Cuba's government has approved a new legal framework allowing domestic and foreign private companies to participate in oil and gas exploration and production through contracts and concessions lasting up to 50 years.

Oct. 13 (UPI) -- Cuba's government has approved a new legal framework allowing domestic and foreign private companies to participate in oil and gas exploration and production through contracts and concessions lasting up to 50 years, while maintaining state ownership of the country's energy resources.

Published Monday in Cuba's Official Gazette, the measures will take effect Oct. 19, updating petroleum legislation dating to 1938 and 1959.

The reform comes amid a severe energy crisis on the island, marked by prolonged power outages, fuel shortages and problems with its electricity generation infrastructure.

At the same time, U.S. sanctions complicate efforts to attract foreign investment in Cuba's energy sector. A May 2026 executive order authorized sanctions against certain foreign companies operating in the industry, although participation does not automatically trigger penalties, according to the U.S. Treasury Department.

Under the new framework, companies can participate through four arrangements: production-sharing agreements, oil concessions, specialized service contracts and other forms of partnership permitted under Cuban law.

Its scope extends to oil and gas exploration, production, refining, transportation and commercialization, both on land and in offshore areas of Cuba's continental shelf and exclusive economic zone.

One significant provision allows Cuban micro, small and medium-sized enterprises, nonagricultural cooperatives and private companies with more than 100 employees to apply for authorization to participate directly in oil and gas exploration and production.

The regulations also allow foreign investors to participate, subject to Cuba's foreign investment laws and the required government approvals.

Production-sharing agreements may last up to 40 years, with a possible 10-year extension, while oil concessions may run for up to 30 years, with an option to extend them for another decade.

Under production-sharing agreements, operators can recover their investments and expenses through a portion of the oil produced, with the remaining output divided according to agreed percentages.

Despite allowing private participation, the Cuban government will retain ownership of oil and gas deposits and control over authorizations, which require approval from the Council of State and the Council of Ministers.

The legislation also establishes that prices for oil, gas and petroleum products will be determined using updated international market prices as a reference, under a methodology set by economic authorities.

It also introduces environmental obligations, industrial safety measures and penalties for violations, including the suspension of operations.

The reform updates the regulatory framework for an industry considered strategic to Cuba, although the legislation does not announce specific investments or new oil production targets.