Cuban offshore oil drilling plans postponed again

Cuban offshore oil drilling plans postponed again
Published on Wednesday, July 8, 2009
By Marc Frank

HAVANA, Cuba (Reuters) -- Cuba and a consortium of foreign oil companies
have once again postponed plans to drill for oil in the island's
still-untapped fields in the Gulf of Mexico, diplomatic and industry
sources said this week.

Cuba had announced the consortium, led by Spain's Repsol-YPF, would
drill in June or July, but now it is uncertain when work will begin in
the waters that Cuban oil experts say may contain 20 billion barrels of oil.

"The project has been postponed until a further date for more study,"
said a foreign oil industry source with direct knowledge of the plans.

"It is premature to say when drilling might begin, later this year or
next," he added.

A European diplomat said he had first-hand knowledge that drilling was
postponed at least until the end of 2009, if not into 2010.

Neither source wished to be identified. Cuban authorities were not
immediately available for comment.

Repsol drilled a test well 20 miles (32 km) off Cuba's northern coast in
2004 and said it discovered traces of high quality oil, but that it was
not commercially viable at the time.

Since then, there have been several announcements that a second well
would be drilled, but each time the project has been put off without
explanation.

It was not clear if the latest postponement had to do with difficulties
obtaining and moving a drilling rig, the cost of the project compared
with the current price of oil, or other factors.

The on-again, off-again project has been cloaked in secrecy in part due
to opposition in the United States.

The US trade embargo against communist-run Cuba is said to be a factor
in the repeated delays because of US regulations that threaten sanctions
against companies doing business with Cuba if their drilling equipment
contains more than 10 percent American technology.

The United States has vast oil and gas fields in the Gulf of Mexico, but
its energy companies cannot do business in Cuba because of the
47-year-old embargo against the island that is just 90 miles (145 km)
from Florida's Key West.

Repsol has an agreement with Cuba's state oil monopoly Cubapetroleo for
exploration of six offshore blocks in partnership with Norway's
StatoilHydro and ONGC Videsh of India.

Cuba has divided its share of the gulf into 59 blocks, 21 of which are
already under lease to seven companies.

Manuel Marrero Faz, oil advisor to Cuba's Ministry of Basic Industry,
said earlier this year Cuba was in negotiations to lease another 23
blocks to firms including China National Petroleum Corporation, Angola's
national oil company and a Russian consortium.

Cuba says it produces the equivalent of 80,000 barrels a day of oil and
gas, or about 50 percent of its energy needs. It depends on ally
Venezuela for the rest.

PDVSA, the national oil company of Venezuela, has said it plans to sink
its first exploratory well in Cuba's offshore fields next year.

Other companies with blocks are Vietnam state oil and gas group
Petrovietnam, Malaysia's state-run Petronas and Brazil's Petrobras.

The US Geological Survey has estimated that Cuba's offshore reserves are
likely around 5 billion barrels of oil and 10 trillion cubic feet of
gas. Cuba experts say their estimates are higher because they have more
information about the geology of the region.

Caribbean Net News: Cuba (8 July 2009)
http://www.caribbeannetnews.com/cuba/cuba.php?news_id=17544&start=0&category_id=5