February 25, 2011 12:39 am

US bill to bar oil groups with Cuban links

If Vern Buchanan has his way, Repsol, Spain’s largest energy company, will have to choose between doing business in the US or in Cuba – and that goes for the other international companies looking at prospecting for oil off Cuba’s coast, too.

“We cannot allow this project to move forward,” the Republican congressman from Florida said this month after introducing legislation to allow the US interior secretary to deny oil and gas leases to companies that do business with Cuba.

“My bill tells Repsol to decide whether it wants to continue doing business with Cuba or with the United States.”

Moved partly by the desire to keep in force a 50-year-old trade embargo, and partly by environmental concerns, Mr Buchanan is one of several US lawmakers seeking to stop Cuba from drilling for oil 65 miles off the US coast.

Using a Chinese-made rig, Repsol is due to begin operations this spring, alongside Norway’s Statoil and India’s ONGC.

Russia’s Gazprom, Brazil’s Petrobras and, according to sources at Cuban oil company Cupet, China’s CNPC are also vying for Cuban licences.

Following Mr Buchanan’s lead, Democratic senator Bill Nelson also plans to re-introduce legislation to revoke the US visas of executives of companies trading with Cuba. Miami Republican Ileana Ros-Lehtinen, who chairs the House foreign affairs committee, also supports sanctions on companies involved in Cuba.

“The [Buchanan] bill doesn’t have any economic, legal or political justification,” counters Jorge Piñón, a Cuba research fellow with Florida International University and former president of BP-Amoco Oil Latin America.

“But there’s a political and economic benefit for Cuba to drill for oil.” A report released on Thursday by the Washington-based Center for Democracy in the Americas says that finding oil in commercially viable amounts would be “transformative” for Cuba.

At the same time, the embargo against Cuba “is an obstacle to realising and protecting [US] interests in the region”, giving the competitive advantage to other foreign firms while denying Cuba access to US equipment for drilling and environmental protection.

In 1977, Jimmy Carter, then US president, set the boundaries of Cuban waters at 45 miles off the Florida Keys, a halfway point between the two countries. The potential oil reserves fall on the Cuban side.

Although the size of the reserves is disputed – the US Geological Survey suggests 4.6bn barrels, the Cuban government says 20bn – if large quantities of commercially viable oil are found, advocates of a hardline stance towards Cuba are likely to face growing opposition from oil lobbyists in Washington.

The Obama administration has relaxed its stance on Cuba just as Raúl Castro, its president, seems to be liberalising the economy. Yet the trade embargo remains, stopping US oil companies from bidding for Cuban drilling rights, while also restricting US technology that can be used there.

“Cuba has neither the resources nor the technology to handle a spill, and help from American companies would be greatly complicated by the trade embargo,” Mr Buchanan said. “If disaster strikes, who pays the price? Not Cuba or China but America. The economic and environmental damage would be catastrophic.”

A Repsol spokesman responded: “We have significant experience in offshore drilling, we have the right people and the right equipment and we are sure we can do it safely and successfully in Cuba.”

Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.

NEWS BY EMAIL

Sign up for email briefings to stay up to date on topics you are interested in

SHARE THIS QUOTE