Tuesday, February 22, 2011

Arrival of Cuba offshore oil rig delayed again

Arrival of Cuba offshore oil rig delayed again
Tue Feb 22, 2011 5:18pm EST
* Chinese-built rig to be inspected before delivery
* Inspection may delay arrival in Cuba until August
By Jeff Franks

HAVANA, Feb 22 (Reuters) - Delivery of a Chinese-built drilling rig that
will open the first full-scale exploration for oil in Cuban waters looks
unlikely until at least August in the latest delay to beset the project,
sources said this week.

They said an inspection of the newly-built, high-tech rig had been
ordered to make sure it was in good shape after taking on water in
transit from the Chinese shipyard where it was built to Singapore for
completion in October.

The rig -- the Scarabeo 9, owned by Italian oil service firm Saipem
SPLM.SI -- had been expected to arrive in Cuban waters in late June or
early July after several earlier delays postponed its original delivery
date of September 2009.

If the inspection turns up problems that need repair, the latest delay
could stretch beyond August, sources said.

The water problem was not considered a major issue, but an inspection
was ordered to assure the rig's overall quality, they said.

Once the rig gets to Cuba, it will be used by a consortium led by
Spanish oil company Repsol YPF (REP.MC) to drill one or two exploratory
wells, then passed on to other oil companies for exploration in drilling
leases they hold in Cuba's part of the Gulf of Mexico.

Repsol drilled the only offshore well in Cuba in 2004 and found oil, but
said it was "non-commercial."

It has long planned to drill another well, but is widely believed to
have had difficulty finding a rig that does not violate limits on use of
U.S.-developed technology set by the 49-year-old U.S. trade embargo
against Cuba.

Cuba, which depends on its socialist ally Venezuela for much of its oil,
has said it may have 20 billion barrels or more of oil in its untapped
oil fields.

The U.S. Geological Survey has estimated a more modest 4.6 billion
barrels and 10 trillion feet of gas.

The Scarabeo 9 is a dynamic positioning, semi-submersible rig, meaning
it floats partially submerged in the ocean and is kept in place by
thrusters built into the platform.

It will be drilling in more than 5,000 feet (1,524 meters) of water, but
is capable of working in depths of 12,000 feet (3,600 meters).

An August arrival would bring Scarabeo 9 to Cuba at the height of
hurricane season, but the rig is built to withstand winds up to 115
miles per hour (185 km) and waves up to 88 feet (26.8 meters).

The prospect of offshore oil exploration by Cuba has prompted proposed
legislation in the U.S. Congress that could penalize companies operating
in the communist-led country or require them to prove they can
adequately respond to an accident like last summer's BP blowout in the
U.S. Gulf of Mexico.

Cuba is just 90 miles (145 km) from Florida, but U.S. oil companies
cannot operate there because of the U.S. embargo. (Editing by Chris Wilson)


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