Analysis: Cuban oil finds may bring change
By Les Kjos
UNITED PRESS INTERNATIONAL
Published February 11, 2005

MIAMI -- An oil discovery off Cuba and continued exploration by a variety of international interests could set off a series of changes in the energy and political landscape worldwide.

Cuba lost Soviet oil imports in 1990 and now depends heavily on Venezuela for fuel, but Canada, Spain, China and France are entering the picture with exploration off the Cuban coast.

One of two Canadian companies involved, Sherritt International, Cuba's largest foreign oil producer, said recently it has demonstrated a potential of 1,300 barrels a day at a field near Santa Cruz del Norte.

The other company involved in the discovery is Pebercan.

Repsol YPF of Spain is drilling in a separate 4,132-square-mile tract. The Repsol find was labeled as one of the most significant discoveries in the world last year.

The Cuban oil company CUPET and China's SINOPEC, one of the 10 largest oil companies in the world -- signed a joint oil-production agreement for one of the island's potential oilfields, Granma newspaper announced in Cuba last week.

The British and the French have also been exploring the area for oil.

Cuba currently produces 75,000 barrels a day, about half of its daily consumption.

Industry analysts now believe Cuban waters could contain substantial deposits, although earlier exploration led to only modest discoveries. The finds last year were the first since 1999.

The oil would be extracted by foreign countries, which would also refine it.

Cuba has no capability for refining oil and would have to swap the bulk oil for the refined product, said Jonathan Benjamin Alvarado, a Cuba energy expert and political science professor at the University of Nebraska at Omaha.

He said Cuba will also need management to keep costs under control, a major problem when Russia was supplying their oil.

"They know that now," he said Friday.

"You've got people across the gulf in Texas that have all the expertise that is needed for the management that is projected," he said.

He said U.S. firms could be extremely interested in helping -- and in getting in on the action in many other ways.

He said that could lead to a major shift in U.S. policy later in President Bush's second term.

In Washington, freshman Sen. Mel Martinez, R-Fla., played down those kinds of possibilities.

"It's not necessarily a big find," he told the Tampa Tribune. "I don't think there's any likelihood there'd be any successful pressure in the administration to change things."

Despite his fledgling status in the Senate, Martinez is bound to become a focal point of any action regarding Cuban oil.

He is a Cuban-born Floridian dedicated to the overthrow of the regime of President Fidel Castro and committed to the 46-year-old economic embargo against the Caribbean nation. He is also a member of the Senate Energy and Natural Resources Committee.

Martinez said he was concerned over oil drilling in Cuba for environmental reasons.

"We've been very vigilant in Florida to maintain the pristine nature of our coastline and now allow drilling," he said. "It's troubling when a neighboring state might do it."

Alvarado sees the oil as a factor that "clarifies some of the ambiguity of Cuba's future. It helps the future stability of their economy. It is the No. 1 priority right now."

He said Cuba is having a lot of trouble generating the revenue needed to support the needs of the nation because of energy issues.

"It spends half of all export revenues -- tourism, citrus and the rest -- for purchasing petroleum products," he said.

He doesn't see the oil as a problem so much as presenting the United States with the need to make a decision.

"If 100 million barrels is only the tip of the iceberg, there will be calls on Capitol Hill for normalization of relations with the Cuban government," he said.

He recalled a New York Times story last summer on oil exploration by the Spanish.

"Halliburton officials said it would certainly change the posture of the petroleum industry," Alvarado said. "For the Bush administration, it might be cause to make a change in policy."

He said allegations that Cuba is a brutal dictatorship may be true, but oil can change everything.

"You've got Spain and Canada and exploration by the English and French. There is a link right now between Cuba and Venezuela, the major oil supplier in the absence of Russia," Alvarado said.

He said what could cause the major U.S. oil companies to rise up in an effort to participate is that "they are not there and everybody else is.

"Even if the find isn't more than 500 million barrels of oil, about enough for 15 years, it would still provide interest for technical support from the United States," he said.

He said if firms like Halliburton make enough noise the president may eventually listen, even if it's not until near the end of his current term.

http://www.wpherald.com/storyview.php?St...11-033608-5711r

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