Cuba: U.S. oil companies welcome to explore off island’s coast

The Associated Press contributed to this article

Cuba welcomed American petroleum companies on Dec. 4 to join efforts by the government and other firms to find oil off the island’s coast in the Gulf of Mexico.

“The Cuban government does not object to letting American petroleum companies participate in exploration and drilling in our zone as long as it is based on mutual benefit,” said an official notice in the Communist Party daily Granma.

Spain-based Repsol-YPF plans to begin offshore exploration next year, putting the Norwegian-owned Eirik Raude rig (pictured above) to work at $195,000 a day drilling for oil in water more than a mile deep. Cuba’s current oil production is all from onshore coastal deposits east of Havana.

Havana opened up 51 blocks totaling 43,250 square miles of its Gulf waters in 1999 to foreign exploration and development.

Sherritt International of Canada was one of the takers and has since signed contracts with the government to begin exploration, and Petrobras of Brazil is studying the feasibility of a similar move. In 2001, the two companies dropped $16 million into a wildcat well further east that came up dry.

Despite Cuba’s invitation, interested American companies would be unable to explore or drill for oil off the island’s coast because of a four-decade-old U.S. trade embargo against the communist-run nation.

The Cuban government statement noted American farmers have been legally selling their agricultural goods to the island for two years under an exception to the trade sanctions.

Cuba, once almost wholly dependent on foreign fuel imports, now produces more than 30 percent of its own crude.

Nevertheless, the government said it was not counting on the possibility of future oil discoveries for the nation’s economic development.

“The government of Cuba would like to clarify that our plans for economic development, and especially our social programs that are increasingly admired by many around the world, are not based in the least on the hypothetical possibility of finding new sources of energy,” the statement said.

One new report quoted Michael Rodgers, senior director of PFC Energy, a Washington-based consultancy, as saying, “Deep-water Cuba is an exploration frontier. It is fair to characterize it as very high risk.”

To develop an oilfield at the depth Repsol plans to drill Rodgers said would cost more than $1 billion.