Tuesday, July 20, 2010

Washington grants Cuba licenses to U.S. oil spill firms

Washington grants Cuba licenses to U.S. oil spill firms

Washington will grant licenses to U.S. oil services companies to provide
support to third-country companies in Cuban offshore drilling, a U.S.
Department of State spokesman said Monday.

Asked by a reporter during the daily press briefing to comment on Repsol
YPF's soon-to-begin exploratory drilling in Cuban waters and fears about
another environmental disaster, spokesman P.J. Crowley announced that
"U.S. oil spill mitigation service companies can be licensed through the
Treasury Department's Office of Foreign Assets Control (OFAC) to provide
oil spill prevention and containment support to companies operating in

Washington's move opens another small crack in the door to Cuba for U.S.
oil services companies. The announcement comes after, in May, the
Administration granted a travel license to the Houston-based
International Association of Drilling Contractors (IADC). The group is
planning to brief Cuban officials in Havana in August on deepwater
drilling safety measures.

Madrid-based Repsol YPF contracted an oil rig from the subsidiary of
Italian oil company ENI for exploratory drilling just north of Havana,
in a consortium with Norway's Statoil and India's ONGC Videsh. The
Scarabeo-9 platform is currently under construction in China. It took
the Spanish oil company four years to obtain a rig, due to U.S. sanctions.

"The Deepwater Horizon oil spill in the Gulf of Mexico demonstrates the
critical need to take adequate safety measures and planning precautions
in offshore drilling," Crowley said. "We expect any company engaged in
oil exploration activities to have adequate safeguards in place to
prevent oil spills and contingency plans to address a spill should it

Crowley added that the Obama Administration "will continue to pursue
these and other initiatives within our authority in order to minimize
risk to U.S. waters and shores."

Legislation that would exempt some offshore oil drilling activities in
Cuba from embargo restrictions is winding its way through Congress. A
bill originally introduced by Sens. Lisa Murkowski (R-Ak.) and Mary
Landrieux (D-La.) last summer may be included as an amendment in a large
climate and energy bill.

Although it won't explicitly exempt all oil-related activities from the
embargo, the law would be a first step towards allowing U.S. oil
companies getting active in Cuba. The original Cuba language presented
by Murkowski and Landrieux would allow U.S. citizens and residents to
"engage in any transaction necessary" for oil and gas exploration and
extraction in Cuba — "notwithstanding any other provision of law."

For that purpose, the bill would amend the Trade Sanctions Reform and
Export Enhancement Act of 2000, allowing oil industry employees to
travel to Cuba without having to apply for a specific license with OFAC.

The bill passed the Senate Committee on Energy and Natural Resources
last fall, but it has since stalled. The Petroleum Equipment Suppliers
Association (PESA) has come out in favor of the Cuba language.


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