Repsol to cap and abandon oil well off Cuban coast
Major disappointment as Repsol exploratory oil well off Cuba comes up dry
HAVANA, Cuba, Thursday, May 24, 2012 – Hope continues to spring in Cuba even if the oil has not, from the latest exploratory well dug by Spanish oil company Repsol.
Repsol has announced that its exploratory oil well off the northern coast of Cuba has proved a failure and will be capped and abandoned.
This announcement comes five months after the Spanish company had to move its massive rig into Caribbean waters from Singapore at considerable cost as it circumvented United States waters in order not to fall victim to that country’s Cuba embargo.
Now, all of that manoeuvring has ended in disappointment for Repsol and the cash-strapped Caribbean nation hoping for a new economic lifeline.
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, had been awaiting their turn. Diplomats and industry sources had said that the Scarabeo-9 rig would be rented out next by Malaysian oil company Petronas for exploration north of Cuba's Pinar del Rio province, to the west of Havana.
It is now left to be seen what impact the Repsol’s failure to find oil will have on other speculators. And this is not the first failure for the company, which has now come up dry in two Cuban wells drilled over the last decade.
Repsol is said to be evaluating the data it collected from the Scarabeo-9 rig off the coast of Havana, but the company has not yet decided whether to sink further wells in the area, spokesman Kristian Rix is reported to have said.
However, analysts have said that trial and error is par for the course in oil exploration and are suggesting that all is not lost for Cuba's petroleum dreams.
Indeed, Rix is reported to have said that four out of every five offshore wells come up dry and therefore they are yet to determine whether other parts of Repsol's exploration block are commercially viable.
Hope also remains that the failed well does not mean that the rest of Cuba's offshore exploratory area, said to hold an estimated to hold 5 billion to 9 billion barrels of crude, is barren.
Jorge Pinon, former president of Amoco Oil Latin America and now an energy expert at the University of Texas has been quoted as saying that, while the Repsol news is disappointing news, it does not mean that the whole of the Cuban north belt will not yield a substantial amount of hydrocarbons.
Cuba has been struggling to lift its weak economy out of the doldrums for years, and the prospect of oil riches is a major part of the country's master plan. A big find would also lessen Cuba's reliance on Venezuela, which gives Cuba US$3 billion a year in oil subsidies.