Saturday, October 15, 2011

Cuba Makes Bold Move to Develop Oil Resources

Chinese-built oil drilling rig (Photo: Reuters)

St. Kitts Nevis Observer

Friday, October 14, 2011

By Kenneth Williams and Geno Marcello

Cuba is hoping to boost its faltering economy by launching a full-scale oil exploration in the Gulf of Mexico just 50 miles from Florida. Experts say Cuba has 20 Billion barrels of undiscovered oil reserves. Proven true, Cuba would be in the top 20 oil producing countries.

The announcement came from Cubapetroleo, the state oil monopoly, through a dispatch written by Marc Frank for the Financial Times in Havana. According to Mr. Frank, seven exploration wells are planned in Cuba's Gulf of Mexico up to the end of 2012.

A new Chinese deep-water rig owned by Saipem, a unit of Italian oil company Eni SpA, left its shipyard in late 2010 to begin working with the Cubans. The rig was built specially to get around the 10 percent limit on American technology which is required under the embargo.

Reports are circulating that some companies have opened bids for well casing. Some work has also been done in Miami and is continuing to prepare for the exploratory wells.

Embargo foes in Washington D.C. are supporting legislation that would let U.S. groups participate in Cuba's offshore oil plans for development. Supporters of the embargo are creating laws that impose sanctions on any foreign groups that defy the embargo.

Some exploratory work by Seposi in 2004 revealed the presence of hydrocarbons when a well was drilled, but not in a commercially viable quantity. Since that first well, however, other seismic work has revealed 15 sites with a high probability of oil.

Cuba's oil advisor Manuel Marreo Faz estimates the country has over 20 billion barrels of oil in its offshore areas. The U.S. Geological Survey is much more conservative, putting the figure at 4.6 billion barrels. Cuba presently produces 60,000 barrels of oil per day and imports 115,000 barrels daily from Venezuela.

Observers report the Obama Administration has declined to denounce Cuba's drilling plans and seems to favor limited cooperation, said Frank.

The Obama Administration said recently that it would allow U.S. firms that handle and clean up oil spills to operate in Cuban waters should the need arise and also granted approval for executives from the Houston-based International Assn. of Drilling Contractors to visit Cuba recently. Association President Lee Hunt told the Financial Times he was impressed by Cuba's preparations to date as well as its regulatory regime in the wake of the BP oil disaster.

Hunt pointed out, 'This is one gulf shared by three countries. We are promoting cooperation between their industries to insure the unfortunate events that occurred in Mexico and more recently in the United States do not happen here.'

Jorge Pinot, a visiting research assistant at the Cuban Research Institute of Florida International University, said more efforts should be made to wean Cuba from energy dependence on Venezuela while insuring safety. He called on the U.S. to give oil companies working in Cuba access to equipment and technology that would allow (the development) of Cuba's hydrocarbon resources in a safe and responsible manner.'

No comments: