Battle looms as US realises that Cuba has oil reserves

Campaign News | Sunday, 14 May 2006

How the policy of hatred has backfired

Washington 13 May: Whether society is high-tech or low-tech, you still need access to natural resources. Now a big fight is heating up as an embarrassed US realizes that Cuba controls a lot of oil.

Here are excerpts from an article being circulated by and originally appearing in Newsday (U.S.).

The United States, Cuba, China and India may soon be embroiled in a nasty conflict over oil to be drilled in the Florida Straits. With oil prices soaring, the vast underwater oil and gas fields just off the Cuban coast, on each side of the international line dividing the straits, are beckoning -- and setting off an energy race that could stir up political tensions with unforeseeable consequences. Not to mention that drilling along the shared continental shelf could demolish U.S. environmental protections dating back more than two decades.

What's already precipitating congressional furor on Capitol Hill are plans by Chinese and Indian companies to drill in fields recently leased to them by the Cuban government. These plans could trigger an invidious competition for oil extracted from the continental shelf, with Cuba getting off the first shot in what could degenerate into a conflict of major powers over a strategic commodity. China and India ought to reconsider their moves to secure exclusive sources of petroleum, a commodity that should be traded openly on the world's free markets. Cuba has opened a barn door that will be hard to close. Canadian and Spanish companies are already bidding for their own leases.

What's infuriating some legislators is that U.S. firms were invited to bid on the Cuban leases, but were prevented from doing so by the absurd Cold War-era economic embargo of communist Cuba. Other legislators instead fear that drilling in the Florida Straits would moot the environmental considerations that have kept most of the U.S. continental shelf off limits for drilling since the early 1980s.

That threat is real. The oil and gas fields in question are huge and straddle the border geologically. On Cuba's side alone, fields are estimated to hold nearly 5 billion barrels of oil and close to 10 trillion cubic feet of natural gas. But the fields are so close to the international line that they might as well be in U.S. waters. In 1977, the United States and Cuba signed a treaty to divide the straits evenly to preserve each nation's economic rights. Now Cuba is exercising its option to exploit those rights, but U.S. law bars drilling on the American side.

Brace for a spate of punitive bills in Congress. Last week, 14 House members, 11 of them from Florida, filed a bill aimed at blocking Cuba from leasing the fields, echoing an earlier Senate bill. The measures would deny visas to employees of any company "that contributes to the development of Cuba's oil-exploration program." It's hard to see what perceptible effects these bills will have. But they hint at the battles to come over growing competition for oil.

Cuba announces joint Spanish, Norwegian and Indian oil venture for the Gulf

Move creates split in US over Cuba policy

HAVANA 10 May - As Florida members of Congress seek to stop Cuba's oil drilling in the Gulf of Mexico, Cuba has announced that it has struck a deal with Spanish, Norwegian and Indian oil companies to drill in the mile-deep (1.6-km) waters of the Gulf, industry sources and diplomats said on Tuesday.

And this has created a political quandary in the US over its broader Cuba policy.

The possibility of striking oil in Cuban waters just 90 miles (120 km) off U.S. shores at a time of soaring fuel prices and rising global demand has set off a political debate over whether U.S. companies, sidelined by American sanctions, should be allowed to explore there.

Contracts will be signed May 23 in Havana between Spanish major Repsol YPF, Norway's Norsk Hydro and ONGC Videsh Ltd, the overseas arm of India's state-owned Oil and Natural Gas Corp., they said.

Drilling will most likely not begin until 2008 due to a tight market for deep-sea exploration rigs as the world's search for oil intensifies under pressure from the high prices, one industry official said.

Repsol found good-quality light oil in Cuba's economic exclusion zone of the Gulf of Mexico in 2004, but not in commercially viable quantities.

The Spanish company will complete seismic studies by the end of this month to determine where next to drill with its two new partners, said the official, who asked not to be named.

"There might be quite good opportunities for finding something, and things would really change then. It's very exciting," a European diplomat said.

The US Geological Survey estimated last year that the North Cuba basin could contain some 4.6 billion barrels of oil, with a high-end potential of 9.3 billion barrels.

Complaining that energy-hungry China could gain access to oil "within spitting distance" of the United States, Sen. Larry Craig, an Idaho Republican, has introduced legislation that would seek an exception to the trade embargo for US oil companies so they could drill in Cuba.

US companies are barred from exploring for oil in communist Cuba under trade sanctions enforced against President Fidel Castro's revolutionary government since 1962.

Legislators from Florida, where anti-Castro Cuban exiles have political clout, seek to block Cuba drilling near the Florida coastline and penalize executives of foreign companies that help Cuba look for oil and gas.

Havana is eager to see American oil companies join forces with the anti-embargo lobby led by U.S. farmers who have been selling food to Cuba for four years.

Cuba invited U.S. exploration at a meeting with oil industry executives in Mexico City in February.

"The purpose of the conference was to tell them we are open for business as soon as the laws of their country permit," said Juan Fleites, general manager of the Cuban state oil company CU


Cuba produces 60,000 barrels per day of poor-quality oil and imports about 90,000 bpd of oil and derivatives from its ally Venezuela.

China's giant oil and gas company Sinopec Corp. signed an agreement last year to produce heavy oil with CUPET in Cuba's westernmost Pinar del Rio province from on-shore wells.

China is renting towers for directional drilling in oil fields run by Canadian companies Sherritt International and Pebercan Inc. along a coastal oil belt producing heavy oil and gas used to generate electricity.

But China has no involvement in deep-sea exploration in the 43,250-square-mile (112,000-square-km) off-shore area Cuba opened up to foreign exploration in 1999, divided into 59 blocks.

Sherritt has signed exploration contracts for four blocks, but is waiting to see what Repsol discovers in its six blocks.

Industry experts said Cuba will have to find large deposits of light oil to make it worthwhile extracting oil so deep under water.

Split appears in US on Cuba oil plans

NEW YORK 9 May - Plans for foreign oil companies, some from India and China, to drill off the cost of Cuba are prompting calls from US lawmakers to ease environmental restrictions that prohibit coastal drilling in most of the US, according to a report on Tuesday.

At a time of rising soaring gasoline prices caused partly by a lack of supply, legislators are fuming that Cuba is opening up its continental shelf for oil and gas exploration while most of the US continental shelf outside the Gulf of Mexico, which extends 200 miles from shore, has been off limits for drilling since the early 1980s, the New York Times reported.

At the same time, representatives in Miami are introducing bills that will try to stop Cuba from carrying it out its plan to develop its Gulf oil field.

The Times reported that US firms were invited to bid on the Cuban contracts, but were barred by the US government due to the country's longstanding economic Blockade.

"Red China should not be left to drill for oil within spitting distance of our shores without competition from US industries," Sen. Larry Craig, Republican of Idaho, told the Times.

Firms from Canada and Spain will also drill off the Cuban coast, the article said

Craig is introducing a bill to exempt US oil firms from the blocakde, much as food and drug firms are, according to the article.

There are also several bills moving through Congress aimed at opening up areas more areas of the US to oil and gas exploration, including coastal waters and Alaska's Arctic National Wildlife Refuge.

Supporters of the bills, including the oil industry, say it would help bring down oil and gas prices and decrease the country's reliance on oil imports from the volatile Middle East.

Gasoline prices have soared 33 percent over the last year, while the price of crude oil has tripled since 2002.

But critics of more drilling say the energy obtained, which they say would be minimal and wouldn't bring down prices that much, isn't worth the environmental risks. They also say more drilling for a finite resource does nothing to promote long term conservation solutions.

Most coastal states also oppose offshore drilling, fearing unsightly rigs and oil spills will hurt their tourism industries.

The United States Geological Survey estimates the Cuban deal involves 4.6 billion barrels of oil and 9.8 trillion cubic feet of natural gas, according to the Times. The paper said that's enough oil and gas to power the US for a few months.

The paper also cited an Interior Department study that said the US continental shelf contained 115 billion barrels of oil and 633 trillion cubic feet of natural gas. That would be enough oil to satisfy US demand, at current consumption levels, for 16 years and enough natural gas for 25 years, according to the Times.

Cuban-American rightwinger joins bill to block Cuba from oil drilling

WASHINGTON 4 May - Rightwing US Congresswoman Ileana Ros-Lehtinen is joining Democratic US Sen. Bill Nelson in filing legislation aimed at blocking Cuba from drilling for oil near the Florida Keys.

The Miami Republican has filed a bill that would deny visas to any employees of a company or entity that "contributes to the development of Cuba's oil-exploration program."

It would also impose sanctions on any individuals -- or companies -- who invest $1 million or more to help Cuba develop its oil and natural gas resources.

"My colleagues and I have been working tirelessly to prevent our own companies from ruining Florida's pristine beaches and delicate ecosystem by exploring and drilling for oil off our coast," Ros-Lehtinen said in a statement. "To now have this murderous and totalitarian regime say it wants to drill just 45 miles from Key West is beyond the pale and totally unacceptable."

Lacking the technology for offshore drilling, the Cuban government has entered into agreements with several companies in foreign countries, including Spain, China and Canada.

Senator in move to stop Cuba's oil programme

MIAMI, 28 April - US Senator Bill Nelson announced legislation on Friday that would use the excuse of environmental concerns to try and stop Cuba from oil drilling in its waters in the Caribbean.

The Democratic senator's bill would block the renewal of a 1977 international agreement allowing Cuba to conduct commercial activity near the Florida Keys - unless Cuba would agree not to put oil rigs in the Florida Straits close to the low-lying island chain off Florida's southern tip.

"At risk are the Florida Keys and the state's tourism economy, not to mention the $8 billion that Congress is investing to restore the Everglades," Nelson in a statement.

The 1977 Maritime Boundary Agreement dividing control of the 90 miles of sea between Cuba and the Keys must be renewed every two years, and was last renewed in 2004.

Nelson's legislation would also deny visas to executives of foreign oil companies who continue drilling off Cuba's northern coast.

In a February meeting in Mexico with US energy executives, Cuban officials announced plans to double their drilling capacity and explore for oil offshore. Since the discovery of oil deposits off its coast two years ago,

Cuba has signed exploration deals with Canadian, Chinese, Indian and Norwegian firms.

Nelson has joined Mel Martinez, Florida's Republican senator, in opposing efforts to allow oil and gas drilling off the state's Gulf coast, saying drilling could interfere with military training and poses environmental risks that could threaten beaches vital to Florida's tourism industry.

A Martinez spokesman said he could not immediately comment Friday.

US Rep. John Peterson, R-Pa., who last year co-sponsored legislation that would have removed drilling moratoriums in parts of the Gulf of Mexico, called Nelson's bill an "attempt to control the national energy policy of Cuba."

Other countries already drill just as close to the coasts of other states, Peterson said.

"If Mr. Nelson was serious about preventing foreign nations from producing energy off our coasts, his bill would seek to obstruct the Canadian drilling programme as well -- which has set up shop off Maine in the east, Washington state in the West, and Lake Erie in the north," Peterson said in a statement.

US companies are prohibited from doing business with Cuba under a 45-year-old trade embargo.,0,3654082.story?coll=orl-home-headlines

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