From: Keith Epstein, Tampa Tribune, Fla.
Published January 18, 2005 12:00 AM

Cuban Oil Drilling Could Put U.S. Embargo over Economic Barrel

Jan. 18—WASHINGTON — Is Cuba on the verge of an oil bonanza that could pump financial life into Fidel Castro's regime and soften U.S. trade policy toward the island?





If so, new U.S. Sen. Mel Martinez could find himself at the intersection of conflicting agendas — as a loyalist to President Bush, who draws support from energy interests as well as from anti-Castro Cubans, as a hard-line refugee who fled the dictatorship, and as a member of a Senate committee that weighs energy development against environmental protection.





Martinez dismisses the possibility.





"It's not necessarily a big find," the Florida Republican said last week about reports of oil discovered in Cuba-controlled waters.





And even if it is, he said, "I don't think there's any likelihood there'd be any successful pressure on the administration to change things."





Martinez, the nation's first Cuban-American senator, said he would oppose any relaxation of trade barriers with his native country. "I definitely would not like to see it," he said.





Other Cuba watchers, however, said the hunt for oil barely 100 miles off Florida's coastline — depending on the quality and quantity of the find — could fuel the easing of barriers by the end of Bush's second term.





Two Canadian energy companies have discovered what Castro claims is 100 million barrels of oil in waters just off the island's northwestern shores.





Wildcatters from Canada and Spain have been busy in the region where, by law, U.S. energy companies cannot drill, explore or even help.





The explorers aren't saying much, at least publicly. But if further work yields results, "the cry from the American Petroleum Institute and other actors in Washington will be very loud," predicted Jonathan Benjamin Alvarado, a Cuba energy specialist and political science professor at the University of Nebraska at Omaha.





"The Americans won't want to be on the sidelines as French, Spanish and Canadian investors descend on Cuba," he said. "If different oil companies like Halliburton make a big enough beef, the president will listen — maybe not until the final third of his term, but he will."





During decades of prohibitions against U.S. trade, Cuba has enlisted trading partners from Argentina to Monaco on projects that include mining and biotechnology.





Many U.S. companies dislike being deprived of the nearby market. And increasingly, Americans have been undermining the ironclad intent of the original embargo.





Four years ago, Congress allowed the sale of agricultural products to Cuba. Last month, delegations from Alabama, Louisiana and Maine toured the island in an attempt to encourage the Castro government to buy their agricultural products.





The issue is especially sensitive in Florida, where most Cuban-Americans support bans on business with Castro — and support Republican politicians such as Bush and Martinez.





In Florida, even Democrats including U.S. Rep. Jim Davis of Tampa are careful about their positions. Davis has not opposed the trade embargo, for instance, even as he has called for "dialogue" and lesser restrictions on travel to Cuba.





Martinez rejected speculation that oil could be the next U.S. trade exception.





"Sen. Martinez may well be correct right now," said John Kavulich, president of the U.S.-Cuba Trade and Economic Council. "But then, who would have expected the tectonic plate shift in public opinion subsequent to allowing food and agriculture purchases in 2001?





"The Bush administration has done everything it can, from the regulatory standpoint to the bully pulpit, to make food and ag exports difficult. But despite everything, exports continue and the bipartisan interest level in Congress is high."





Martinez, as a member of the Senate Energy and Natural Resources Committee, said his goals include not only maintaining the embargo but protecting Florida waters.





Oil drilling off Cuba "could be potentially a pollution threat to the coast of Florida," he said. "We've been very vigilant in Florida to maintain the pristine nature of our coastline and not allow drilling. It's troubling when a neighboring state might do it."





Cuba lost Soviet-subsidized oil imports in 1990, and it depends heavily on Venezuela for fuel.





One of the Canadian companies involved, Sherritt International, the largest foreign oil producer in Cuba, confirmed it had demonstrated a 1,300-barrel-per-day find near Santa Cruz del Norte.





Repsol YPF of Spain, meanwhile, is drilling in a separate, 4,132-square-mile tract. The American Association of Petroleum Geologists listed the Repsol find as among the most "significant discoveries" worldwide in 2004.





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© 2005, Tampa Tribune, Fla. Distributed by Knight Ridder/Tribune Business News.


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