Informacion economica sobre Cuba

Posted on Sunday, 05.27.12

Cuba waits anxiously for oil dreams to materialize

By PAUL HAVEN

Associated Press

HAVANA — It was supposed to be Cuba's economic savior: vast untapped

reserves of black gold buried deep under the rocky ocean floor.

But the first attempt in nearly a decade to find Cuba's hoped-for

undersea oil bonanza has come up dry, and the island's leaders and their

partners must regroup and hope they have better luck – quickly.

Experts say it is not unusual that a 3-mile (4.8-kilometer) deep

exploratory well drilled at a cost of more than $100 million by Spanish

oil giant Repsol was a bust. Four out of five such wells find nothing in

the high-stakes oil game, and petroleum companies are built to handle

the losses.

But Cuba has more at stake, and only a few more spins left of the

roulette wheel. The enormous Scarabeo-9 platform being used in the hunt

is the only one in the world that can drill in Cuban waters without

incurring sanctions under the U.S. economic embargo, and it is under

contract for only one to four more exploratory wells before it heads off

to Brazil.

"If oil is not found now I think it would be another five to 10 years

before somebody else comes back and drills again," said Jorge Pinon, the

former president of Amoco Oil Latin America and a leading expert on

Cuba's energy prospects. "Not because there is no oil, but because the

pain and tribulations that people have to go through to drill in Cuba

are not worth it when there are better and easier options in places like

Angola, Brazil or the U.S. Gulf of Mexico."

A delay would be catastrophic for Cuba, where 80-year-old President Raul

Castro is desperately trying to pull the economy out of the doldrums

through limited free-market reforms, and has been forced to cut many of

the subsidies islanders have come to expect in return for salaries of

just $20 a month.

It could also leave the Communist-governed island more dependent on

Venezuela, where President Hugo Chavez is ailing with cancer. Chavez

provides Cuba with $3 billion worth of heavily subsidized oil every

year, a deal that might evaporate if he dies or fails to win re-election

in October.

An oil find, on the other hand, would potentially improve Cuba's

long-bitter relations with the United States, some analysts suggest.

They say the U.S. oil industry could lobby Congress to loosen the

embargo so it could get in on Cuba's oil game. At the very least,

coordination between the Cold War enemies would be necessary to prepare

for any spill that could coat beaches in the U.S. and Cuba with black goo.

The Cuban government has not commented on Repsol's announcement May 18

that the first well came up dry, and declined to make any oil officials

or experts available to be interviewed for this article.

Next in line for using the drilling rig in Cuban waters is Malaysia's

Petronas, which holds the rights to explore an area in the Florida

Straits known as the Northbelt Thrust, about 110 miles (180 kilometers)

southwest of Repsol's drill site. Wee Yiaw Hin, Petronas' executive vice

president of exploration and production, told The Associated Press that

drilling has begun and he expects results by the end of July.

After that, two industry experts said, Repsol is under contract to drill

a second well, though it could get out of the deal by paying a penalty

to Saipem, the Italian company that owns the rig. Kristian Rix, a

spokesman for Repsol in Madrid, said a decision on whether to sink

another well was still being evaluated.

Venezuela's PDVSA and Sonangol of Angola have options to drill next, but

are under no obligation if they don't like their odds. While both

countries are strong allies of Cuba, at $100 million a well, the

decision to drill will likely be based solely on economics.

Even if oil is found, the Scarabeo-9 is under contract to power up its

eight enormous thrusters and sail to Brazil after that, with no date set

for its return to Cuba. The bottleneck highlights the difficulties Cuba

faces, and why it could be well into the 2020s before the island sees

any oil windfall.

"Assuming they're successful in finding oil, to bring the oil to market

will take years of development efforts," said Victor Shum, an energy

analyst with consulting firm Purvin & Gertz in Singapore.

Once an exploratory well finds oil, companies generally drill between 10

and 20 additional wells nearby to get a sense of the reservoir's size.

The process can take several years even under normal circumstances, and

circumstances are not normal in Cuba.

The Scarabeo-9 was built in Asia with less than 10 percent U.S.-made

parts to avoid violating Washington's embargo, making it the only rig in

the world that meets the requirement. That means no other rig could be

used in Cuba without risking U.S. sanction, and the additional wells

would have to be drilled by the rig one at a time, with each taking

about 100 days to complete. At about three wells a year, it could take

up to six years for this second phase – assuming the rig is available.

After gauging a reservoir's size, an oil company then must assess

whether the economics of a field make it a prime spot for exploitation,

or whether to concentrate resources elsewhere.

If exploitation does go forward, complicated equipment is required to

pull oil from such depths. Several industry experts said the only

country that produces the necessary apparatus is the United States,

although Brazil and other countries are working to catch up. Unless they

do, the oil could not be removed unless the U.S. embargo was lifted or

altered.

"A lot of folks are looking at the energy sector in Cuba because they

are looking at a Cuba of five years from now, or 10 years from now,"

said Pinon. "So a lot of people are betting that either the embargo is

going to be lifted, or the relationship between the U.S. and Cuba is

going to improve in some way."

Still, the benefits of hitting a gusher would be enormous for Cuba, and

the impact could be felt long before any oil was pumped.

Because of the embargo, Cuba is shut off from borrowing from

international lending institutions, and the island's own poor record of

repayment has left most other creditors leery. Cuba, for instance, owes

the Paris Club of creditor nations nearly $30 billion.

An oil find could change the game, with Cuba using future oil riches as

collateral to secure new financing, economists say. They point to China

and Brazil as potential sources of new funding, but say neither is

likely to put money into the island without reasonable confidence they

will get their investment back.

Lee Hunt, the recently retired president of the Houston-based

International Association of Drilling Contractors, said the stakes are

enormous for Cuba that one of the wells hits oil before the Scarabeo-9

leaves. Hunt has worked to bring U.S. and Cuban industry and

environmental groups together.

"If the only rig you can work with is gone, it's like somebody took your

shovel away," Hunt said. "You are not going to dig any holes without a

shovel, even if you know the treasure is down there."

Associated Press writer Eileen Ng in Kuala Lumpur, Malaysia, contributed

to this report.

Follow Paul Haven on Twitter at http://www.twitter.com/paulhaven.

http://www.miamiherald.com/2012/05/27/v-fullstory/2819854/cuba-waits-anxiously-for-oil-dreams.html


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