Cuba opens Florida Straits oil zone

There’s oil in Cuba! Can the invasion be far behind? Actually, the fact that this story (complete with maps of the divided offshore zone and the exploration blocs) appears on the front page of today’s New York Times indicates that maybe more pragmatic elements of the US ruling elites would like to get in on the action and view this embargo jazz as a Cold War anachronism. Maybe these elements constitute enough of a critical mass to indefinitely forestall any military designs on the island. We hope.

Cuba Plans Offshore Wells Banned in U.S. Waters

WASHINGTON, May 8 — In 1977, the United States and Cuba signed a treaty that evenly divided the Florida Straits to preserve each country’s economic rights. They included access to vast underwater oil and gas fields on both sides of the line.

Now, with energy costs soaring, plans are under way to drill this year — but all on the Cuban side.

With only modest energy needs and no ability of its own to drill, Cuba has negotiated lease agreements with China and other energy-hungry countries to extract resources for themselves and for Cuba.

Cuba’s drilling plans have been in place for several years, but now that China, India and others are involved and fuel prices are unusually high, a growing number of lawmakers and business leaders in the United States are starting to complain. They argue that the United States’ decades-old ban against drilling in coastal waters is driving up domestic energy costs and, in this case, is giving two of America’s chief economic competitors access to energy at the United States’ expense.

“This is the irony of ironies,” Charles T. Drevna, executive vice president of the National Petrochemical and Refiners Association, said of Cuba’s collaboration with China and India. “We have chosen to lock up our resources and stand by to be spectators while these two come in and benefit from things right in our own backyard.”

The United States Geological Survey estimates that the energy field on Cuba’s side alone may have 4.6 billion barrels of oil and 9.8 trillion cubic feet of natural gas. That much energy is equivalent to just a few months of the United States’ total energy consumption.

The survey does not specify how much of an energy reserve is on the United States’ side of the Florida Straits, just north of Cuba. But almost all of the country’s Outer Continental Shelf, waters within 200 miles of shorelines, has been off limits to drilling since the early 1980’s because of Congressional bans and executive orders.

President Bush, who renewed the 1977 treaty last December for two years, has cited China’s growing demand for oil and international efforts to obtain it as prime reasons for high gasoline prices. The latest version of the administration’s national security strategy, issued in March, warned that China’s leaders were “acting as if they can somehow ‘lock up’ energy supplies around the world.”

To Mr. Drevna and others who are lobbying Congress to end the prohibition, energy exploration in coastal waters represents a strong step toward energy independence and lower prices.

The Interior Department estimates that the Outer Continental Shelf has more than 115 billion barrels of oil and 633 trillion cubic feet of natural gas available for extraction. At current levels of consumption, that would satisfy the nation’s oil needs for about 16 years and its natural gas needs for about 25 years.

Opponents of drilling in United States waters are equally passionate in their arguments, saying that drilling for oil off the coast poses environmental risks and that drilling for finite supplies undermines long-term conservation solutions. They also say modest supplies of additional oil would not necessarily lower gasoline prices in the United States because oil is traded on a world market.

But drilling proponents say the time has come to end the bans, especially with plans by China and India to capture oil and gas so close to the United States shoreline.

“My fear is for the future of America,” said Representative John E. Peterson, Republican of Pennsylvania, who has collected more than 160 co-sponsors for a bipartisan bill that would open coastal waters for development of natural gas. “We have a natural gas crisis, and it’s the biggest threat we have to the American economy.”

Senator Larry E. Craig, Republican of Idaho, took narrow aim at the activities planned for the Florida Straits and recently complained on the Senate floor, “Red China should not be left to drill for oil within spitting distance of our shores without competition from U.S. industries.”

Cuba has divided its side of the Florida Straits into 59 lease areas. As of the end of February, foreign countries had secured the rights or were negotiating the rights to 16 of them, according to Cuban government documents provided by the Cuban Interests Section in Washington.

Kirby Jones, founder and president of the U.S. Cuba Trade Association, a group that promotes United States business interests in Cuba, said Cuba had signed agreements with companies from China, India, Spain and Canada.

At a recent trade conference in Mexico City arranged by Mr. Jones, Cuban officials invited American oil companies to bid for the other leases on the Cuban side of the Florida Straits even though drilling in Cuban waters would violate the United States’ longstanding trade embargo against Cuba.

The purpose, Mr. Jones said, “was to let the American oil executives know what is happening in Cuba.”

United States oil companies would have a right to bid for Cuban leases under legislation Mr. Craig is drafting. Dan Whiting, his spokesman, said the measure would seek an exemption like the one created several years ago for United States companies to sell food and medicine to Cuba. But an exemption for drilling seems uncertain, given the large number of lawmakers staunchly opposed to any economic relationship with Cuba as long as Fidel Castro is president.

Mr. Craig’s measure would be one of several Senate bills aimed at drilling in coastal waters. Two pending measures would approve operations in a small tract of the Gulf of Mexico, one of the few coastal areas where drilling is allowed. And a measure introduced two weeks ago by Senator Bill Nelson, Democrat of Florida, who opposes drilling within 150 miles of Florida’s coastline, would block renewal of the 1977 treaty and then deny foreign companies access to United States markets if they continued to drill in waters close to Cuba.

Mr. Peterson said his bill focused only on natural gas because of its importance to the American manufacturing industry, particularly chemical companies, which spend huge amounts on natural gas to make their products.

The average price of a gallon of gasoline has increased by 126 percent since early 2000, to a current average of $2.96 per gallon, according to the Energy Information Administration. Natural gas prices have jumped by 152 percent in the same period, to $6.56 per thousand cubic feet. It is a rate the National Association of Manufacturers says has contributed to the loss of more than 3.1 million jobs since 2000 through plant closings and relocations offshore.

Mr. Peterson’s bill is one of several proposing to open coastal waters that House lawmakers are expected to consider before long. Brian Kennedy, a spokesman for Representative Richard W. Pombo, Republican of California and chairman of the House Resources Committee, said Mr. Pombo planned to introduce a bill that would give states control of the first 125 miles of waters beyond their shorelines.

Last week, American business executives visited lawmakers on Capitol Hill to lobby for any change in policy that would open up coastal waters, particularly those near Cuba.

“It’s such an easy fix,” said John Paro, president and chief executive of the CPH Holding Corporation, a chemical company in Chicago. “We have the supply, and it’s close. I just wish the public would recognize how easy this problem is to deal with.”

From Reuters, May 10:

Cuba OKs Spain-Norway-India oil venture in Gulf

HAVANA – Cuba has struck a deal with Spanish, Norwegian and Indian oil companies to drill in the mile-deep (1.6-km) waters of the Gulf of Mexico, industry sources and diplomats said on Tuesday.

The possibility of striking oil in Cuban waters just 90 miles (120 km) off U.S. shores at a time of soaring fuel prices and rising global demand has set off a political debate over whether U.S. companies, sidelined by American sanctions, should be allowed to explore there.

Contracts will be signed May 23 in Havana between Spanish major Repsol YPF, Norway’s Norsk Hydro and ONGC Videsh Ltd, the overseas arm of India’s state-owned Oil and Natural Gas Corp., they said.

Drilling will most likely not begin until 2008 due to a tight market for deep-sea exploration rigs as the world’s search for oil intensifies under pressure from the high prices, one industry official said.

Repsol found good-quality light oil in Cuba’s economic exclusion zone of the Gulf of Mexico in 2004, but not in commercially viable quantities.

The Spanish company will complete seismic studies by the end of this month to determine where next to drill with its two new partners, said the official, who asked not to be named.

“There might be quite good opportunities for finding something, and things would really change then. It’s very exciting,” a European diplomat said.

The U.S. Geological Survey estimated last year that the North Cuba basin could contain some 4.6 billion barrels of oil, with a high-end potential of 9.3 billion barrels.


Complaining that energy-hungry China could gain access to oil “within spitting distance” of the United States, Sen. Larry Craig, an Idaho Republican, has introduced legislation that would seek an exception to the trade embargo for U.S. oil companies so they could drill in Cuba.

U.S. companies are barred from exploring for oil in communist Cuba under trade sanctions enforced against President Fidel Castro’s revolutionary government since 1962.

Legislators from Florida, where anti-Castro Cuban exiles have political clout, seek to block Cuba drilling near the Florida coastline and penalize executives of foreign companies that help Cuba look for oil and gas.

Havana is eager to see American oil companies join forces with the anti-embargo lobby led by U.S. farmers who have been selling food to Cuba for four years.

Cuba invited U.S. exploration at a meeting with oil industry executives in Mexico City in February.

“The purpose of the conference was to tell them we are open for business as soon as the laws of their country permit,” said Juan Fleites, general manager of the Cuban state oil company CUPET.

Cuba produces 60,000 barrels per day of poor-quality oil and imports about 90,000 bpd of oil and derivatives from its ally Venezuela.

China’s giant oil and gas company Sinopec Corp. signed an agreement last year to produce heavy oil with CUPET in Cuba’s westernmost Pinar del Rio province from on-shore wells.

China is renting towers for directional drilling in oil fields run by Canadian companies Sherritt International and Pebercan Inc. along a coastal oil belt producing heavy oil and gas used to generate electricity.

But China has no involvement in deep-sea exploration in the 43,250-square-mile (112,000-square-km) off-shore area Cuba opened up to foreign exploration in 1999, divided into 59 blocks.

Sherritt has signed exploration contracts for four blocks, but is waiting to see what Repsol discovers in its six blocks.

Industry experts said Cuba will have to find large deposits of light oil to make it worthwhile extracting oil so deep under water.

Now here’s an interesting question. What about the Florida ecologists who have been fighting for decades to halt expansion of offshore oil operations? Will the anti-Castro crowd try to co-opt them now, in a proverbial case of strange bedfellows? Or can they possibly establish contact with genuine ecological dissidents in Cuba who oppose the drilling for the right reasons? (As opposed to the right-wing reasons.) Do such groups even exist? Over ten years ago, a group called Sendero Verde was active in Cuba (mostly against the Cienfuegos nuclear power plant, which was halted when the Soviet technicians were called home). But they were forced into exile, as this 1993 report from the anarchist solidarity group Neither East Nor West notes (archived at Spunk Library):

Sendero Verde can’t go home

Orlando Polo and Mercedes Paez are activists and members of Cuba’s only green/anti-authoritarian opposition group, the Eco-Pacifist Movement “Sendero Verde” (Green Path). After touring the U.S. the Cuban government refused them permission to return to the island. Neither East Nor West-NYC (NENW-NYC) launched a letter writing campaign on their behalf, and because of that Cuban officials met with the Green Pathers. But permission to return is still denied, so another round of letters is being called for. Please write letters demanding that Orlando and Mercedes be allowed to return home, and address them to the Cuban Interest Section in Washington D.C. Mail them to NENW-NYC who’ll get them to Cuban officials: Neither East Nor West, 528 5th St., Brooklyn NY, 11215, U.S. (Tel: 718-499-7720)

Does anyone have an update?

See our last post on Cuba.