US and Havana talk about oil in October
HAVANA, July 24 A first-of-its kind oil summit in Cuba organized by U.S. energy-industry heavy hitters is expected in October.
The meeting, set for Havana from Oct. 18-21, comes amid loosening tensions and expanding diplomatic relations between the United States and Cuba.
“The symposium is both historic and unique, the first-ever bringing together of high-level experts and leaders from the U.S. to join in discussion with parallel experts and leaders in Cuba and other Gulf and Caribbean nations,” reads the mission statement of the Safe Seas — Clean Seas conference.
It is organized by two former high-ranking executives of the International Association of Drilling Contractors — Lee Hunt and Brian Petty, respectively former president and executive vice president of global government affairs for the trade group.
Hunt and Petty said the purpose of the conference is to work on establishing uniform environmental and safety policies for offshore drilling throughout the Gulf of Mexico and the Caribbean Sea.
As things stand between the United States and Cuba, this is not possible now. The opening up of a U.S. embassy in Havana and a Cuban embassy in Washington, D.C., this week further signaled strengthening ties between the neighboring countries. But the more-than-50-year-old U.S.-imposed trade embargo against Cuba remains.
Because of the embargo, most American companies skilled in oil cleanup would be prohibited from providing immediate assistance if an oil spill occurs during a Cuban offshore drilling operation.
There are special U.S. government licenses available to American companies allowing them to do business with an oil rig drilling in Cuban waters, but not nearly enough to effectively deal with a disaster.
Based on the amount of equipment, vessels and services required to contain the 2010 DeepWater Horizon spill, Lee estimates less than 5 percent of these U.S. resources would be legally available to respond in Cuban seas.
The embargo also impacts the types of rigs and ships that can take part in an offshore Cuban operation. To comply with the embargo, a rig or vessel must have fewer than 10 percent of its parts made in the United States. If the ship is not compliant with the embargo, companies using it could face U.S. sanctions.
This was an issue in 2012 and 2013, when several international companies used an Italian-owned, Chinese-built semi-submersible rig to look for oil in the Florida Straits between Cuba and Key West.
The rig, the Scarabeo 9, met the specifications of the embargo. But there was concern among American officials, environmentalists and oil industry people that the embargo would hinder cleanup efforts in the event of a spill.
The operations largely came up empty, but the Cuban government thinks there are large supplies of oil and gas below the ocean floor in the deep waters of the Straits and Gulf of Mexico.
With that in mind, Hunt and Petty said it is necessary to “discuss the strategic and policy developments that would enable Cuba, and foreign upstream operators in Cuba, to trade with U.S. companies in certain areas of equipment and services, in particular those U.S. oilfield products and technologies that serve a dual purpose of not only enabling safe drilling practices, but also effective, successful emergency responses to oil spills to assure clean seas.”
More companies are looking to drill in the same area, according to industry sources. Media in Angola recently reported that country’s state-owned Sonangol oil company will be ready to drill in the Gulf between 2016 and 2017.
Ricardo Cabrisas Ruiz, Cuba’s vice president of the Council of Ministers, stressed, however, that such operations will be difficult without the U.S. lifting the embargo.
But some industry watchers have their doubts that, even with the lifting of the embargo, Sonangol is ready to embark on such a large operation off Cuba.
“I think this is a very long shot,” said Jorge Pinon, director of the Latin American and Caribbean Energy Program at the University of Texas, Austin. “Sonangol recently announced a cutback of over $1 billion in their budget due to low oil prices. I believe it when I see it.”