The search for Gulf oil begins
By Gerardo Arreola
From the Mexican newspaper La Jornada
HAVANA – With a multinational investment that may total hundreds of millions of dollars, Cuba began a search for oil in the deep waters of the Gulf of Mexico, with the potential to impact the United States’ economic blockade against the island like nothing ever before.
The semi-submersible platform Scarabeo-9, built in China and Singapore for the Italian company Eni SpA’s, completed its journey of more than four months and took its first position last week. From western Havana, it is visible on the horizon even at night, when it is flooded with lights.
The lease of the structure is US$511,000 per day, more than the average commercial cost for its kind because it was made to order, with fewer than 10 percent of U.S. parts to avoid the limitations of the embargo, said Jorge Piñón, a former Amoco oil company executive who is now a researcher at the University of Texas.
The Scarabeo-9 is leased for two exploratory wells of the Spanish firm Repsol-YPF and its partners (the Norwegian Statoil and India’s ONGC Videsh) and for one well of Petronas (in partnership with Russia’s Gazprom), with two additional options. For that reason, it could remain in Cuba between nine and 13 months, said the expert.
If you add the well that Repsol-YPF explored in 2004 and deemed of no commercial value, plus the seismic surveys, travel, administration and staff, I would not be surprised if the total expenditures to date for all the licensees exceed US$500 million, calculated Piñón.
Cuba works in this case with contracts for shared production, which are negotiated by periods as the project progresses, leaving the financial risk in the hands of the foreign licensees.
The United States is on the sidelines of all this action and the eventual scenario of a promising find, however. Moreover, to avoid reprisals, the oil companies went so far to ensure that nothing aboard the Scarabeo-9, not even ballpoint pens or laptops, is of American origin, as a source familiar with the operation told this newspaper.
One year ago, Repsol-YPF stopped trading on Wall Street because, as the company explained, the benefits did not outweigh the excessive cost of financial reports, although in practice this was one fewer obstacle for its investment in Cuba.
However, since last year, Cuba and the U.S. have maintained an unprecedented indirect dialogue with extreme care for the formalities.
In May 2011, Havana island presented its oil security plan to U.S. entrepreneurs authorized by Washington. In June, U.S. Interior Secretary Ken Salazar spoke in Madrid with directors of Repsol-YPF, after which the company announced it would comply voluntarily with the embargo.
In December 2011, Cuban and American technicians, with colleagues from the Bahamas, Mexico and Jamaica, discussed in Nassau oil security in the area. This month, after inspecting the Scarabeo-9 in Trinidad and Tobago at the invitation of Repsol-YPF, U.S. experts expressed satisfaction with the safety of the platform.
Later, Senate Majority Whip Dick Durbin spoke about the oil project with the Cuban government in Havana. No details emerged.
Piñón expressed high regard for the work of the Bureau of Safety and Environmental Enforcement of the Department of the Interior and the Coast Guard, which inspected the platform, but opined that this was a political act of the Obama administration to satisfy anti-Castro legislators.
Without the ability to counter the Cuban campaign with economic pressures, some lawmakers aimed their guns at the issue of safety, recalling the British Petroleum disaster in 2010 in the southeastern United States.
Ileana Ros-Lehtinen, chairwoman of the House Foreign Relations Committee and a radical adversary of Havana, announced an initiative to punish foreign companies that explore in Cuba. Senators Bill Nelson and Bob Menendez proposed an amendment that would force Cuba to pay damages for an eventual spill, even if it occurs outside U.S. waters.
On the other hand, the International Association of Drilling Contractors called for Washington to declare an exception to the blockade to make sure that, in case of an emergency, Cuba can quickly receive spill-control equipment.
Lee Hunt, the guild’s president, said that the blockade inhibits optimum safety in the Gulf of Mexico. Piñón went farther, saying that more important than obtaining licenses to import equipment, if Cuba and the U.S. don’t have a plan for joint cooperation all equipment will be useless. What’s needed is an operational agreement.
