Cuban offshore well a dry hole
Miami Herald:
Cuba’s dreams of an oil bonanza suffered a tough but possibly temporary setback Friday when the Spanish Repsol company confirmed it hit a dry hole when it drilled a well off the island’s northwest coast.The dry well will put more pressure on Cuba’s dependence on Venezuelan oil and means the government of Raúl Castro needs to continue nurturing its tight relations with the ailing president of Venezuela, Hugo Chávez, one analyst said.The development also may temporarily allay fears of an oil spill in Cuban waters that could foul the Florida Keys and the U.S. eastern seaboard, although several other foreign oil companies have options to explore in Cuban waters and Repsol had contracted to drill a second exploratory well.Repsol spokesman in Kristian Rix confirmed to journalists in Havana Friday that the Scarabeo-9 floating drill platform found nothing in a well in more than 6,000 feet of water about 20 miles northwest of Havana. The well will be capped, he added.The announcement was a tough blow to Cuba’s hopes for finding crude that could fuel its anemic economy.Jorge Piñon, a University of Texas oil expert who keeps an eye on Cuba, said the dry hole was not surprising because such things can happen, yet surprising because modern technology has significantly increased the chances of hitting oil.A key question now, Piñon added, is whether Repsol, already battered by the Argentine government’s nationalization of its YPF branch earlier this month, will decide to cut its risks and leave Cuba for more productive areas.
... Drilling the well cost an estimated $100 million to $150 million, financed by a consortium made up of Repsol, Norway’s Statoil and ONGC, an Indian oil company, Piñón noted. Repsol owns 40 percent of the partnership, so it will be hit with that portion of the losses.
A report by the U.S. Geological Survey estimated the area northwest of Cuba may hold up to 5 billion barrels of crude, yet the Cuban government has put the estimates as high as 20 billion, and commissioned studies on how it should handle the windfall.
Cuba is not only planning how to spend its winnings in the oil lottery before a number is drawn, it hasn’t even bought a lottery ticket yet, joked one U.S. oil expert.
The Scarabeo-9 rig, owned by an Italian firm and built in China with few U.S. parts specifically to avoid U.S. embargo regulations, is now expected to drill further west off the coast of Pinar del Rio on behalf of a consortium of Malaysia’s Petronas and Russia’s Gazprom Neft companies....
This has to be a blow to Cuba's communist as well as to Repsol which was recently screwed by Argentina on oil business it had in that country. Piñon is correct about how modern technology has increased the prospects of finding oil. Having a $100 to $150 million dollar dry hole can put a strain on any operation.
As big a risk is actually doing business with Latin American socialist and communist who have a history of stealing assets from companies who develop their resources. I would have recommended against the operation for tat reason. I do suspect there is some oil in the area. We should permit drilling by US companies off the coast of Florida.
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