Cuba Invites U.S. Companies to Explore for Oil
Thu Dec 4,12:14 PM ET
By Anthony Boadle

HAVANA (Reuters) - Cuba said on Thursday American oil companies were welcome to join off-shore exploration of its Gulf of Mexico waters.

Spain's Repsol-YPF SA plans to sink an exploratory well in March in waters one mile deep off Cuba's northwestern coast in search of light oil deposits. A Canadian company has also signed risk contracts to explore for oil deposits there.

"The government of Cuba wishes to say it has no objection whatsoever to the involvement of American oil companies in exploration and drilling in our exclusive economic zone on mutually beneficial terms," said a statement published by the ruling Communist Party newspaper, Granma.

It noted that U.S. food and agribusiness companies have traded with Cuba for two years, under an exception to trade sanctions imposed by Washington for four decades on Cuban President Fidel Castro's government.

The world's largest semi-submersible rig, the Eirik Raude, a floating platform designed for ultra deep water owned by Norway's Ocean Rig ASA 's energy services unit, John Gibson, said in an address to employees the future of oil exploration lay in developing countries, and sanctions gave competitors an advantage over U.S companies in some markets.

SMALL OUTPUT

Cuba's current small oil output of about 56,000 barrels a day --less than half of its total oil needs -- is drilled from onshore rigs in coastal deposits to the east of Havana. So far, Cuba has only found heavy oil laden with sulfur and gas that are used to generate 90 percent of the island's electrical power.

Oilmen hope to find lighter crude farther out to sea, though experts say large deposits would have to be found to make it commercially viable to develop a field in deep waters, with cost estimates of more than $1 billion and as much as $3 billion.

Havana opened up 43,250 square miles of its Gulf waters in 1999 to foreign exploration and development, dividing the area into 51 blocks. Canada's Sherritt International, already involved in Cuban oil and gas production, signed rights for four blocks last year.

Brazil's Petrobras is conducting a feasibility study to decide whether to return to exploration in Cuba. In 2001, Petrobras and Sherritt sank $16 million into a wildcat hole farther east that proved dry.

Cuba said it is not betting its economic future on the discovery of oil in the Gulf of Mexico.

"The government of Cuba wishes to make clear that our plans for economic development, and specially our social programs that are seen with growing admiration by many in the world, are not based at all on the hypothetical possibility of finding new energy sources or not in (the Gulf)," the statement said.

Cuba Welcomes U.S. Oil Companies
Thu Dec 4, 5:27 PM ET

HAVANA - Cuba welcomed American petroleum companies on Thursday to join efforts by the government and other firms to find oil off the island's coast in the Gulf of Mexico.

"The Cuban government does not object to letting American petroleum companies participate in exploration and drilling in our zone as long as it is based on mutual benefit," said an official notice in the Communist Party daily Granma.

Repsol-YPF of Spain plans to begin offshore exploration next year. Sherritt International of Canada has also signed contracts with the government to begin exploration, and Petrobras of Brazil is studying the feasibility of a similar move.

Despite Cuba's invitation, interested American companies would be unable to explore or drill for oil off the island's coast because of a four-decade-old U.S. trade embargo against the communist-run nation.

The Cuban government statement noted American farmers have been legally selling their agricultural goods to the island for two years under an exception to the trade sanctions.

Cuba, once almost wholly dependent on foreign fuel imports, now produces more than 30 percent of its own crude.

Nevertheless, the government said it was not counting on the possibility of future oil discoveries for the nation's economic development.

"The government of Cuba would like to clarify that our plans for economic development, and especially our social programs that are increasingly admired by many around the world, are not based in the least on the hypothetical possibility of finding new sources of energy," the statement said.

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