Cuba, Bahamas push ahead with offshore oil plans

Cuba, Bahamas push ahead with offshore oil plans
Thursday October 07, 2010 06:49:21 PM GMT
* Florida political leaders ask Obama to stop Cuba plans
* Possible significant oil reserves in Cuba, Bahamas
* Anti-Castro exiles fear oil could prolong Cuba communism
By Jeff Franks

HAVANA, Oct 6 (Reuters) - Plans in Cuba and neighboring Bahamas to
develop offshore oil fields may open big new oil frontiers at the
doorstep of the United States, but the Cuban project has sparked
opposition in next-door Florida reflecting the usual antagonistic
U.S.-Cuba politics.

Some Florida political leaders have asked U.S. President Barack Obama to
find a way to stop Cuba's drilling, but so far the White House has
stayed out of the issue. Cuban oil exploration plans continue on the
communist-led island, where significant fresh drilling is expected to
begin early in 2011.

Suggestions from U.S. lawmakers such as Senator Bill Nelson and
Representative Vern Buchanan have included withdrawing the 1977
recognition of Cuba's claim to part of the Gulf of Mexico and pressuring
Spain to curb Spanish oil giant Repsol YPF, which is leading the Cuba
exploration.

Florida, mindful of its $60 billion-a-year tourism industry, has
successfully kept U.S. offshore exploration well away from its shores.
In the oil-rich Gulf of Mexico, drillers are allowed no closer to the
state's west coast than 125 miles (200 km).

Still, some of Florida's Panhandle beaches were stained by oil from the
massive BP Gulf spill this summer.

Buchanan, in a letter to Obama, said Cuba will drill in water deeper
than the BP well, which was about 5,000 feet (141 metres) down, making
it "extremely difficult" to control a spill.

"It is critical that Florida's unique coastline environment and its
population be protected," he said.

Maritime boundaries with Cuba and Bahamas are about 50 miles (80 km)
distance from South Florida, meaning they can drill closer to the state
than U.S. operators.

In the Bahamas, the Bahamas Petroleum Corp has leased more than 2
million acres offshore and has a joint venture in place with Norway's
Statoil, but this project so far has received little mention in Florida.

The stakes are high in both countries.

Cuba believes it has at least 20 billion barrels of oil offshore, while
estimated reserves for the leases controlled by Bahamas Petroleum have
gone as high as 17 billion barrels.

The U.S. Geological Survey has estimated Cuba has 5 billion barrels of oil.

Among anti-Castro Cuban exiles in Florida, concerns about Cuban oil are
not just environmental.

"LIFELINE' FOR CUBAN COMMUNISM

They fear a significant oil find would bring money that would prolong
the rule of communism on the island. For five decades, they have
supported U.S. economic sanctions aimed at toppling the government first
led for over four decades by Fidel Castro, and in recent years by his
brother Raul Castro.

"The regime is in tough economic straits and to keep itself afloat, is
now looking at the oil industry, among others, to throw a lifeline,"
U.S. Representative Ileana Ros-Lehtinen of Florida was quoted as saying
last week by The Miami Herald.

Cuba's oil development plans are advancing however,

Repsol has contracted a Chinese-built drilling rig from Saipem Corp., a
unit of Italian oil company Eni SpA, that is expected in Cuba in the
first quarter of next year.

Once in place, state-owned Cuban oil company Cupet has said the Scarabeo
9 rig will drill seven wells by the end of 2012 for some of the various
companies with offshore Cuba leases.

None of the companies are American because the longstanding U.S. trade
embargo prevents them from doing business in Cuba.

Nonetheless, the U.S. oil industry has begun taking interest, as
signaled by an August visit to Havana by a delegation from the
Houston-based International Association of Drilling Contractors. The
group's president, Lee Hunt, said offshore accidents in Cuba would be
better prevented if U.S. companies were involved.

Senior attorney Dan Whittle at the Environmental Defense Fund agreed,
telling Reuters U.S.-Cuba cooperation was critical to responding to any
problems.

"We have no more right to tell Cuba not to drill in its own waters of
the Gulf of Mexico than it has a right to tell the U.S. to do the same,"
he said. "Florida should in the forefront of initiating this dialogue,
not only with Cuba, but also with the Bahamas."

The Bahamas does not have the same political baggage as Cuba, nor is its
oil exploration as imminent, said Bahamas Petroleum Chairman Alan Burns.

The government will not allow drilling until it draws up offshore safety
regulations, which will not be completed until the full cause of the BP
accident is known. After that, it will take 18 months to start drilling,
Burns said.

Burns said technological limitations and low prices scuttled earlier
Bahamas exploration efforts, but seismic tests indicate the presence of
large reserves of oil.

"To have new big producers close by can only be good for the U.S.,
particularly if they are friendly like the Bahamas," he said. (Editing
by Pascal Fletcher and Doina Chiacu)

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