Monday, July 16, 2012

Plan to Drill for Cuban Oil Faces Delay

A Russian state oil company will delay drilling its first exploratory well off the northern coast of Cuba, about 180 miles from Florida, after apparently struggling to find a suitable drilling rig that would not violate U.S. sanctions.

Cuba produces little oil now, but petroleum experts say the country's northern coastal waters could hold reserves, which may help revive the island's economy and ease its dependence on oil imported from Venezuela.

The Russian company, Zarubezhneft, said in a statement on Wednesday that it had planned to drill in August but now planned to start in November.

Half a dozen companies have signed deals to work in Cuban waters on projects that are alarming for the U.S. authorities because they are close to the United States but out of reach of its safety regulators. In places, Cuba's maritime border is 50 miles from the U.S. coast.

The update on the Russian company's plans came during a visit to Moscow on Wednesday by Ra?l Castro, Cuba's leader and the brother of Fidel Castro. Ra?l Castro is on a tour of former Communist allies, seeking investment. He stopped in Russia after visiting China and Vietnam. In Russia, he met with President Vladimir V. Putin, who asked that he relay the country's best wishes to his brother.

Zarubezhneft, a small state-owned company, obtained the exploration rights to four blocks off Cuba three years ago. In June, it contracted with a Cyprus-based drilling operator, Songa Offshore, for a rig.

Rigs have posed a challenge for oil companies operating in Cuba. They must have sufficiently few U.S.-made parts to avoid violating the trade embargo the United States imposed on Cuba 50 years ago. Yet the United States is a leader in the offshore drilling industry.

Songa Offshore, a company with ties to the Norwegian oil industry, once operated from offices in Houston but has since relocated to Singapore and Cyprus, according to its Web site.

After it contracted for the Songa rig, the Russians took the added precaution of hiring a third-party auditing company to confirm that the machine had fewer than 10 percent U.S.-made parts, Zarubezhneft said in its statement. That question settled, the rig is now sailing from Kuala Lumpur, Malaysia, to Cuba.

The Russians plan to drill at a site called Block L, near the Cuban coastal town of Cayo Santa Maria.

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Source: http://www.rigzone.com/news/oil_gas/a/119327/Plan_to_Drill_for_Cuban_Oil_Faces_Delay?rss=true

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