India, Norway join Spain in Cuba oil prospect

India, Norway join Spain in Cuba oil prospect
2006-05-24 03:01

Spanish oil company Repsol YPF teamed up on Tuesday with Norway's Norsk
Hydro and India's ONGC Videsh to explore six offshore blocks in Cuban
waters where good-quality oil was found two years ago, reports Reuters.

The prospect of finding commercial quantities of oil in Cuban waters of
the Gulf of Mexico at a time of soaring prices has set off a political
debate. Whether U.S. companies, sidelined by American sanctions against
Cuba, should be allowed to explore there.

Under the deal signed with Cuba's state-owned Cuba Petroleo (Cupet),
operator Repsol will have a 40-percent share in the project, while Norsk
Hydro and ONGC Videsh will each have 30 percent.

Exploration plans include 1,158 square miles (3,000 sq km) of
three-dimensional seismic studies to be completed in June, said Egil
Gloppen, Hydro Oil& Energy international business development director.

But drilling is not expected to begin until 2008 due to a tight market
for deep-water exploration rigs as the world's search for oil
intensifies to take advantage of tight demand and high prices for crude oil.

"2008 is probably the earliest, unless we come across a rig that can be
used immediately, but that is not very likely," said Gloppen. He said
there were only 20-30 rigs in the world than can drill at such depths.

Repsol found good-quality light oil in mile-deep (1.6-km) waters of
Cuba's economic exclusion zone in the Gulf of Mexico in 2004, but not in
commercially viable quantities.

The U.S. Geological Survey estimated last year that the North Cuba basin
could contain some 4.6 billion barrels of oil, with a high-end potential
of 9.3 billion barrels."Our technical people see this as a good
prospect," said Uttam Sengupta, senior vice president of ONGC Videsh,
the overseas subsidiary of Oil and Natural Gas Corp., India's largest
integrated oil and gas company.

U.S. companies are barred from looking for oil in Communist Cuba under
trade sanctions enforced against President Fidel Castro's revolutionary
government since 1962.

Sen. Larry Craig, an Idaho Republican, last month complained that
energy-hungry China could gain access to oil "within spitting distance"
of the United States. He introduced legislation that would seek an
exception to the trade embargo for U.S. oil companies so they could
drill in Cuba."The U.S. industry thinks it is too bad they cannot
compete so close to their own turf," Gloppen said.

China's giant oil and gas company Sinopec Corp. signed an agreement last
year to produce heavy oil with CUPET in Cuba's western-most Pinar del
Rio province from on-shore wells.

China is renting towers for directional drilling in oil fields run by
Canadian companies Sherritt International and Pebercan Inc. along a
coastal oil belt producing heavy oil and gas used to generate
electricity.Cuba produces 60,000 barrels per day of poor-quality oil and
is dependent on its ally Venezuela for imports of about 90,000 bpd of
oil and derivatives.

Legislators from Florida, where anti-Castro Cuban exiles are politically
powerful, are seeking to block Cuba drilling near the Florida coast on
environmental grounds and penalize executives of foreign companies that
helped Cuba to look for oil and gas.

But U.S. sanctions should not apply to foreign companies exploring
off-shore in Cuba because they would not be using American assets
expropriated after Castro's 1959 revolution, oil industry executives said.

http://news.moneycontrol.com/india/news/business/indianorwayjoinspaincubaoilprospect/resultsviewsipomfinsurancetaxnriinterviewsceocommentspressreleases/market/stocks/article/5085/999999