Cuba hopes that offshore oil find fuels its economy

Published: October 04. 2006 3:00AM
Nation/World
Cuba hopes that offshore oil find fuels its economy

October 4, 2006

BY GARY MARX

CHICAGO TRIBUNE

HAVANA -- Known more for cigars and rum than for oil rigs, Cuba has
become the latest country drawn into the hunt for oil, hoping a gusher
in its Caribbean fields will ease its energy dependence and boost its
economy.

After years of boasting about Cuba's energy potential but seeing few
results, Cuban authorities got good news last year when the U.S.
Geological Survey estimated that Cuba's northern offshore basin contains
4.6 billion barrels of oil and 9.8 trillion cubic feet of natural gas.

The oil is roughly half the estimated reserves in the Arctic National
Wildlife Refuge, which President George W. Bush wants to open for
drilling, and could provide Cuba with daily production of about 300,000
barrels.

"Cuba is not Saudi Arabia or Venezuela, but it could become a major oil
and gas player in the region," said Jorge Pinon, former president of
Amoco Oil in Latin America and now a senior research associate at the
University of Miami.

Already, oil companies from Canada, Spain, Norway, Malaysia and India
have signed agreements to begin exploring in Cuban waters more than
6,000 feet deep.

R.S. Butola, an Indian oil executive, said geological studies of the
area are promising. The initial exploration is expected to last several
years and cost tens of millions of dollars.

Bringing a deep-water oil well on line would take years and cost $1
billion or more.

Venezuela's government-run oil giant, Petroleos de Venezuela, along with
Brazilian and Chinese companies, also are interested in exploring for
high-quality crude in Cuba's 43,250-square-mile offshore zone.

U.S. oil corporations are barred from participating because of U.S.
trade sanctions against the island. The sanctions also would prohibit
the United States from importing Cuban oil.

Embargo opponents and oil industry insiders say the United States should
grant an exemption to U.S. petroleum companies. The law already allows
for U.S. agricultural and medical exports to Cuba.

The hope of a major strike in Cuban waters was buttressed in September
by the announcement that as many as 15 billion barrels of oil were found
in deep waters northwest of Cuba in the Gulf of Mexico. It could be the
largest U.S. oil discovery in decades.

In February, executives from Exxon Mobil Corp. and other U.S.
corporations met with Cuban officials in Mexico City to discuss
exploration in Cuba's gulf waters, which extend to within 50 miles of
the Florida coast.

But a U.S.-owned hotel expelled the Cuban officials under pressure from
the U.S. Treasury Department, which argued that housing the Cubans
violated the U.S. trade embargo against the island.

Cuban and Mexican authorities accused the United States of interfering
in other countries' internal affairs.

U.S. executives are focused on getting legislation passed that would
open millions of acres to oil and gas drilling in U.S. territorial waters.

The U.S. House and Senate recently approved separate bills to ease
drilling restrictions in the Gulf of Mexico and other offshore areas.
It's uncertain whether a compromise can be reached before the end of the
legislative session.

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