[Marxism] Drilling for black gold in Cuba

Walter Lippmann walterlx at earthlink.net
Mon Jun 28 06:57:01 MDT 2004


(Because the Miami Herald's coverage of Cuba is
so often so slanted that it has little connection with
reality, it's all the more significant and pleasing on
those rare occasions with a thoroughly factual and
objective report finds its way into the pages of the
paper, as it does today. This story, by the highly
well-informed Larry Luxner, added to that by the
Reuters reporter Mark Frank a week ago Friday
helps us understand the latest aggressive moves
by Washington in a better light. 

Readers should keep in mind that if Cuba succeeds
in this endeavor, it will be the greatest blow in the
island's independence struggle since the Revolution
triumphed in 1959. Because of Washington's idiotic
attitude, many US corporations are denied a chance
to participate in this process, to which they would be
welcomed by the island's officials. And Cuba does
provide a fair return for its foreign investors. Just
ask Sherritt International which has participated in
the joint operations of the Nicaro nickel mining in
Moa on the eastern shores of the island.

(THIS, prospect, together with the increasing new
openness to Cubans abroad as demonstrated at
the recent Emigration and Nation Conference helps
us understand why the Bush Administration and the
wealthy ultra-rightwing minority of the Cuban exile
militants are so desperate to curtail even those quite
limited possibilities for family visits and other forms
of legal contact between the iand and the people of
the United States.

(And it underlines the urgency of the Friendshipment
Caravan, which represents some of the best of the
growing anti-blockade sentiments among the public
in the United States for an end to all US restrictions.

(''We are open to U.S. oil companies interested 
in exploration, production and services,'' Juan Fleites, 
vice president of the state-run Cubapetroleo told 
U.S. executives at a recent conference in Havana.

''There is no reason U.S. companies shouldn't take 
advantage and compete so close to home,'' he said.
------------------------------------------------------------
(In 1999, he added, about half of Cuba's electricity 
was generated by domestically produced oil and gas; 
today it's nearly 100 percent.)
==================================

MIAMI HERALD
Posted on Mon, Jun. 28, 2004  

DRILLING FOR BLACK GOLD
SPAIN'S REPSOL-YPF HELPS CUBA 
SEARCH THE WATERS OFF ITS COAST FOR OIL.



INTERNATIONAL

BY LARRY LUXNER

Special to The Herald

HAVANA -- The Spanish oil company Repsol-YPF has begun drilling for oil in waters
18 miles off Cuba's northwestern coast in an effort to reduce Havana's dependence
on imports.

Although the decades-old U.S. trade embargo precludes the involvement of U.S. oil
companies in the Cuban industry, oil officials in Cuba say they would be open to
the possibility.

''We are open to U.S. oil companies interested in exploration, production and services,''
Juan Fleites, vice president of the state-run Cubapetroleo told U.S. executives 
at a recent conference in Havana.

''There is no reason U.S. companies shouldn't take advantage and compete so close
to home,'' he said.

One of the main reasons for Cuba's welcoming attitude is that the island nation 
doesn't have the capacity to explore and develop a 43,000-square-mile area known
as the Exclusive Economic Zone in the Gulf of Mexico, so it is eager for foreign
partners with capital and know-how.

WIDESPREAD INTEREST

Fleites said 16 foreign oil companies, mostly from Canada, France and Spain, have
already signed contracts to prospect and drill to a depth of between 1,000 and 3,000
meters.

''We have leased 10 of our 59 blocks in the Gulf of Mexico, but we expect many more
companies to sign if Repsol finds oil,'' Fleites said.

And that is a big if.

Experts say Cuba must discover a deposit of light crude large enough to make it 
commercially feasible to spend more than $1 billion developing any deep-water field
in the Gulf.

Some Spanish oil industry executives have been quoted as saying the odds of Repsol-YPF
finding such deposits are only one in 25. A Repsol official quoted by the Spanish
news agency EFE put the odds at one in four.

And a Repsol-YPF engineer working to sink the well told The Financial Times, ``The
chances that we will find oil are better than winning the lottery or a casino jackpot.
More like getting some of the numbers right or coming out ahead at the blackjack
table on consecutive nights.''

Some observers say if Cuba does hit the jackpot offshore, there could be increased
pressure to lift the U.S. embargo.

GROWING PRESSURE

''It is difficult to imagine how the U.S. oil industry could stay on the sidelines
for long if there is a commercial find,'' said John Kavulich, president of the U.S.-Cuba
Trade and Economic Council, which monitors commercial relations between the two 
countries. ''There will be pressure on the government from U.S. oil companies, both
upstream and downstream,'' he told The Financial Times.

''We've been in contact with various American oil companies,'' Fleites said, but
he declined to elaborate.

Cuba currently produces about 3.5 million tons of oil equivalent per year, or just
more than 40 percent of the island's annual consumption of 8.5 million tons, said
Jorge Pérez-Lopez, a U.S. economist who specializes in Cuba issues. The rest is
imported, almost entirely from Venezuela.

Repsol-YPF, which has six concession blocks along Cuba's northwestern coast from
Pinar del Río to Matanzas, has leased the Norwegian-owned Eirik Raude rig at $195,000
a day to drill in water more than a mile deep. It is the world's largest semi-submersible
rig, a floating platform designed for very deep water.

HUGE INVESTMENT

The company has reported it would spend more than $40 million on the project but
believes its investment could yield up to 1.6 billion barrels of oil below the seabed.

''If they find oil, we will share the production as well as the profits,'' Fleites
said. ``This is a risk you take whenever there is confidence in the country. Companies
know we will live up to our commitments.''

Fleites said foreign investment in Cuba's oil sector is around $1.2 billion. Canada's
Sherritt International signed rights to four exploration blocks last year. In 2001,
Sherritt and Brazil's government-owned Petrobras sank $16 million into a well that
proved dry. But Petrobras says it hasn't given up on Cuba.

Foreign companies led by Sherritt and another Canadian company, Pebercan, have joint
ventures and production deals with Cubapetroleo that account for 60 percent of the
island's oil and gas output.

''Thanks to the participation of foreign companies, we have had the possibility 
of introducing new techniques such as horizontal drilling,'' said Fleites. ``This
technique is quite new, and we haven't used it before. We also have multitube wells
and have introduced new pumping systems that are much more modern than what we had
before.''

LITTLE INFORMATION

Madrid-based Repsol-YPF is tight-lipped about its Cuba venture, especially when 
it comes to U.S.-based reporters.

Valentín Alvarez, general director of Repsol's Caribbean business unit in Venezuela,
declined comment and referred media inquiries to José Conesa Martínez, general
manager of Repsol-YPF Cuba S.A.

In an e-mail, Conesa's secretary said her boss wasn't available for an interview
``given the situation existing [in Cuba-U.S. relations]. . ., which could prejudice
the work our company is doing in Cuba.''

Fleites said Cuba has more than 310 miles of pipelines, and that the Matanzas oil
terminal is now capable of receiving 150,000-ton supertankers.

In 1999, he added, about half of Cuba's electricity was generated by domestically
produced oil and gas; today it's nearly 100 percent.

''For this, we had to upgrade our power plants to burn domestic crude. These investments
took place over four years,'' he said. ``At present . . . all our electricity is
based on oil or gas.''

Two ventures are currently underway for the sale of LPG: one in Havana, with Argentina's
Puma Gas, and the other in the eastern city of Santiago de Cuba with Total of France.
Combined investment in the two projects is around $50 million.

''Most of our people still use kerosene, which is not the best domestic fuel. Little
by little, we are replacing kerosene with LPG,'' Fleites said.







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