Cuba oil offshore exploration could be a game changer

A substantial oil strike off the coast of Cuba could change the island’s economic landscape.

HAVANA, Cuba, Thursday, February 2, 2012 – Only one in five exploratory wells strike oil, but the Cuban people are hoping that Spanish oil company Repsol will hit liquid gold before pulling out as half of any oil found belongs to Cuba.

Thirty-one miles off the northern coast of Cuba workers have begun drilling deep beneath the waves for oil reserves that could break Cuba’s oil dependence. It will take up to 60 days for Repsol to drill the first exploratory well from the Scarabeo and for Cuban officials to know if riches will start to flow.

The island has two on-shore oil facilities that produce half of the oil it needs; it is heavily dependent on socialist ally Venezuela for the rest.

The government imports more than 100,000 barrels a day at subsidised rates, paid for with the services of some 30,000 Cuban doctors and other health officials working in Venezuela.

However, Juan Triana, of the Centre for the Study of the Cuban Economy, advises that authorities cannot be complacent about this arrangement. "Today we have strong relations with Venezuela and that's good for Cuba. But if this relationship did not work in the future, that would be a very dramatic position," he is on record as saying.

Preliminary studies of the rock formation beneath Cuban waters suggest there are considerable deposits to discover: anything between five billion and 20 billion barrels of oil.

Repsol is the first company to explore, leasing the Scarabeo rig for US $500,000 a day and a long line of companies from other countries, except the United States, are awaiting their turn.

The most immediate hope for Cuban citizens is that gasoline will be cheaper, but substantial deposits of oil, and most likely gas, would transform this struggling economy into an energy exporter.

Triana suggested to the media that in two or three years the level of transformative change would be huge, easing Cuba’s financial pressures allowing it the resources to focus on critical needs such as infrastructure and development. Click here to receive free news bulletins via email from Caribbean360. (View sample)