http://www.havanatimes.org/?p=60134

January 20, 2012 |

Fernando Ravsberg

The fabrication of the platform is not the only assistance from Beijing. Chinese specialists have been working for years in Cuba on the extraction of oil. Photo: Raquel Perez

HAVANA TIMES, Jan 20 – A Chinese-built offshore oil drilling platform has arrived in Cuban waters and can be seen from the Havana seawall. It comes along with the Spanish company Repsol, which will be the first, but not only firm, doing exploratory drilling to confirm the accuracy of previous assessments.

Washington has already inspected the rig to verify that it meets international safety standards and complies with restrictions set by the US economic embargo, which limits the use of American components in the construction of all equipment sold to Havana.

This requirement multiplied the expenses necessary for the fabrication of the special platform for Cuba. But this didn’t stop Repsol. The firm is confident that it will turn up large deposits of oil and gas, which were even confirmed by the US Geological Survey.

The island has exclusive rights to 43,000 square miles of “Caribbean Economic Zone” seabed off its coast, which has been parceled into 59 blocks and leased to various oil companies interested in prospecting those areas – with each corporation assuming all of their own financial risks.

Probable reserves

According to a study by the US Geological Survey (USGS), the Cuban reserves in the Gulf region amount to 4.6 billion barrels of oil, 10 trillion cubic feet of natural gas and 0.9 billion barrels of liquid natural gas.

However, Cuban specialists say there is actually five times more than what the Americans recognize. Such figures whetted the appetites of several companies, which spent years doing surveys.

Any contract with Cuba is a risk since the oil companies will have to pay all oceanic prospecting costs from out of their own pockets. Nonetheless, should they discover oil and/or gas, they will be allowed to carry out the exploitation of the deposits and will become the owners of half those reserves.

The work in Cuban waters is complex, requiring drilling to a depth of 1,700 meters while confronting ocean currents that are as strong as the political storms that broke out in Miami when it was learned that Cuba would be pumping oil from the Florida Strait.

Accusations from Miami
The petrochemical complex built by Venezuela on the central coast of the island is an ideal investment for refining the oil that will come out of the Gulf.

The first reaction of the exiles was to issue an ultimatum to Repsol. Led by the Miami Republican representative, Cuban-American Ileana Ros-Lehtinen, 34 federal lawmakers demanded the firm walk away from the project.

They charged that the discovery of oil would only serve to “finance the repressive apparatus,” adding that the Cuban government was searching for “an economic lifeline” and accusing Repsol of being “a partner ready to rescue it.”

Rafael Arias, the director of the Cuba’s oil company, responded that this demonstrates the “extraterritoriality of the blockade, the existing prohibitions by the US Congress, and the pressure and blackmail exerted by the US administration to curtail or prevent other countries or companies from doing business with Cuba.”

Negotiations

Washington ultimately opted for dialogue and Repsol agreed to allow US technicians to inspect the platform. They boarded it while it was passing through Trinidad and Tobago, since Cuba wouldn’t allow them to do so within its territorial waters.

The inspectors gave their approval as the construction of the platform was designed to deal with the reluctance of the White House and Miami. The security protocols are American and less than 10 percent of the rig’s components are US-made, thereby respecting the constraints of economic embargo.

For its part, the Obama administration issued licenses to US agencies to “deploy oil clean-up machinery, dispersants, pumps and other equipment and supplies needed to minimize environmental damage in the event of a spill.”

The economic zone gives Cuba a monopoly on the exploitation of oil under 43,000 square miles of water in the Gulf. Photo: Raquel Perez

Thanks to these licenses, specialized companies could reach the area within a few hours to combat a spill if there were an accident similar to the one suffered by the US two years ago from a British platform operating in the Gulf of Mexico.

The consequences

The Cuban authorities are giving a low profile to the subject in the press. Apparently, they don’t want to increase pressure on President Obama, who so far has handled the issue with a great deal of pragmatism.

Nor are the island’s officials interested in generating too many internal expectations. As one government official explained to me, “You know how it is, if we say we’ve discovered oil, lots of people are going to think there’s no reason for them to work and no need to save.”

Certainly, the discovery of important oil and gas reserves can completely change the Cuban scenario. A report from the Spanish Embassy said, “Favorable consequences for Cuba would begin to be felt from that very moment and could be powerful.”

Such finds could even change relations with the US, which would find it difficult to accept being sidelined without a piece of the pie, especially with regard to gas reserves that could reduce energy costs in some southern states. The sole obstacle is the economic embargo.

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An authorized translation by Havana Times from the Spanish original published by Cartas Desde Cuba.
Special thanks to Richard Charter