Latin America & Caribbean

Cuba oil: Offshore exploration brings hopes and fears

A Chinese-built drilling rig known as Scarabeo 9, is seen lit up off the coast of Havana 22 January 2012.
Image caption Tantalising: The Scarabeo 9 will help to find out how much oil there is off Cuba

Some 50km (31 miles) off the northern coast of Cuba workers have begun drilling deep beneath the waves, exploring for oil reserves that could transform the island's future.

The Scarabeo 9 oil rig had to be brought half way around the world to bypass the five-decade-long US trade embargo on Cuba.

After a slow trek by sea from China, it finally arrived in the region last week: a faint hulk on the horizon, shrouded in mist, as it passed Havana's waterfront, the Malecon.

This is a key moment for Cuba.

The island has two on-shore oil facilities that produce half of the oil it needs; it is heavily dependent on socialist ally Venezuela for the rest.

The government imports more than 100,000 barrels a day at subsidised rates, paid for with the services of some 30,000 Cuban doctors and other health officials working in Venezuela.

Finding substantive offshore reserves of its own would break that dependence.

"Today we have strong relations with Venezuela and that's good for Cuba," says Juan Triana, of the Centre for the Study of the Cuban Economy.

"But if this relationship did not work in the future, that would be a very dramatic position."

Preliminary studies of the rock formation beneath Cuban waters suggest there are considerable deposits to discover: anything between five billion and 20 billion barrels of oil.

But it is only by drilling deep into the seabed that Cuba will find out.

Spanish oil firm Repsol is the first company to explore, leasing the Scarabeo rig for $500,000 (£320,000) a day.

"Geological analysis indicates there's a good rock formation there," says Repsol spokesman Kristian Rix.

A long line of companies from other countries, bar the US, are lining up behind Repsol for their turn.

Half of any eventual findings belongs to Cuba.

Game-changer?

In Havana though, many people are oblivious to their government's oil dreams. Even on the crowded Malecon, few spotted the Scarabeo as it passed.

But for people whose average wage is less than $20 a month, the possibility of striking it rich is alluring.

"If they do find oil it should improve all our lives," Josue says, as he fishes for fun - and food.

Image caption Finding significant oil reserves could transform Cuba's future course

"Maybe then petrol would be cheaper. It costs $1 a litre and in our cars just going round the corner swallows two [litres]."

Substantial deposits of oil, and most likely gas, would transform this struggling economy into an energy exporter.

"Maybe not immediately, but I think in two or three years the change will be huge," says Mr Triana.

"The financial pressure would diminish. Cuba needs many things in terms of infrastructure and development and with oil we will have the resources."

Worries

But on the other side of the water the project is controversial.

Cuban-American conservatives accuse firms planning to explore for oil of handing the island's communist leaders - their sworn enemies - an economic lifeline.

And with the drill site just 100km off the Florida coast, there are concerns over how to co-ordinate in an emergency: the US and Cuba have had no diplomatic relations since the 1960s.

Spain's Repsol insists there's nothing to worry about.

The firm invited US inspectors on board Scarabeo-9 to confirm its compliance with international norms, going "above and beyond" its obligations, according to Mr Rix.

"We have to be sensible. This is about safety," he told the BBC from Madrid.

"And if there is a spill, we have contingency plans, ships to mobilise. It's all in place."

Still, the dearth of clear information worries some, especially in the wake of the devastating 2010 BP oil spill in the Gulf of Mexico.

But for Cuba, this is an unprecedented opportunity.

There is ongoing debate over whether newfound riches would put a brake on current, tentative moves to open up its Soviet-style economy.

Meanwhile, some imagine oil could even end years of enmity with the US.

"If we find oil it could neutralise the US trade blockade," said Miguel, who drives a battered old Soviet Lada taxi.

"It would make more sense for America to buy oil from us, than bring it all the way from Venezuela."

For now, it is a waiting game.

It will take up to 60 days for Repsol to drill the first exploratory well from the Scarabeo. On average, four out of five wells turn out to be dry.

A lucky strike would give Cuba an idea of the kind of wealth it could be sitting on.

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