Cuba-Repsol oil operation threatened by political motives

Originally published by Havana Times.

by Fernando Ravsberg

 

The possibility of Cuba becoming an oil-producing country is worrying politicians in the US. They have therefore begun putting pressure on those firms operating in Cuban waters, particularly the Spanish corporation Repsol, which will be the first to start drilling.

While Washington says it’s afraid of an oil spill, Cuban-American lawmakers are complaining that oil finds could strengthen the Castro government, and US oil companies are alarmed by the idea of drilling competition 60 miles off their shores.

For years there was speculation that Cuban waters could possess deep underwater oil reserves and, paradoxically, the confirmation of this came from the US.

A study carried out in 2004 by the US Geological Service claimed that the Gulf area belonging to Cuba had oil reserves estimated at 4.6 billion barrels, in addition to 2.8 billion cubic meters of natural gas and 900 million barrels of liquid natural gas.

Cuban sources now claim there are actually five times more than what the Americans identified.

Cuba parceled its 112,000 square kilometers of offshore Gulf waters into 59 blocks and signed exploration contracts with various oil companies, which will take a percentage of any oil discovered or lose their investment if they fail to find exploitable deposits.

The investments are huge, while exploration requires working at a depth of 1,700 meters with sophisticated and expensive technology. An aggravating factor is that to avoid a legal problem with the United States, no oil rig can have more than 10 percent of its components made in the USA, according stipulations in Washington’s 50-year economic embargo against Cuba.

Repsol is the leading company working in the area and will start drilling early next month from its Scarabeo 9 platform, manufactured especially for Cuba taking into account the constraints imposed by the US.

Other companies are waiting in line to use that platform in the exploration of their own blocks. Operating costs are so high that for oil companies to invest, they must have prior evidence that they will find exploitable reserves.

Cuban-American representatives in the US Congress rapidly began pressuring Repsol and other oil companies. Thirty-four federal lawmakers, led by Miami Republican Rep. Ileana Ros-Lehtinen, demanded that the project be halted.

They claimed that discoveries would only serve to “finance the repressive apparatus,” arguing that the Cuban government is looking for an “economic lifeline” while accusing Repsol of being a “partner ready to rescue it.”

Since this political offensive didn’t work, they returned to the attack by questioning the safety of the operation, given the catastrophe impact an oil spill would have on the coast of Florida.

In response, a group of US experts (led by William Reilly, the co-chair of the commission investigating last year’s BP spill in the Gulf) was invited to the island this past September. He was accompanied by Daniel Whittle, from the Environmental Defense Fund; and Lee Hunt, from the International Association of Drilling Contractors. The three were “optimistic,” stressing the willingness of Cuban experts to cooperate with the US and recognizing Repsol’s experience in this kind of operation.

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