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CUBA: Oil Drilling Opens Up New Possibilities

HAVANA, Feb 16 2012 (IPS) - The search for oil in Cuba’s Gulf of Mexico waters, launched by the Spanish firm Repsol, has triggered speculation about future prospects for Cuba and the possibility of this country one day making the transition from importer to exporter of crude.

Moreover, given its strategic importance for both the United States and Cuba, some analysts believe that energy offers a potential area for cooperation that could eventually help pave the way to the normalisation of relations between the two countries.

For the moment, the Cuban authorities and oil industry personnel are remaining discreetly silent on the subject. CUPET, the state-owned oil company, has limited itself to officially confirming the arrival in the country on Jan. 19 of the Scarabeo 9 oil rig for “the resumption in the coming days of deepwater drilling for oil exploration.”

Drilling operations presumably began in late January. According to CUPET, the goal is to continue testing to determine the potential for oil and gas production in Cuba’s exclusive economic zone (EEZ) in the Gulf of Mexico. The results of the drilling will contribute to defining that potential.

After opening up its economy to foreign investment in 1991, Cuba divided the EEZ, which covers an area of 112,000 sq km, into 59 oil and gas exploration blocks. On Jan. 18, Rafael Tenreiro, director of exploration and production at CUPET, reiterated a previous estimate of a potential 20,000 million barrels in the area.

At the launching of the book “Perforación de pozos petroleros marinos” (“Offshore Oil Well Drilling”) by Rolando Fernández, supervisor of the Gulf of Mexico operations group, Tenreiro stated that it was “possible” that Cuba could become an oil exporter.

“We have to prepare the country for this good news,” he added, stressing the need for the production of technology and participation in the entire process.

In 2011, more than 20 offshore exploration blocks had already been leased to large foreign energy companies, including, in addition to Repsol, StatoilHydro of Norway, ONGC Videsh of India, PETRONAS of Malaysia, PetroVietnam, Gazprom of Russia, Sonangol of Angola the Venezuelan state oil company PDVSA.

Reflecting on the potential ramifications should Repsol’s exploratory drilling prove successful, university professor Fernando Martirena told IPS that large-scale development of the Cuban oil industry would obviously provide a boost to the government programmes currently underway, since it would represent “a needed injection of fresh foreign currency into a tense national economy.”

This scenario, “combined with the package of measures being implemented as a result of the ‘updating’ of the Cuban economic model, will heat up the issue of the blockade,” said Martirena. Under the U.S. economic embargo against this Caribbean island nation, in place for 50 years this month, U.S. companies are shut out from profiting from a potential oil boom in Cuba.

In Martirena’s view, if the U.S. Congress wants to be pragmatic, “it will have to choose between continuing to support the hysterical Cuban-American bloc that does so much lobbying around the issue of the blockade, or simply accepting reality – that there is no reason to maintain this policy.”

Cuban-American members of Congress headed up by the chairwoman of the influential House Foreign Affairs Committee, Ileana Ros-Lehtinen, have attempted to block Repsol’s drilling operations in Cuban waters. While they claim that their opposition is based on concerns for the environment and the security of the United States, analysts believe that their motivation is primarily political.

Before arriving in Cuban waters, the Scarabeo 9 drilling rig – built in China and assembled in Singapore, and therefore exempt from the prohibitions of the U.S. embargo – successfully passed inspection by personnel from the U.S. Department of the Interior’s Bureau of Safety and Environmental Enforcement and the U.S. Coast Guard.

CUPET has also vouched that the cutting-edge equipment leased by Repsol for its drilling operations has been duly verified to include the necessary features to guarantee the utmost efficiency and safety. The exploratory drilling is expected to last roughly two and a half months.

“Technically speaking, the chances of a mishap occurring in Cuba’s economic area are extremely small, not only because of the precautions taken, but also for purely statistical reasons. This is one drilling rig out of the countless rigs operating outside of Cuban waters” in the Gulf of Mexico, economist Luis René Fernández commented to IPS.

An expert on Cuba-U.S. relations, Fernández noted that while there are political risks associated with the issues of security and environmental impacts, there are also experiences that indicate that these “could and should be reduced.”

“(Socialist) Venezuela has not stopped supplying oil to the United States, although it has tried to diversity its markets,” he mentioned as an example.

He also pointed to the migration accords signed by Havana and Washington and Cuba’s purchases of food from U.S. companies despite “all of the restrictions and limitations.”

“In these cases, among the reasons for a certain type of communication and collaboration, it always boils down to the importance of geography. There are common issues in which it is more beneficial for both sides to address them directly and even to cooperate. Not doing so could have high costs, not only economic, but also for the environment and security,” he said.

Fernández stressed that the U.S. government is not a “unified actor” and that there are different agencies that deal with matters such as energy and the environment.

“There are experts and professionals who fulfil their missions and could have real impacts on the concrete political situation,” he said, due to geographical proximity but also because “it is advisable to cooperate in spite of political and ideological differences.”

In his opinion, both countries are moving in the mid term and especially in the long term towards the normalisation of relations, regardless of the particular political circumstances in the United States. “On the Cuban side, there is a well-known willingness to cooperate and even to debate, on respectful and equal terms, all of the aspects of the bilateral conflict,” he stressed.

“This could be another important area for cooperation, precisely because of the strategic significance of energy sources for both the United States and Cuba. Are there risks? Without a doubt. But the benefits of cooperation definitely outweigh them,” Fernández concluded.