Cuban waters come up dry on oil
International oil companies have been searching for crude off the coast of Cuba for the past few years, but all came up short. In hindsight, did the drilling program make sense?
• A version of this post ran on the author's blog. The views expressed are the author's own.
International oil companies have been searching for crude off the coast of Cuba for the past few years, including three separate efforts to drill for oil. It was a challenge, as most oil drilling rigs are prohibited from working in Cuba under the US embargo. But the companies found a rig and got to work.
Now, After 3 dry holes, the rig is asail for Africa. Repsol [Spain], Petronas [Malaysia], and PDVSA [Venezuela] all came up short. Petrobras [Brazil] abandoned its work on the island a couple years ago. Now one might ask, in hindsight, did this drilling program make sense?
Maybe it did for Repsol. It never hurts to take a chance, and if they had struck oil, they had the expertise and money to get it out of the ground. And Petronas, why not? Like Repsol, they need to look abroad for growth. But PDVSA and Petrobras, two companies with far more reserves than they have cash to develop the reserves?
For Petrobras, I think the effort was more about trying to get friendly with Venezuela, so as to boost the possibility of Brazil receiving a piece of [Venezuela's] Orinoco Belt. One giveaway was the location of the office that ran the Cuba venture: Caracas. And for Venezuela, home of the world’s biggest oil reserves? Was this project anything more than the chance to stick a finger in the eye of the US Empire and say neener neener neener? Yes, I know. Eulogio del Pino, vice president of exploration and development at PDVSA, has always said the Cuba project was serious. But here’s the thing: What kind of oil company puts millions of dollars into high-risk offshore drilling when it doesn’t even have proper lightning protection on its tank farms or up-to-date foam cannons at its refineries? I don’t believe that this was a serious investment decision unaffected by politics.
Back in 2005 I asked an oil reserves expert about the hydrocarbon resources off the Spratly Islands – the islands [in the South China Sea] that have recently been causing all sorts of geopolitical concerns. He scoffed, saying that while he had no special expertise about South China Sea geology, territorial conflicts often correspond with abrupt increases in estimates of oil and gas reserves. Armed forces looking at a potential conflict need to convince their own populace and government of the importance of defending these scraps of land, and one way to do so is to highlight natural resource wealth.
I’ve since seen the wisdom of what he said – most recently someone told me about the likely oil and gas riches in what otherwise appears to be a useless, overfished triangle of sea between Chile and Peru. No coincidence that Peru has been trying to get the water out of Chilean hands through a maritime law case. And Cuba? Obviously, it’s a lot of fun to talk about oil reserves off Florida that are out of US reach because of the ... old embargo. It’s less fun to actually try and find those reserves. Now, we’ll have a reprieve from such games as Cuba seeks a new Keno ticket, hopefully one that isn’t the result of anti-imperialist magical thinking.