New York Times: Russian Oil Drilling Off Cuba Is Delayed by Old Embargo

By ANDREW E. KRAMER
Published: July 11, 2012

MOSCOW – A Russian oil company will delay drilling its first exploratory well off the northern coast of Cuba, about 180 miles from Florida, after apparently struggling to find a drilling rig that would not violate a United States embargo.

The Russian company, Zarubezhneft, said in a statement on Wednesday that it had planned to drill in August but now planned to start in November.

Finding rigs can be a challenge for oil companies operating in Cuba. To avoid violating the trade embargo the United States imposed on Cuba 50 years ago, rigs can have only a small portion of their parts manufactured in the United States.

Zarubezhneft, a small state-owned company, obtained the exploration rights to potential oil fields in the waters off Cuba three years ago. Last month, it obtained a rig from the Cyprus-based drilling operator, Songa Offshore.

Cuba produces little oil now, but petroleum experts say the country’s northern coastal waters could hold reserves, which may help revive the island’s economy and ease its dependence on oil imported from Venezuela.

Half a dozen companies have signed deals to work in Cuban waters on projects that concern United States authorities. Many of the projects would be close to the United States but beyond the reach of its safety regulators. Cuba’s maritime border is in some places 50 miles from the coast of the United States.

Zarubezhneft updated its plans during a visit from Raúl Castro, Cuba’s leader and the brother of Fidel Castro, who is on a tour of former Communist allies. Seeking money for Cuba, Castro met with President Vladimir V. Putin after visiting China and Vietnam.

Songa Offshore once operated from offices in Houston, but has since moved to Singapore and Cyprus, according to its Web site.

After it contracted for the Songa rig, Zarubezhneft hired a third-party auditing company to confirm that the machine had fewer than 10 percent United States-made parts, the Russian company said in a statement. The rig is on its way from Kuala Lumpur, Malaysia, to Cuba. The company plans to drill at a site called Block L near the Cuban coastal town of Cayo Santa Maria.

A version of this article appeared in print on July 12, 2012, on page B6 of the New York edition with the headline: Russian Oil Drilling Off Cuba Is Delayed by Old Embargo.

Special thanks to Richard Charter

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