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Anti-Castro Cuban Americans Fret Over Drilling Rig

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Scarabeo 9

by Jim Lobe

WASHINGTON, Nov 4, 2011 (IPS) – With a giant deep-water oil rig steaming slowly toward the Gulf of Mexico and the waters just off Cuba, the administration of President Barack Obama is being pushed and pulled by different interests over what, if anything, to do about it.

On the one hand, anti-Castro Cuban-American and other right-wing lawmakers here are expressing growing exasperation over what they see as Washington’s failure to do whatever it can to prevent the new, 750-million-dollar Scarabeo 9 from fulfilling its mission to begin exploratory drilling off the island’s northwest coast by early next year.

They appear increasingly worried that the rig, which will be operated initially by the Spanish oil company, Repsol-YPF, may find commercially exploitable quantities of oil under Cuba’s waters and thus provide a “windfall” for Havana that will be used to help sustain the Communist government led by President Raul Castro.

On the other hand, some environmental and anti-embargo groups, including business associations that want to increase trade with Havana, are calling on Obama to engage the Cuban government more directly in the interests of both protecting the Gulf’s ecology from a possible spill and ensuring that U.S. oil service companies will be able to help contain the damage should such an accident take place.

Less than 18 months after the Deepwater Horizon blow-out that sent nearly five million barrels of oil pouring into the Gulf over a three-month period, they argue that Washington should work closely with both the Cuban government and Repsol, as well as other third- country companies that will operate the rig, to both minimise the risk of a similar accident and contain its impact if there is one.

So far, the administration appears to be trying to steer a middle course, satisfying neither side.

The U.S. Geological Service estimates that there could be undiscovered reserves of up to six billion barrels of oil under Cuban waters only 100 kms from the Florida Keys, while others have suggested there could be as much as several times that amount.

And while it would take at least a couple of years before those reserves could be tapped commercially, they would provide a huge boost to the struggling Cuban economy, which currently depends on the largess of Venezuelan President Hugo Chavez for more than two-thirds of its daily crude oil requirements.

“We are extremely concerned over what seems to be a lack of a coordinated effort by the Administration to prevent a State Sponsor of Terrorism, just 90 miles form our shores, from engaging in risky deep sea oil drilling projects that will harm U.S. interests as well as extend another economic lifeline to the Cuban regime,” complained four Cuban-American congressmen in a letter to Obama earlier this week.

They demanded, among other things, that the administration investigate whether any part of the Scarabeo has been made with U.S.- origin parts in violation of the 49-year-old U.S. trade embargo, and whether Obama’s own Interior Department may itself be violating the law by providing Repsol with technical advice.

“The administration needs to provide answers and change course,” said Rep. Ileana Ros-Lehtinen, one of the four lawmakers and chair of the House Foreign Affairs Committee, who in September also helped persuade 35 of her House colleagues to sign a letter to Repsol’s chairman urging him to immediately halt the company’s plans to drill.

The signatories included most lawmakers from Florida whose Gulf coast would almost certainly be affected by any spill originating in the drilling area.

Repsol has become the main target of Congressional opposition to the project primarily because it is the only publicly-traded company with substantial investments in the U.S. in a multinational consortium that includes the state oil companies of Malaysia, Brazil, Norway, Angola, and several other countries.

Repsol, which has issued repeated assurances that the rig’s operation and equipment will meet U.S. standards, has agreed to permit a team from the U.S. Coast Guard and the Interior Department’s Bureau of Safety and Environmental Enforcement (BSEE) to inspect the Scarabeo and its drilling equipment when it reaches Trinidad and Tobago later this month.

While that inspection won’t be as comprehensive as Washington would like, BSEE director Michael Bromwich told a hearing of the House Subcommittee on Energy and Mineral Resources Congressional Wednesday, “In our judgement, it’s a lot better than nothing.”

The administration is also using the multilateral International Maritime Organisation (IMO) to have its Coast Guard officers sit down with Cuban and other officials from the northern Caribbean next month to discuss measures for dealing with spills under the 1990 International Convention on Oil Pollution, Preparedness, Response and Cooperation (OPRC).

In fact, the 750-million-dollar Scarabeo is considered pretty much state of the art. It was designed by Norwegian engineers; its structure was built in China; and it was fitted with the latest deep- water drilling technology in Singapore.

But the fear of a major accident has prompted a number of environmental groups and independent experts to urge the administration to become significantly more engaged with both the Cuban government and all of the companies that will be operating the rig.

In particular, they want the administration to issue a general license for U.S. oil services companies to work in Cuba, which would permit them to respond quickly to any spill or related emergency resulting from drilling operations. Under the trade embargo, each company would have to apply for a special license to do so.

“We are very naïve to think that, in the case of Cuba, a handful of individual exports licenses could prevent and contain a deepwater oil exploratory well blow-out,” Jorge Pinon, a former oil executive and consultant at Florida International University, told the Subcommittee.

“A general license to export and supply equipment, personnel and services to international oil companies operating in Cuba in the case of an emergency is urgently needed,” he stressed, noting that more than 5,000 vessels, millions of metres of booms; and nearly eight million litres of dispersant were deployed to contain the Deepwater Horizon spill.

That message was echoed by Daniel Whittle, who directs the Cuba programme at the Environmental Defense Fund and who organized a delegation headed by President George H.W. Bush’s environment chief, William Reilly, that visited Cuba earlier this year. Reilly was the co-chairman of the national commission that investigated the Deepwater disaster.

“First and foremost, the administration should take steps now to ensure that U.S.-based companies are pre-authorized to assist in preventing and containing major oil spills in Cuban waters,” he testified.

“It’s critical to get U.S. companies into the act because of their technology, know-how, and proximity,” agreed Jake Colvin, vice president of the National Foreign Trade Council (NFTC), a business lobby that represents major multi-national corporations here. “While the administration has the authority to license a rapid response by those companies in the event of an accident, it hasn’t yet authorized it.”

“The reason they’re not issuing a general license is entirely political,” according to Sarah Stephen, the director of the Washington-based Center for Democracy in the Americas, which has lobbied against the embargo and last summer published a booklet on Cuba’s drilling plans.

“The administration clearly understands the urgency here, but it’s worried about the pressure from Congress, especially from the Floridians,” she said.

*Jim Lobe’s blog on U.S. foreign policy can be read at http://www.lobelog.com.

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Chinese-made drilling rig to be in Cuba by year’s end

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HAVANA (AP) — A Chinese-made oil rig is on schedule to arrive off Cuba and begin drilling before the end of 2011, a spokesman for Spanish oil company Repsol YPF said Thursday.

Spokesman Kristian Rix would neither confirm nor deny recent reports of delays as the Scarabeo-9 rig travels to the Caribbean island, but he said the project has always been based on a window of time and things are still on schedule.

He said it’s impossible to predict exact dates for such a complex undertaking as transporting the huge offshore rig, which is capable of housing up to 200 workers.

“We’re not moving a bag of chips around here,” Rix said by phone from Madrid.

Repsol holds the rights to an exploration block off Cuba covering more than 1,700 square miles, according to its 2010 annual report. Earlier this year it signed a contract with Italy’s Saipem SpA to lease the Scarabeo-9 rig for drilling operations in Cuba.

“Where we’re at at the moment is we’re expecting the rig to arrive in Cuba just before the end of the year, and the plan as it stands is to begin drilling before the end of the year,” Rix said.

According to geologic studies conducted by several institutions, some of them U.S.-based, Cuba’s reserves in the Gulf of Mexico could be 5 billion to 9 billion barrels of crude.

The Cuban government has designated dozens of blocks in Gulf waters encompassing 43,200 square miles where private energy companies plan to drill deep-water test wells.

None of the companies are American, due to Washington’s decades-old embargo banning most U.S. business dealings with the communist-governed island, although some U.S. firms have expressed interest in the past.

Some environmental groups, U.S. politicians and academics have expressed concerns about drilling off Cuba after last year’s Deepwater Horizon disaster that killed 11 workers and spilled more than 200 million gallons of oil into the Gulf of Mexico.

Repsol’s 2010 annual report says the Sacarabeo-9 complies with U.S. specifications and technical requirements. Cuban officials have also said that the safest, most modern technology will be used.

Earlier this year, Cuba reported its 2010 production totaled 4 million tons of petroleum equivalent, which is oil plus natural gas. That is about 46 percent of its domestic consumption. The rest it obtains from Venezuela on preferential terms.

Original Article

Jamaica: Bids Open for LNG Project

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The Government says it will be hosting meetings with prospective bidders for the Jamaica’s Liquid Natural Gas (LNG) supply project and the building of a Floating and Regasification Terminal next week.

The meetings are to take place on Monday and Thursday at the Jamaica Pegasus Hotel. Minister of Energy and Mining, Clive Mullings and Chairman of the LNG Steering Committee, Christopher Zacca are expected to speak at both pre-bid meetings.

The Office of the Prime Minister says pre-bid meetings are opened to all interested bidders but that attendance is not required to submit a proposal in response to the project.

The Government was forced to re-tender the bid for the Floating Storage and Regasification Terminal after the Contractor General, Greg Christie, alleged there had been irregularities in the bidding.

Christie had said the eventual winner, the Exmar Consortium, had been given an unfair advantage. However, this week the Office of the Director of Public Prosecutions said there was no evidence to draw the inference that Exmar’s advantageous position was the result of bid-rigging or corruption.

Original Article

Drilling: U.S. Embargo May Hinder Oil-Spill Response in Cuban Waters

Platts – A long-standing embargo imposed by the United States on Cuba could make it more difficult to clean up potential oil spills as the Caribbean nation prepares to drill in deep water 50 miles from the shores of Florida, according to the head of an international drilling trade group. Lee Hunt, the president of the International Association of Drilling Contractors (IADC), made his comments to Platts Energy Week (http://www.plattsenergyweektv.com/), the independent, all-energy television news and talk program airing Sundays in the United States.

Hunt said that the U.S. embargo on Havana has required drillers there to use second-hand equipment to avoid buying it from U.S. companies. “The impact of the embargo has to do if something goes wrong, and what kind of resources can be mobilized to cap or stem the flow of a runaway well or to contain a spill.”

Cuba has been a target of a U.S. embargo since 1962. A subsequent U.S. law allows foreign companies working with Cuba to use only 10% U.S.-made equipment, or face sanctions on their operations in the United States.

Spanish-owned Repsol plans deepwater drilling off the Cuban coast later this year using a drilling rig built in China specifically to avoid the embargo.

“What the contractor has had to do is shop around its used inventory to locate a piece of equipment that falls outside the restrictions of the embargo, so the embargo, in effect has forced the drilling contractors working in Cuba to go to second-level equipment,” Hunt said.

Hunt’s comments come a little more than one year after the anniversary of the 2010 Macondo well blowout in the Gulf of Mexico resulted in the worst oil spill in U.S. history.  A report from the Interior Department found that human failure was the primary cause of the disaster, but that a malfunctioning blowout preventer was a major contributing factor to the magnitude of the spill.

“It is unnerving that as we work here in the Gulf of Mexico with the Department of Interior and the [Bureau of Ocean Energy Management, Regulation and Enforcement] that as we seek the gold-plated standard for the United States, the impact of the embargo is to force our neighbor, drilling very, very close to our shores, to go into a secondary market for parts, service and supply.”

Cuban officials have been very supportive of drilling safety, Hunt said. “What we are hearing from Cuban officials is a great deal of respect for the various regulatory schemes in the world, and in particular the new ones emerging in the U.S.,” Hunt said. ‘They are attempting to follow what can be communicated as best practices.”

The interview with Hunt was shortly before the U.S. announced it would allow the Cuban officials to attend a conference in Trinidad next month sponsored by the U.S.-based IADC to discuss Cuba’s deepwater drilling plans. Permission from the United Sates was required because IADC is a U.S. group and the embargo prohibits U.S. citizens from meeting with Cuban officials. The full interview may be accessed here.

As plans for deepwater drilling ramp up off the Cuban coast, the presence of a delegation from Havana including the country’s top drilling regulator would mark the first time they have discussed that drilling in an international forum. The IADC hopes to use the forum to discuss international best practices with Cuban officials.

In a segment entitled Iraq Plays Catch-up on Oil, Platts Baghdad-based correspondent Ben Lando reported on Iraq’s race to rebuild its oil infrastructure and play a bigger role in oil and natural as markets.

In this week’s Energy Watch segment, Platts Energy Week featured Devon Energy’s William Whitsitt, executive vice president for public affairs, on the topic of a new national database on fluids used in shale gas drilling. Whitsitt spoke about his company’s participation in a new voluntary database. Platts Gas Daily Associate Editor Bill Holland offered an update on the latest developments in the Marcellus Formation, the rich shale gas region that stretches from New York to West Virginia.

Original Article

US concerned about Cuba drilling

A top US official said they were concerned about Cuba opening its offshore waters to oil drilling, while Mexico said the three countries should try to work out differences.

“For us it is an issue of concern,” said US Interior Secretary Ken Salazar about drilling in Cuban waters. “Obviously, because it’s located 60 miles off the coast of Florida … it’s an issue that we’re monitoring carefully.”

In light of the BP oil spill nearly a year ago, the US is now worried that Cuba is unable to ensure its offshore drilling will be safe, Reuters reported.

Salazar spoke to reporters during a break at a day-long international conference sponsored by the US Interior Department on best safety practices for drilling in deep waters.

Cuba was not among the dozen or so countries invited to the conference.

Cuba is eager to develop its oil resources in the Gulf of Mexico, which it estimates could total 20 billion barrels of crude. The US pegs the total at a more modest 5 billion barrels.

Mario Budebo, an undersecretary at Mexico’s Ministry of Energy, said his country had an offshore boundary dispute with Cuba and was less concerned about drilling safely in Cuban waters.

He said the three countries should “get together and have discussions” about Cuba’s offshore drilling activities.

“That is still something that we have to deal with and put Cuba together (at) the table,” said Budebo.

Salazar did not respond to Budebo’s suggestion. When asked later if Salazar supported the idea, an Interior spokesperson referred the question to the US State Department.

The US does not have full formal relations with Cuba.

But other Interior officials recently met with executives from Spanish oil giant Repsol about the company’s plans to drill in Cuban waters.

Repsol, in a consortium with Norway’s Statoil and a unit of India’s ONGC, plans to start drilling offshore Cuba by the end of the summer.

( Original Article )

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