Wednesday, August 25, 2010

Cuba looks to cooperate on offshore safety

Cuba looks to cooperate on offshore safety

Cuba's oil industry wants to work with its counterparts in the United
States and Mexico to promote safe drilling practices and avoid the kind
of well blowout and spill seen recently in the Gulf of Mexico, a leading
drilling industry expert said today.

News wires 25 August 2010 18:25 GMT

Lee Hunt, President of the Houston-based International Association of
Drilling Contractors, said during a visit to Havana he would like to see
Cuba's state oil company join the organisation to be able to exchange
information with its neighbors on drilling techniques, safety and

"Cubapetroleo (Cupet) is interested in joining and we have an interest
in them being a member of the international drilling community," Hunt
told Reuters in an interview, after two days of talks in Cuba with local
industry officials and regulators.

The association officials, making their first visit to communist-ruled
Cuba, said they were told the island was planning the drilling of seven
test wells in 2011 and 2012 in Cuba's offshore Gulf of Mexico acreage.

Spain's Repsol YPF has announced that its consortium with Norway's
Statoil and India's ONGC Videsh Ltd will drill at least one well early
next year using a Chinese built rig owned by Saipem, a unit of Italian
oil company Eni.

The three consortium companies and Saipem are all associates of the
drilling contractors' group, Hunt said.

"We are promoting the concept that there is one Gulf, shared by the
United States, Mexico and Cuba and want a trilateral industry dialogue
on safe practices to ensure unfortunate events such as have occurred in
Mexico and more recently in the United States do not happen off the
shores of Cuba," Hunt said.

Due to the US trade embargo against Cuba, the Houston-based Association
of Drilling Contractors, representing 90% of the world's drilling
companies, will need approval from US President Barack Obama's
administration for Cupet to actively join it as a member.

But exceptions for states under US sanctions have been granted in the
past, for example, to Iran's oil company.

"It is in the interest of everyone to promote communications that will
prevent blowouts, spills and fires," Hunt said.

"A good relationship with the Cuban oil industry is very much in the
interest of the American public as it will be drilling within 40 miles
(65 km) of Key West next year," he added.

Florida politicians have raised fears that Cuban drilling could lead to
an accident like the BP oil spill, the world's worst offshore oil
accident, off the Louisiana coast in the Gulf of Mexico.

The Obama administration has said it would allow US companies that
handle and clean up accidental oil spills to operate in Cuban waters
should the need arise.

Hunt said safety recommendations made by his organization to the US
administration in the wake of the BP spill were already in place in Cuba.

"The Cuban oil industry has put a lot of research, study and thought
into what will be required to safely drill ... they are very
knowledgeable of international industry practices and have incorporated
many of these principles into their safety and regulatory planing and
requirements," he said.

Cupet estimates it has up to 20 billion barrels of oil in its offshore
areas, but the US Geological Survey has estimated a more modest 4.6
billion barrels and 10 trillion cubic feet of gas.

Cuba currently produces about 60,000 barrels of oil per day (bpd), all
from onshore wells.

It receives about 115,000 bpd from ally Venezuela on favorable terms.

The drilling rig is expected to arrive in Cuban waters early next year
and companies have begun preparations to drill once the Scarabeo 9 rig
gets to the island.

Cuba has divided its share of the Gulf into 59 blocks, 21 of which are
already under lease to seven companies.

Diplomats in Havana have said Malaysia's Petronas is also planning to
use the rig. Venezuela's state oil company PDVSA has said it plans to
sink its first exploratory well in Cuba's offshore next year.

Other companies with blocks there are Vietnam state oil and gas group
Petrovietnam and Brazil's Petrobras, while companies from Russia, China
and Angola are in the process of negotiating exploration rights.

Published: 25 August 2010 18:25 GMT | Last updated: 25 August 2010
18:44 GMT

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