Cuban oil renews embargo debate

Chorus of opposition
That scenario raises the hackles of the conservative, and highly influential, Cuban-American voting lobby of south Florida — not exactly what President Bush, or his brother, Jeb, who occupies the governor’s mansion in Florida, would prefer three months before midterm elections.

Says Alfredo Mesa, executive director of the Cuban American National Foundation in Miami: “Those who would advocate for ... allowing U.S. companies to drill off Cuba lose sight of how that would damage our ability to press the Cuban government on other issues, such as human rights.”

Environmentalists are also squarely set against oil-industry access to Cuba, though for different reasons. Oil spills — even routine toxic pollution from drilling — could pollute the Everglades and Florida’s most economically important beaches, they say, and wreck the state’s tourism industry.

Thanks to Sen. Bill Nelson, D-Fla., and Rep. Jim Davis, D-Fla., they, too, have measures in Congress for which to cheer: twin bills that would deny U.S. visas to executives of foreign companies that drill for oil in Cuban waters.

Nelson’s bill would undo a 1977 maritime boundary agreement between the countries that bisects the Straits of Florida and allows Cuba to perform commercial activities (e.g., oil drilling) near the Florida Keys.

It’s not clear how this could keep the Cubans from exploiting waters closer to their shores than America’s. One semiofficial response from Cuba, an editorial by the state-run Prensa Latina newswire, called the measures “extraterritorial.”

Time to think it over
How likely is it that Congress will act?

“If the oil industry continues to sit on the fence as it has been — not too likely, especially with this administration and Congress,” says Werner, editor of the Cuba trade newsletter. “But there are elections in November, which could change the whole equation.”

Peters, of the Lexington Institute, agrees. “I think if you call (oil companies) up and ask them, ’What is your position on this?’ they’d say yes, we’re behind an exemption in the embargo. But I’m not sure if they would get behind it in a major way yet.”

In response to queries from The Associated Press, the American Petroleum Institute in Washington, D.C., the industry’s lobbying arm, issued this statement:

“We cannot speak to individual interest in Cuba, but we can say that API members are more focused on expanding access on the U.S. portion of the outer continental shelf, which is much closer to the existing pipeline network and where they have more information about oil and natural gas reserves.”

All of this is still somewhat premature, says Pinon, the former oil executive and research associate. “We are still three to five years away from commercializing any of those Cuban reserves.”

There is at least an 18-month backlog on the leasing of deep-water rigs, he says, and “crude oil is worth zero if you can’t move it or process it. Even if they find the oil, what are they going to do with it?”

Benjamin-Alvarado, a regular visitor to Cuba who has been following that nation’s energy development for 15 years, concurs. Cuba, he says, needs help “downstreaming” — upgrading its ports, refineries and maintenance equipment.

Already, though, Venezuela’s state oil monopoly, PDVSA, has signed a $100 million deal to revamp Cuba’s Cienfuegos refinery, a Russian relic from Cold-War days, and to increase oil storage capacity at the Port of Matanzas.

“Every day the United States puts off making the path into Cuba, that window of opportunity closes a little more,” says Benjamin-Alvarado. Once Cuba gets to the platform stage of deep-water drilling, he says, “the Americans are going to be left out.”

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