India, Norway join Spain in Cuba oil prospect
Spanish co Repsol YPF has teamed up with Norway's Norsk Hydro and India's OVL to explore blocks in Cuban waters.india Updated: May 24, 2006 10:45 IST
Spanish oil company Repsol YPF teamed up on Tuesday with Norway's Norsk Hydro and India's ONGC Videsh to explore six offshore blocks in Cuban waters where good-quality oil was found two years ago, the companies said.
The prospect of finding commercial quantities of oil in Cuban waters of the Gulf of Mexico at a time of soaring prices has set off a political debate over whether US companies, sidelined by American sanctions against Cuba, should be allowed to explore there.
Under the deal signed with Cuba's state-owned Cuba Petroleo (Cupet), operator Repsol will have a 40-per cent share in the project, while Norsk Hydro and ONGC Videsh will each have 30 per cent.
Exploration plans include 1,158 square miles (3,000 sq km) of three-dimensional seismic studies to be completed in June, said Egil Gloppen, Hydro Oil & Energy international business development director.
But drilling is not expected to begin until 2008 due to a tight market for deep-water exploration rigs as the world's search for oil intensifies to take advantage of tight demand and high prices for crude.
"2008 is probably the earliest, unless we come across a rig that can be used immediately, but that is not very likely," Gloppen said. He said there were only 20-30 rigs in the world than can drill at such depths.
Repsol found good-quality light oil in mile-deep (1.6-km) waters of Cuba's economic exclusion zone in the Gulf of Mexico in 2004, but not in commercially viable quantities.
Billions of barrels of oil
The US Geological Survey estimated last year that the North Cuba basin could contain some 4.6 billion barrels of oil, with a high-end potential of 9.3 billion barrels.
"Our technical people see this as a good prospect," said Uttam Sengupta, senior vice president of ONGC Videsh, the overseas subsidiary of Oil and Natural Gas Corp, India's largest integrated oil and gas company.
US companies are barred from looking for oil in Communist Cuba under trade sanctions enforced against President Fidel Castro's revolutionary government since 1962.
Sen. Larry Craig, an Idaho Republican, last month complained that energy-hungry China could gain access to oil "within spitting distance" of the United States. He introduced legislation that would seek an exception to the trade embargo for US oil companies so they could drill in Cuba.
"The US industry thinks it is too bad they cannot compete so close to their own turf," Gloppen said.
China's giant oil and gas company Sinopec Corp signed an agreement last year to produce heavy oil with CUPET in Cuba's western-most Pinar del Rio province from on-shore wells.
China is renting towers for directional drilling in oil fields run by Canadian companies Sherritt International and Pebercan Inc along a coastal oil belt producing heavy oil and gas used to generate electricity.
Cuba produces 60,000 barrels per day of poor-quality oil and is dependent on its ally Venezuela for imports of about 90,000 bpd of oil and derivatives.
Legislators from Florida, where anti-Castro Cuban exiles are politically powerful, are seeking to block Cuba drilling near the Florida coast on environmental grounds and penalize executives of foreign companies that help Cuba look for oil and gas.
But US sanctions should not apply to foreign companies exploring off-shore in Cuba because they would not be using American assets expropriated after Castro's 1959 revolution, oil industry executives said.
First Published: May 24, 2006 10:45 IST