Communist
18th May 2009, 01:46
Cuba's Undersea Oil Could Help Thaw Trade With U.S.
By Nick Miroff
Washington Post
May 16, 2009
http://www.washingtonpost.com/wp-dyn/content/article/2009/05/15/AR2009051503416_pf.html
Deep in the Gulf of Mexico, an end to the 1962 U.S.
trade embargo against Cuba may be lying untapped, buried
under layers of rock, seawater and bitter relations.
Oil, up to 20 billion barrels of it, sits off Cuba's
northwest coast in territorial waters, according to the
Cuban government -- enough to turn the island into the
Qatar of the Caribbean. At a minimum, estimates by the
U.S. Geological Survey place Cuba's potential deep-water
reserves at 4.6 billion barrels of oil and 9.8 trillion
cubic feet of natural gas, stores that would rank the
island among the region's top producers.
Drilling operations by foreign companies in Cuban waters
are still in the exploratory stage, and significant
obstacles -- technological and political -- stand
between a U.S.-Cuba rapprochement eased by oil. But as
the Obama administration gestures toward improved
relations with the Castro government, the national
security, energy and economic benefits of Cuban crude
may make it a powerful incentive for change.
Limited commercial ties between U.S. businesses and the
island's communist government have been quietly
expanding this decade as Cuban purchases of U.S. goods
-- mostly food -- have increased from $7 million in 2001
to $718 million in 2008, according to census data.
Thawing relations could eventually open up U.S.
investment in mining, agriculture, tourism and other
sectors of Cuba's tattered economy. But the prospect of
major offshore reserves that would be off-limits to U.S.
companies and consumers has some Cuba experts arguing
that 21st-century energy needs should prevail over 20th-
century Cold War politics.
"The implications of this have the potential to be a sea
change, literally and figuratively, for the Cubans,"
said Jonathan Benjamin-Alvarado, a political scientist
at the University of Nebraska-Omaha who studies Cuba's
energy sector.
At a House subcommittee hearing last month on U.S.-Cuba
policy, former oil executive Jorge Piñón told lawmakers
that the United States has a strategic interest in
helping Cuba tap its potentially vast hydrocarbon stores
and that U.S. companies should receive special
permission to do so.
"American oil and oil equipment and service companies
have the capital, technology and operational know-how to
explore, produce and refine in a safe and responsible
manner Cuba's potential oil and natural gas reserves.
Yet they remain on the sidelines because of our almost
five-decade-old unilateral political and economic
embargo," said Piñón, a member of a Brookings
Institution advisory group on Cuba policy reform.
Cuba has said it welcomes U.S. investment, but American
companies remain largely silent on the issue, at least
in public, bound by trade sanctions that were
established under the Kennedy administration. When Cuban
oil officials and U.S. companies attended a joint energy
conference at an American-owned hotel in Mexico in 2006,
the Bush administration forced the facility to expel the
Cuban delegation, attempting to thwart any potential for
partnership.
"Until trade barriers are removed, Chevron is unable to
do business in Cuba," said Chevron spokesman Kurt
Glaubitz. "Companies like us would have to see a change
in U.S. policy before we evaluate whether there's
interest."
Robert Dodge, a spokesman for the American Petroleum
Institute, said his organization is not lobbying for
access to Cuba, and Texas congressional representatives
with ties to the oil industry said they are focused on
opening U.S. territorial waters to drilling. But
observers of U.S.-Cuba relations say American companies
haven't been sitting on their hands and remain in
conversations with Cuban counterparts.
At the 2006 Mexico energy conference, U.S. oil companies
"all had plans to move forward as soon as the U.S.
government gives them the go-ahead," said Benjamin-
Alvarado, who attended the conference.
If that go-ahead is granted, American companies would be
entering a drilling contest crowded with foreign
competitors. Several global firms, including Repsol
(Spain), Petrobras (Brazil) and StatoilHydro (Norway)
are exploring in the Gulf of Mexico through agreements
with the Castro government, and state companies from
Malaysia, India, Vietnam and Venezuela have also signed
deals.
Sherritt International, a Canadian company, has had oil
derricks pumping heavy crude along Cuba's north coast
for more than a decade, extracting about 55,000 barrels
a day, mostly for Cuba's domestic energy consumption.
But most of Cuba's undiscovered reserves are thought to
be in two offshore areas. The oil and gas that make up
the USGS estimate lie in an area known as the North Cuba
Basin, a short distance off the island's northwest
coast.
The larger deposit is thought to be in a section of the
gulf known as the Eastern Gap, to which Mexico and the
United States also have a claim. Cuban officials believe
there are 10 billion to 15 billion barrels of crude
stored there under more than 5,000 feet of seawater and
20,000 feet of rock-- costly to extract but accessible
with existing technology. By comparison, U.S. proven
reserves total 21 billion barrels.
The Eastern Gap area is also coveted by American
companies, but in Florida, where anti-Castro and anti-
drilling sentiments run high, the Cuban government's
energy ambitions have alarmed lawmakers who see the
threat of ecological calamity in Cuba's plans to drill
in that part of the gulf.
"They'd be drilling right in the Gulf Stream," Sen. Bill
Nelson (D-Fla.) said in a telephone interview,
describing a nightmare scenario in which ocean currents
could carry spilled crude into Florida's marine
sanctuaries and blacken beaches along the Eastern
Seaboard.
"There would be a monumental disaster," he said. "There
simply should not be drilling out there."
Other U.S. lawmakers said oil deals with the Cuban
government would throw a lifeline to the island's feeble
economy and the 50-year rule of Fidel and Raúl Castro.
They also question how reliable a partner Cuba would be.
"What if we make those investments and then U.S. assets
are nationalized?" Rep. Darrell Issa (R-Calif.) asked
after last month's subcommittee hearing.
Because it would take three or more years for Cuba to
fully develop its energy resources, according to Piñón,
U.S. participation in the island's energy sector could
benefit a Cuban government not necessarily led by Fidel,
82, or Raúl, 78. Helping Cuba develop its own reserves,
he said, would allow the island to gain the political
independence and economic footing needed to negotiate a
reconciliation with the United States without outside
interference.
"Since Fidel Castro's 1959 revolution, Cuba's communist
government has had to largely rely on foreign providers
-- first the Soviet Union, now Venezuela -- to fulfill
its energy needs," Piñón said.
Cuba's "petroleum dependency" on Hugo Chávez's
government "could be used by Venezuela as a tool to
influence a Cuban government in maintaining a
politically antagonistic and belligerent position toward
the United States," he said.
_____________________________________________
Portside aims to provide material of interest
to people on the left that will help them to
interpret the world and to change it.
By Nick Miroff
Washington Post
May 16, 2009
http://www.washingtonpost.com/wp-dyn/content/article/2009/05/15/AR2009051503416_pf.html
Deep in the Gulf of Mexico, an end to the 1962 U.S.
trade embargo against Cuba may be lying untapped, buried
under layers of rock, seawater and bitter relations.
Oil, up to 20 billion barrels of it, sits off Cuba's
northwest coast in territorial waters, according to the
Cuban government -- enough to turn the island into the
Qatar of the Caribbean. At a minimum, estimates by the
U.S. Geological Survey place Cuba's potential deep-water
reserves at 4.6 billion barrels of oil and 9.8 trillion
cubic feet of natural gas, stores that would rank the
island among the region's top producers.
Drilling operations by foreign companies in Cuban waters
are still in the exploratory stage, and significant
obstacles -- technological and political -- stand
between a U.S.-Cuba rapprochement eased by oil. But as
the Obama administration gestures toward improved
relations with the Castro government, the national
security, energy and economic benefits of Cuban crude
may make it a powerful incentive for change.
Limited commercial ties between U.S. businesses and the
island's communist government have been quietly
expanding this decade as Cuban purchases of U.S. goods
-- mostly food -- have increased from $7 million in 2001
to $718 million in 2008, according to census data.
Thawing relations could eventually open up U.S.
investment in mining, agriculture, tourism and other
sectors of Cuba's tattered economy. But the prospect of
major offshore reserves that would be off-limits to U.S.
companies and consumers has some Cuba experts arguing
that 21st-century energy needs should prevail over 20th-
century Cold War politics.
"The implications of this have the potential to be a sea
change, literally and figuratively, for the Cubans,"
said Jonathan Benjamin-Alvarado, a political scientist
at the University of Nebraska-Omaha who studies Cuba's
energy sector.
At a House subcommittee hearing last month on U.S.-Cuba
policy, former oil executive Jorge Piñón told lawmakers
that the United States has a strategic interest in
helping Cuba tap its potentially vast hydrocarbon stores
and that U.S. companies should receive special
permission to do so.
"American oil and oil equipment and service companies
have the capital, technology and operational know-how to
explore, produce and refine in a safe and responsible
manner Cuba's potential oil and natural gas reserves.
Yet they remain on the sidelines because of our almost
five-decade-old unilateral political and economic
embargo," said Piñón, a member of a Brookings
Institution advisory group on Cuba policy reform.
Cuba has said it welcomes U.S. investment, but American
companies remain largely silent on the issue, at least
in public, bound by trade sanctions that were
established under the Kennedy administration. When Cuban
oil officials and U.S. companies attended a joint energy
conference at an American-owned hotel in Mexico in 2006,
the Bush administration forced the facility to expel the
Cuban delegation, attempting to thwart any potential for
partnership.
"Until trade barriers are removed, Chevron is unable to
do business in Cuba," said Chevron spokesman Kurt
Glaubitz. "Companies like us would have to see a change
in U.S. policy before we evaluate whether there's
interest."
Robert Dodge, a spokesman for the American Petroleum
Institute, said his organization is not lobbying for
access to Cuba, and Texas congressional representatives
with ties to the oil industry said they are focused on
opening U.S. territorial waters to drilling. But
observers of U.S.-Cuba relations say American companies
haven't been sitting on their hands and remain in
conversations with Cuban counterparts.
At the 2006 Mexico energy conference, U.S. oil companies
"all had plans to move forward as soon as the U.S.
government gives them the go-ahead," said Benjamin-
Alvarado, who attended the conference.
If that go-ahead is granted, American companies would be
entering a drilling contest crowded with foreign
competitors. Several global firms, including Repsol
(Spain), Petrobras (Brazil) and StatoilHydro (Norway)
are exploring in the Gulf of Mexico through agreements
with the Castro government, and state companies from
Malaysia, India, Vietnam and Venezuela have also signed
deals.
Sherritt International, a Canadian company, has had oil
derricks pumping heavy crude along Cuba's north coast
for more than a decade, extracting about 55,000 barrels
a day, mostly for Cuba's domestic energy consumption.
But most of Cuba's undiscovered reserves are thought to
be in two offshore areas. The oil and gas that make up
the USGS estimate lie in an area known as the North Cuba
Basin, a short distance off the island's northwest
coast.
The larger deposit is thought to be in a section of the
gulf known as the Eastern Gap, to which Mexico and the
United States also have a claim. Cuban officials believe
there are 10 billion to 15 billion barrels of crude
stored there under more than 5,000 feet of seawater and
20,000 feet of rock-- costly to extract but accessible
with existing technology. By comparison, U.S. proven
reserves total 21 billion barrels.
The Eastern Gap area is also coveted by American
companies, but in Florida, where anti-Castro and anti-
drilling sentiments run high, the Cuban government's
energy ambitions have alarmed lawmakers who see the
threat of ecological calamity in Cuba's plans to drill
in that part of the gulf.
"They'd be drilling right in the Gulf Stream," Sen. Bill
Nelson (D-Fla.) said in a telephone interview,
describing a nightmare scenario in which ocean currents
could carry spilled crude into Florida's marine
sanctuaries and blacken beaches along the Eastern
Seaboard.
"There would be a monumental disaster," he said. "There
simply should not be drilling out there."
Other U.S. lawmakers said oil deals with the Cuban
government would throw a lifeline to the island's feeble
economy and the 50-year rule of Fidel and Raúl Castro.
They also question how reliable a partner Cuba would be.
"What if we make those investments and then U.S. assets
are nationalized?" Rep. Darrell Issa (R-Calif.) asked
after last month's subcommittee hearing.
Because it would take three or more years for Cuba to
fully develop its energy resources, according to Piñón,
U.S. participation in the island's energy sector could
benefit a Cuban government not necessarily led by Fidel,
82, or Raúl, 78. Helping Cuba develop its own reserves,
he said, would allow the island to gain the political
independence and economic footing needed to negotiate a
reconciliation with the United States without outside
interference.
"Since Fidel Castro's 1959 revolution, Cuba's communist
government has had to largely rely on foreign providers
-- first the Soviet Union, now Venezuela -- to fulfill
its energy needs," Piñón said.
Cuba's "petroleum dependency" on Hugo Chávez's
government "could be used by Venezuela as a tool to
influence a Cuban government in maintaining a
politically antagonistic and belligerent position toward
the United States," he said.
_____________________________________________
Portside aims to provide material of interest
to people on the left that will help them to
interpret the world and to change it.