Oil bonanza eludes Cuba after fresh tests

Energy Resources

Oil bonanza eludes Cuba after fresh tests
Published: May 25, 2012 at 4:37 PM

HAVANA, May 25 (UPI) -- Cuba is reportedly sitting on vast underwater
oil and gas reserves, but none came up in the latest exploration, a
joint Chinese-Spanish undertaking.

The Repsol initiative brought Chinese drilling rig operators into the
play, but the outcome so far has been a dry well that has had to be
abandoned.

More explorations will follow, as both Repsol and Chinese interests aim
to expand their presence in Latin America and forge new partnerships in
Cuba's slowly liberalizing economy.

Repsol has also secured partnerships in the venture with Norsk Hydro
ASA, Oslo and ONGC Videsh Ltd., New Delhi, and Cuba's state company
Cubapetroleo S.A.

Brazilian President Dilma Rousseff earlier secured several key contracts
to gain a strategic position for the Brazilian energy sector and pledged
a multibillion dollar investment program.

Repsol is aiming to expand its role in Cuba in preparation of a more
relaxed business environment despite industry complaints the Cuban
reform program remains beholden to communist ideals and has yet to
encourage a significant number of international investors.

In contrast, the Chinese have joined veteran regional players Brazil and
Spain in aiming for a "long game" with the hope of entrenching their
interests before Cuba actually becomes a market economy.

Cuba is still under U.S. sanctions, the longest in history, but has
thriving trade with most of its Latin American neighbors.

Repsol said poor results in the well exploration did not mean the
project was abandoned. It was too early to determine the outcome and the
company would take the next steps after a thorough investigation of the
drilling outcome, Repsol sources said.

It was "not uncommon" to find four out of five offshore wells that were
drilled to produce discouraging results, the sources said.

Cuba imports about half of its 200,000 barrels per day consumption from
friendly countries, including Venezuela, but technical evaluation of the
offshore resources has established Cuba is ripe for large-scale
development of its underwater energy sector.

Cuban officials and analysts, quoted in the media, also said the
government lacked a fall-back position to guarantee continued supplies
if relations with Venezuela changed for the worse. Venezuelan President
Hugo Chavez, an admirer of the Castro brothers, has been receiving
cancer treatment in Cuba, a health issue that puts a question mark on
Venezuela's political direction.

The Chinese participation in Repsol's exploration program was instigated
by the need to circumvent the U.S. embargo on Cuba. The Scarabeo 9
Repsol oil rig has been drilling only about 50 miles from Key West, Fla.

Preliminary studies showed the waters may hold 5 billion to 20 billion
barrels of crude oil equivalent.

http://www.upi.com/Business_News/Energy-Resources/2012/05/25/Oil-bonanza-eludes-Cuba-after-fresh-tests/UPI-28511337978245/