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Cuba’s oil drilling plan is a great reason to end U.S. embargo

 

Christopher Helman, Forbes

 

Cuba has announced plans to start drilling for oil off its shores, in the Gulf of Mexico, as early as this summer. The first well will likely be spudded by Spain’s Repsol, in partnership with Norway’s Statoil. They have reportedly contracted a drilling platform. Other companies lined up to drill include Russia’s Gazprom, India’s ONGC-Videsh, Malaysia’s Petronas, and Venezuela’s Pdvsa. All of these are state-controlled companies; none (except for Statoil) have much, if any, experience drilling deepwater wells anywhere, let alone in the Gulf of Mexico.

 

The deepwater drilling would likely take place about 100 miles from Key West, Fla. Should Americans be worried about a deepwater disaster in Cuban waters sullying Florida beaches? Well, not according to Rafeal Tenrreyro, head of exploration for Cuba’s state oil company Cupet. Tenrreyro reportedly said on Monday that “safety is more than guaranteed. Cuban institutions have made sure that is the case.”

 

Perhaps Cuba’s offshore drilling regulators are just as capable as the seasoned engineers reviewing permits at the U.S. Bureau of Ocean Energy Management (BOEMRE), but I doubt it.

 

The U.S. economic embargo against Cuba is clearly a failure and now that the Cold War is over its continuation has only served to force Cuba into the arms of Venezuela’s Hugo Chavez, who provides Cuba with 100,000 bpd of cut-price oil through Pdvsa.

 

Now is the time to lift the embargo, or at least ease it to allow U.S. oil companies and drilling contractors to compete for drilling prospects in Cuba.

 

It’s a no-brainer that we would rather have Chevron drilling 100 miles off Florida than Gazprom or Pdvsa. Plus, the U.S. offshore drilling industry needs the business–which would be substantial if estimates of a possible 20 billion barrels come to pass.

 

Though BOEMRE has finally begun to issue new drilling permits in the U.S. part of the Gulf, the pace of activity remains glacial. It makes no economic or even political sense to prevent American capital, know-how, and newfound emphasis on deepwater safety from being deployed in Cuba.

 

President Obama’s Interior Secretary Ken Salazar met with officials in Mexico Monday to discuss the creation of a “gold standard” on drilling in the Gulf. But any agreement would be more like a lead standard unless Cuba were included.