No oil off Cuba? What a shocker

After 3 dry holes, one of the world’s only offshore oil drilling apparati that can legally work in Cuba is now asail for Africa. Repsol, Petronas and PDVSA all came up short. Petrobras 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 the 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, VP 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 of the Spratley Islands — the islands 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 stupid 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.

3 Comments

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3 responses to “No oil off Cuba? What a shocker

  1. Dr. Faustus

    So where does that leave Cuba now? Cuba’s Keno ticket is now lying on the gaming floor, half torn in frustration, with a large red stamp on it, “Bupkis! No Oil.” Er, what now? Will the Bolivarian Republic continue picking-up the check for the Castro brothers through 2013 and beyond? Five billion a year. Yup. Are all of those glorified Cuban nurses running around Venezuela really worth five billion a year? What happens in the third and fourth quarter of next year in Venezuela when the economy suddenly tanks? Most economists already see the handwriting on the wall. There’s a debt bomb coming. Will the new leader of Venezuela (trust me, Hugo ain’t gonna make it) demand that the Castro boys get off the Venezuelan welfare rolls, and get a real job? Oh my, 2013 is gonna be a fascinating year.

  2. Ken Price

    Cuba and Venezuela have a transition coming, time is running out for both countries. The Castro brothers can’t have much more due to age, and Hugo due to cancer. At least Venezuela has oil to finance the change, if they have anything left after Hugo has pawned off their future. Cuba can always renege (once again) and try to convince a new sucker to “invest” in some scheme or other. You would think that people would learn that Socialism eventually runs out of other peoples money!

  3. This was really interesting. Thanks for posting.