U.S. companies can't drill there - but foreign firms may be drilling in the Straits of Florida very soon
During the 2008 presidential campaign, Republicans urged the Democrat majority in the U.S. Congress to allow American oil companies to "drill here, drill now, pay less" amidst record gasoline prices. One of the claims Republicans made was that the federal ban on offshore oil drilling, particularly off the coast of Florida, was ridiculous because Cuba had already leased drilling rights to Chinese companies. Thus, Chinese firms would be drilling nearly 90 miles off the coast of the U.S., while American laws would prevent American oil majors from doing the same.
At that time, Democrats dismissed these GOP claims about Chinese drilling as apocryphal, and said that China hadn't drilled for any oil in or around Cuba and that more domestic drilling wouldn't reduce gasoline prices for consumers at the pump. Later on during the campaign, as gasoline prices peaked in July 2008 and U.S. public opinion polls shifted decisively in favor of drilling, the Democrat majority in Congress allowed the long-time drilling ban to slip. Nonetheless, Florida and other states retained their bans on offshore oil and gas development.
One wonders if the news Sunday that Russian oil majors are also considering development in the Gulf of Mexico will affect the debate over drilling in the Florida legislature and on Capitol Hill. The announcement by a Russian diplomat came ahead of President Dimitry Medvedev's state visit to Havana, part of a presidential tour planned through Latin America.
President-elect Barack Obama's spokesman John Podesta has already announced that Obama will review several Bush-era executive orders, including the President's recent decision to abrogate the previous President Bush's 1990 executive order that banned offshore oil drilling. Lower gasoline prices due to the global economic slowdown (and some analysts claim, the bursting of a speculative bubble in commodities) has reduced the pressure on Democrats to allow drilling -- for now. But one wonders whether China, Russia, India and other rising economic powers will have much interest in joining a U.S. and Western European-led carbon "cap and trade" scheme, the favorite policy of House Speaker Nancy Pelosi and other leading Democrats, to reduce worldwide CO2 emissions that may contribute to global warming.
Click on the extended post to read excerpts from the Associated Press story.
Russian firms may soon join China's Sinopec in developing oil reserves in Cuba - either onshore or offshore
Official: Russians want to search for oil off Cuba
HAVANA -- Russian oil companies could soon begin searching for oil in deep Gulf of Mexico waters off Cuba, a top diplomat said just days before Russian President Dmitry Medvedev visits the island.
Russian oil companies have "concrete projects" for drilling in Cuba's part of the gulf, said Mijail Kamynin, Russia's ambassador to Cuba, to the state-run business magazine Opciones.
Kamynin also said Russian companies would like to help build storage tanks for crude oil and to modernize Cuban pipelines, as well as play a role in Venezuelan efforts to refurbish a Soviet-era refinery in the port city of Cienfuegos, according the article published this weekend.
Medvedev comes to former Cold War ally Cuba on Thursday, part of a tour of Latin America to strengthen his country's economic and political ties in the region. Kamynin said trade between Russia and the island would top $400 million this year.
Washington's nearly 50-year-old trade embargo prohibits U.S. companies from investing on the island. But Cuba's state-run oil concern has signed joint operating agreements with companies from several countries to explore waters that Cuban scientists claim could contain reserves of up to 20 billion barrels of oil.
Brazilian President Luiz Inacio Lula da Silva visited Cuba in October for the signing of agreements allowing state-run Petroleo Brasileiro SA to invest $8 million initially for a seven-year, deep-water exploration project north of the famed beach resort of Varadero. If reserves are confirmed, Brazil would produce oil and natural gas recovered there over the next 25 years.
Go to the Associated Press website to read the rest of this story.
This is an interesting development at this difficult time for the global economy. With the fall in crude oil prices from a July high of $147 to around $55 today, this puts significant pressure on many of the oil producing economies.
We will hear a significant announcement on the 29 November when OPEC meets in Cairo. Members like Iran have asked for a cut in production by between 1.0 and 1.5 million barrels per day, but Dr Chakib Khelil, OPEC President, suggested that this may be unlikely.
It seems the current problem is not so much a reduction in oil reserves but rather a dearth of capital investment in the downstream sector, particularly in new refining capacity and distribution.
Furthermore, while the above Cuban project shows capital is being invested in exploration and recovery, not enough has been done in this sector in the lower cost reserve areas, such as the Middle East.
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Russia's offshore drilling experience is what, exactly?