, compared with 1.155 million cubic meters in 2009.
The report gave no explanation for the data.
Cuba does not report oil production in barrels but has said local output of oil and gas accounts for the equivalent of around 50 percent of the 150,000 barrels per day it consumes.
Venezuela provides the remainder of Cuba’s crude plus its share of oil for a joint venture refinery in Cienfuegos, 100 miles to the southeast of Havana, amounting to a total of 115,000 barrels a day in 2009, the last available figures.
The gas is fed to Energas S.A., a power company operated in conjunction with Canadian firm Sherritt International (S.TO).
A local expert said he believed increased oil production was largely due to wells drilled from shore in Matanzas province, around 70 miles east of Havana, using technologies supplied by the Great Wall Drilling Co, an oil services subsidiary of the China National Petroleum Corp (CNPC) that is increasingly active in the country.
The expert, who asked that his name not be used, said the wells proved productive but with less gas than expected.
The horizontal drilling equipment allows wells to be drilled up to 7 kilometers from shore.
The Matanzas area affiliate of state oil company Cubapetroleo reported an additional 8 percent increase in oil production through May, compared with the same period in 2010.
“The crude oil production increase reflects success in enhanced oil recovery methods and new production from their own horizontal record-breaking 6,000 meters Varadero Oeste prospect in the Matanzas town of Camarioca,” Jorge Pinon, a visiting fellow at Florida International University and expert on Cuban oil, said.
Production is concentrated along the northwest heavy oil belt, an 80-mile (128-km) stretch of coast in Havana and Matanzas provinces which produces all of Cuba’s heavy crude with a density rating of 8 API to 18 API and a high sulfur content.
Most new wells are drilled horizontally from shore to a distance of 2 to 7 kilometers out to sea.
Cubapetroleo said earlier this year it drilled 25 wells in 2010 and planned 20 this year.
Output has stagnated for nearly a decade as old wells are exhausted and new ones do little more than take up the slack.
The poor-quality oil is burned in modified power plants and factories.
Some domestic oil is also processed at the joint venture refinery in Cienfuegos and then exported to area countries.
Since 2006, Cuba has shipped small amounts of its heavy crude to Asia.
China National Petroleum Corp signed a framework agreement last week with Cubapetroleo to increase cooperation in onshore and offshore oil exploration and development, as well as a letter of intent to expand the Cienfuegos oil refinery.
CNPC has an onshore exploration block in westernmost Pinar del Rio province and has been negotiating five offshore blocks in Cuba’s Gulf of Mexico waters, where Spanish firm Repsol YPF (REP.MC) is expected to begin exploratory drilling late this year, to be followed by other companies. (Editing by Jim Marshall)