Sometime next year, Cuba plans to begin drilling a major oil field off its northern coast that might do what little else has done - bring change to U.S-Cuba relations. In a rare confluence of circumstances - including a new leader in Havana and a new one coming to the United States, as well as record-high crude oil prices - a new petroleum source could grease the wheels for the two longtime foes to reunite out of mutual need, experts say.
Getting there would require a sea change in U.S. policy, namely altering the U.S. trade embargo imposed against Cuba in 1962 to try to topple Fidel Castro's Communist government.
If the embargo remains as is, a nearby source of oil will be off limits to the United States, and the American oil industry will miss out on billions of dollars of business.
Opponents of the embargo rule out any change until President George W. Bush, who has toughened the embargo, leaves office next year. Even then they can expect a fight from influential Cuban-American leaders, who argue that helping Cuba produce oil will aid the Cuban government and undermine the 46-year-old embargo's reason for being.
"We think what really needs to happen in Cuba is for that system to change," U.S. Commerce Secretary Carlos Gutierrez, who was born in Cuba, told Reuters.
But opponents of the embargo say the combination of economics, energy needs and environmental concerns, as well as new leaders in the two countries, make easing the embargo possible.
"The pro-embargo status quo is really threatened right now," said Sarah Stephens, director of the Center for Democracy in the Americas. "The sands are running out of the clock on the policy and I think that has the pro-embargo folks worried."
The U.S. Geological Survey has estimated the Cuban field holds at least five billion barrels of recoverable oil and 10 trillion cubic feet, or 280 billion cubic meters, of natural gas.
In a few years, Cuba could be producing 525,000 barrels of oil a day, enough to make it energy independent and perhaps even an oil exporter, said Jorge Piñón, a former oil company executive who is now a researcher at the University of Miami. Cuba currently consumes 145,000 barrels of oil daily, of which 92,000 barrels come from Venezuela, though that would most certainly rise if the embargo were lifted.
The government has sold oil concessions to seven companies and has said a consortium of Spanish, Indian and Norwegian companies will drill the first production well in the first half of 2009.
Drilling was supposed to begin this year and has been put off twice because of undisclosed factors that U.S. experts said most likely included difficulty getting a rig because global drilling activity was high, the need for more facilities to handle the oil and possible effects of the U.S. embargo.
The Cuban field lies as much as six miles, or 9.7 kilometers, below the sea surface, depths at which U.S. production technology is superior, said a Cuban oil expert, Jonathan Benjamin-Alvarado, at the University of Nebraska-Omaha.
"Cuba and none of the present partners have that capability without accessing American technology, and therein lies the rub," he said. "U.S. export controls forbid them to transfer that technology to Cuba."
Cuba, looking past the United States, has been in talks with Petrobras of Brazil, which has deep-water expertise, about getting involved.
The embargo has withstood repeated legislative attempts to loosen its terms, including unsuccessful bills in the U.S. Congress in 2006 to exempt oil companies.
But Kirby Jones, a consultant on Cuban business and founder of the U.S.-Cuba Trade Association in Washington, and who is against the embargo, said a big Cuba oil find would change the political equation.
"This is the first time that maintaining the embargo actually costs the United States something," he said. "And we need oil. We need it from wherever we can get it, and in this case it's 50 miles off our coast."
An odd fact is that Cuba will be drilling 50 miles from the Florida Keys, or more than twice as close as U.S. companies can get because of regulations protecting Florida's coast.
Representative Jeff Flake, an Arizona Republican who has introduced bills in Congress to lift the embargo for oil companies, said the environmental argument might be crucial because there was much concern in Florida about potential oil spills.
"If there are going to be oil rigs off of Florida, I think most Americans would be more comfortable if they were U.S. oil rigs, rather than Chinese for example," Flake said.
He said U.S. companies were definitely interested in Cuba, but have not publicly pushed for embargo change. During interviews, industry executives emphasized they did not oppose the embargo because it was U.S. national policy and were pushing instead for access to U.S. areas that were currently prohibited, like offshore western Florida.
"When U.S. companies are not even allowed to drill in the eastern half of the Gulf of Mexico, we have a long way to go before we can think about international waters off the coast of Cuba," said J.Larry Nichols, chairman of Devon Energy, an independent U.S. oil and natural gas producer.
Cuba has said it would welcome U.S. companies to its offshore field and showed its interest by sending Cubapetroleo representatives to a 2006 conference in Mexico City that included companies like the U.S. oil giant ExxonMobil and the top independent U.S. refiner, Valero Energy.
The conference became the center of international controversy when the Sheraton Hotel kicked out the Cuban representatives after the Bush administration told the U.S.-based hotel chain it was violating the embargo by having paying Cuban guests.
The incident may have persuaded the oil industry to lie low on Cuban oil.
"Nobody wants to rankle the Bush administration and get them in a tizzy about what may occur," said Benjamin-Alvarado.
Flake said that the political landscape for the embargo already had changed with Raúl Castro taking over in February as Cuba's president, succeeding his ailing brother, Fidel.
Raúl Castro has made small openings in Cuba's state-run economy, but perhaps more important, he is not the anti-American firebrand and lightning rod his brother was for 49 years.
Getting there would require a sea change in U.S. policy, namely altering the U.S. trade embargo imposed against Cuba in 1962 to try to topple Fidel Castro's Communist government.
If the embargo remains as is, a nearby source of oil will be off limits to the United States, and the American oil industry will miss out on billions of dollars of business.
Opponents of the embargo rule out any change until President George W. Bush, who has toughened the embargo, leaves office next year. Even then they can expect a fight from influential Cuban-American leaders, who argue that helping Cuba produce oil will aid the Cuban government and undermine the 46-year-old embargo's reason for being.
"We think what really needs to happen in Cuba is for that system to change," U.S. Commerce Secretary Carlos Gutierrez, who was born in Cuba, told Reuters.
But opponents of the embargo say the combination of economics, energy needs and environmental concerns, as well as new leaders in the two countries, make easing the embargo possible.
"The pro-embargo status quo is really threatened right now," said Sarah Stephens, director of the Center for Democracy in the Americas. "The sands are running out of the clock on the policy and I think that has the pro-embargo folks worried."
The U.S. Geological Survey has estimated the Cuban field holds at least five billion barrels of recoverable oil and 10 trillion cubic feet, or 280 billion cubic meters, of natural gas.
In a few years, Cuba could be producing 525,000 barrels of oil a day, enough to make it energy independent and perhaps even an oil exporter, said Jorge Piñón, a former oil company executive who is now a researcher at the University of Miami. Cuba currently consumes 145,000 barrels of oil daily, of which 92,000 barrels come from Venezuela, though that would most certainly rise if the embargo were lifted.
The government has sold oil concessions to seven companies and has said a consortium of Spanish, Indian and Norwegian companies will drill the first production well in the first half of 2009.
Drilling was supposed to begin this year and has been put off twice because of undisclosed factors that U.S. experts said most likely included difficulty getting a rig because global drilling activity was high, the need for more facilities to handle the oil and possible effects of the U.S. embargo.
The Cuban field lies as much as six miles, or 9.7 kilometers, below the sea surface, depths at which U.S. production technology is superior, said a Cuban oil expert, Jonathan Benjamin-Alvarado, at the University of Nebraska-Omaha.
"Cuba and none of the present partners have that capability without accessing American technology, and therein lies the rub," he said. "U.S. export controls forbid them to transfer that technology to Cuba."
Cuba, looking past the United States, has been in talks with Petrobras of Brazil, which has deep-water expertise, about getting involved.
The embargo has withstood repeated legislative attempts to loosen its terms, including unsuccessful bills in the U.S. Congress in 2006 to exempt oil companies.
But Kirby Jones, a consultant on Cuban business and founder of the U.S.-Cuba Trade Association in Washington, and who is against the embargo, said a big Cuba oil find would change the political equation.
"This is the first time that maintaining the embargo actually costs the United States something," he said. "And we need oil. We need it from wherever we can get it, and in this case it's 50 miles off our coast."
An odd fact is that Cuba will be drilling 50 miles from the Florida Keys, or more than twice as close as U.S. companies can get because of regulations protecting Florida's coast.
Representative Jeff Flake, an Arizona Republican who has introduced bills in Congress to lift the embargo for oil companies, said the environmental argument might be crucial because there was much concern in Florida about potential oil spills.
"If there are going to be oil rigs off of Florida, I think most Americans would be more comfortable if they were U.S. oil rigs, rather than Chinese for example," Flake said.
He said U.S. companies were definitely interested in Cuba, but have not publicly pushed for embargo change. During interviews, industry executives emphasized they did not oppose the embargo because it was U.S. national policy and were pushing instead for access to U.S. areas that were currently prohibited, like offshore western Florida.
"When U.S. companies are not even allowed to drill in the eastern half of the Gulf of Mexico, we have a long way to go before we can think about international waters off the coast of Cuba," said J.Larry Nichols, chairman of Devon Energy, an independent U.S. oil and natural gas producer.
Cuba has said it would welcome U.S. companies to its offshore field and showed its interest by sending Cubapetroleo representatives to a 2006 conference in Mexico City that included companies like the U.S. oil giant ExxonMobil and the top independent U.S. refiner, Valero Energy.
The conference became the center of international controversy when the Sheraton Hotel kicked out the Cuban representatives after the Bush administration told the U.S.-based hotel chain it was violating the embargo by having paying Cuban guests.
The incident may have persuaded the oil industry to lie low on Cuban oil.
"Nobody wants to rankle the Bush administration and get them in a tizzy about what may occur," said Benjamin-Alvarado.
Flake said that the political landscape for the embargo already had changed with Raúl Castro taking over in February as Cuba's president, succeeding his ailing brother, Fidel.
Raúl Castro has made small openings in Cuba's state-run economy, but perhaps more important, he is not the anti-American firebrand and lightning rod his brother was for 49 years.
Source: Reuters|By Jeff Franks
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