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Cuba to outline oil plans at drilling conference in TT

CARACAS, May 12, 2011

Cuba hopes to counter U.S. worries over its plans to start its first full-scale offshore oil exploration in a rare presentation this week to an energy audience outside the communist-led island.

Officials involved in Cuba's oil project are expected to discuss drilling plans and safety standards during a two-day meeting of international drilling contractors opening on Thursday in the Caribbean country of Trinidad and Tobago.

In the wake of last year's BP oil spill in the Gulf of Mexico , some U.S. officials and politicians have voiced concern over Cuba's drilling plans and whether it can ensure its offshore drilling will be safe.

One congressman from Florida has introduced legislation that would authorize punitive action against companies who drill off Cuba, citing environmental dangers.

"This will pretty much be the first time the Cuban deepwater drilling project managers will make a presentation of what their regulatory requirements are going to be for the companies that drill in Cuban waters," said Lee Hunt, president of the Houston-based International Association of Drilling Contractors, which is organizing the conference.

"There is a lot of incomplete information out there," he said.

Offshore Oil exploration is important for Cuba, which is just 90 miles (145 kms) from the southernmost tip of Florida. Cuba needs oil to sustain its battered economy and end its dependence on oil-rich socialist ally Venezuela .

After repeated delays, large-scale exploration by Cuba in its part of the Gulf of Mexico is set to begin later this year with the arrival of a Chinese-built drilling rig to be used first by a consortium led by Spanish oil company Repsol YPF REP.N. It will then be passed on to other non-U.S. oil companies for exploration in drilling leases they hold in Cuba's part of the Gulf of Mexico.

Other companies in the consortium include Norway's Statoil and ONGC Videsh, a unit of India's Oil and Natural Gas Corp.

No American firms are allowed to participate in the Cuban oil project because of a decades-old U.S. trade embargo preventing them from doing business in Cuba.


However, some in the U.S. oil industry are wondering if involvement by American companies might help prevent possible offshore accidents in Cuba.

"Obviously one of the questions is what impact does the embargo have on Cuban drilling. The main issue there is the best technology for blowout response is found in the United States," Hunt said.

Cuba has said it may have 20 billion barrels or more of oil in its untapped oil fields, but the U.S. Geological Survey has estimated a more modest 4.6 billion barrels.

However, any international coordinated response to a possible oil spill is complicated by the fact the United States and Cuba do not have formal diplomatic relations.

"There are implications for the U.S. in the event of a spill and we need to start making plans to address the appropriate response," Hunt said.

Earlier this year, the U.S. Interior Department sponsored an international conference on the best safety practices for drilling in deep waters, but did not invite Cuba.

Hunt said the drillers association, because it was registered as a U.S. chartered corporation, had to seek a special license from the U.S. government granting it permission to invite the Cuban delegation to the Trinidad conference.

"It took a lot of money, many months and many meetings to get this done," he said.

"I think the Cubans hope to achieve a statement in their own voice about their state of readiness for drilling, what their regulatory plans are and what their capabilities are."

Story by Kevin Gray from Reuters.

Reuters/ May 10, 2011


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