FEATURE-Cuba oil plans could put hole in U.S. embargo
ju4 wa4i dia4n zo1ng he2 ba4o da4o :\n  By Jeff Franks\nHAVANA, June 12 (Reuters) - Sometime next year, Cuba plans to\nbegin drilling a major oil field off its northern coast that might\ndo what little else has done -- bring change to U.S-Cuba\nrelations.\nIn a rare confluence of circumstances, oil could grease the\nwheels for the two bitter enemies to come together in the middle\nof the Florida Straits out of mutual need, experts say.\nGetting there would require a sea change in U.S. policy --\nnamely putting a major hole in the U.S. trade embargo imposed\nagainst Cuba in 1962 to topple Fidel Castro's communist\ngovernment.\nIf the embargo stays as is, a nearby source of oil will be\noff-limits to the energy-thirsty United States and the American\noil industry will miss out on billions of dollars of business.\nEmbargo opponents rule out change until President George W.\nBush, who has toughened the embargo, leaves office next year.\nEven then they can expect a fight from influential\nCuban-American leaders, who argue that helping Cuba produce oil\nwill aid the Cuban government and undermine the 46-year-old\nembargo's reason for being.\n"We think what really needs to happen in Cuba is for that\nsystem to change," U.S. Commerce Secretary Carlos Gutierrez told\nReuters.\nBut embargo foes say the combination of economics, energy needs\nand environmental concerns, as well as new leaders in the two\ncountries make easing the embargo possible.\n"The pro-embargo status quo is really threatened right now,"\nsaid Sarah Stephens, director of the Center for Democracy in the\nAmericas. "The sands are running out of the clock on the policy\nand I think that has the pro-embargo folks worried."\nDRILLING\nThe U.S. Geological Survey has estimated the Cuban field holds\nat least 5 billion barrels of recoverable oil and 10 trillon cubic\nfeet of natural gas.\nIn a few years, Cuba could be producing 525,000 barrels of oil\nper day, enough to make it energy independent and perhaps even an\noil exporter, said former oil company executive Jorge Pinon, now a\nresearcher at the University of Miami. Cuba consumes 145,000\nbarrels daily, of which 92,000 come from Venezuela.\nThe government has sold oil concessions to seven companies and\nhas said a consortium of Spanish, Indian and Norwegian companies\nwill drill the first production well in the first half of 2009.\nDrilling was supposed to begin this year and has been put off\ntwice due to undisclosed factors that U.S. experts say likely\ninclude difficulty getting a rig because global drilling activity\nis high, the need for more downstream facilities to handle the oil\nand possible effects of the U.S. embargo.\nThe Cuban field lies as much as 6 miles (10 km) below the sea\nsurface, depths at which U.S. production technology is superior,\nsaid Cuba oil expert Jonathan Benjamin-Alvarado at the University\nof Nebraska-Omaha.\n"Cuba and none of the present partners have that (depth)\ncapability without accessing American technology, and therein lies\nthe rub," he said. "U.S. export controls forbid them to transfer\nthat technology to Cuba."\nCuba, looking past the United States, has been in talks with\nBrazil's Petrobras, which has much deepwater expertise, about\ngetting involved.\nThe embargo has withstood repeated legislative attempts to\nwater it down, including unsuccessful bills in the U.S. Congress\nin 2006 to exempt oil companies.\nBut embargo foe Kirby Jones, a consultant on Cuba business and\nfounder of the U.S.-Cuba Trade Association in Washington, said a\nbig Cuba oil find changes the political equation.\n"This is the first time that maintaining the embargo actually\ncosts the United States something," he said. "And we need oil. We\nneed it from wherever we can get it, and in this case it's 50\nmiles (80 km) off our coast," he said.\nCLOSE TO U.S.\nAn odd fact is that Cuba will be drilling 50 miles from the\nFlorida Keys, or more than twice as close as U.S. companies can\nget due to regulations protecting Florida's coast.\nU.S. Rep. Jeff Flake, an Arizona Republican who has introduced\nbills to lift the embargo for oil companies, said the\nenvironmental argument may be key because there is much concern in\nFlorida about potential oil spills.\n"If there are going to be oil rigs off of Florida, I think\nmost Americans would be more comfortable if they were U.S. oil\nrigs, rather than Chinese for example," Flake said.\nHe said U.S. companies are definitely interested in Cuba, but\nhave not publicly pushed for embargo change. In interviews,\nindustry executives emphasized they did not oppose the embargo\nbecause it is U.S. national policy and were pushing instead for\naccess to U.S. areas that are currently prohibited, such as\noffshore western Florida.\n"When U.S. companies are not even allowed to drill in the\neastern half of the Gulf of Mexico, we have a long way to go\nbefore we can think about international waters off the coast of\nCuba," said Larry Nichols, chairman of Houston-based Devon\nEnergy.\nCuba has said it would welcome U.S. companies to their\noffshore field and showed its interest by sending Cubapetroleo\nrepresentatives to a 2006 conference in Mexico City with companies\nincluding oil giant Exxon Mobil and top U.S. refiner Valero Corp.\nThe conference became the center of international controversy\nwhen the Sheraton Hotel kicked out the Cuban representatives after\nthe Bush administration told the U.S.-based hotel chain it was\nviolating the embargo by having paying Cuban guests.\nThe incident may have convinced the oil industry to lie low on\nCuban oil.\n"Nobody wants to rankle the Bush administration and get them\nin a tizzy about what may occur," said Benjamin-Alvarado.\nThe political landscape for the embargo already has changed\nwith Raul Castro taking over in February as Cuba's president,\nsucceeding his ailing brother, Fidel, Flake said.\nRaul Castro has made small openings in Cuba's state-run\neconomy, but perhaps more importantly he is not the anti-American\nfirebrand and lightning rod his brother was for 49 years.\n(Reporting by Jeff Franks; Additional reporting by Bruce Nichols\nin Houston; Editing by Eddie Evans)\n((jeff.franks@thomsonreuters.com; 537 833 3145; Reuters\nMessaging: jeff.franks.reuters.com@reuters.net))\nKeywords: CUBA OIL/