China Cuba Oil

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China Drilling for Oil

Cuba has held an interesting place in world history, especially over the past fifty years. The country went through various government configurations until Fidel Castro and Ernesto Che Guevara took over the country in the Cuban Revolution in the late 1950s. The country found itself in a precarious position through worldwide incidents such as the Bay of Pigs Invasion and the Cuban Missile Crisis of the early 1960s.
Modern day Cuba-China relations started when Mao Zedong welcomed Che Guevara in 1960. After that point, Che Guevara took a more China-leaning stance and distanced himself from the Soviet Union. Castro did not. After the events of the twenty-first century, the US established a long lasting embargo against the island.

China Cuba Oil Agreements

In 2005, Cuba agreed to allow Chinese firms the right to explore the
Cuban portion of the Florida Straits area of the Gulf of Mexico (BBC Report). While there have been no verified reports of active drilling or refining activities by the Chinese in Cuban waters, the possibility remains that there will be in the future.

Cuban Oil Deposits

The possibility of an oil drilling deal is not the only agreement on the table for the Cubans. The oil and natural gas fields have been reported as being quite sizable. According to the U.S. Geological Survey, the offshore oilfield contains about five billion barrels of oil, similar to the supplies of Colombia or Ecuador. In addition, the U.S. Geological Survey estimates that there are around ten trillion cubic feet of natural gas. In contrast, Cuba’s own state oil company listed a higher number. They estimated that there were over twenty billion barrels of crude oil. This would put the country's oil levels on par with that of the United States. Cubapetroleo, the state-owned oil firm, believes that this field has very high potential for exploratory findings. Huge oil companies from countries as far away as Vietnam, Malaysia, Spain and Russia are all trying to close deals with the Cuban government for rights to explore and drill in any of the fifty-nine offshore sectors. Venezuela will likely get a large portion of these areas, as President Hugo Chavez has been a close ally of the Cuban government since taking office. They have already given Cuba generous allowances in oil and financing, and the support will not likely end there. Both Venezuela and Cuba have a shared modern history of defying US requests and ideology. Russia has also secured a large part of the oil fields. Trying to rekindle its relationship that was lost after the collapse of the Soviet Union, Russia’s oil giants are already dedicated to exploring many of the sectors. In addition, Russia has agreed to send oil specialists to train Cuban engineers on the fine points of deep water drilling. Overall, the country has the attention of the world, this time for its crude oil and natural gas reserves. China will likely get what it wants out of the deal, but it is certainly not the only player in the Gulf of Mexico.

Is China Drilling For Oil Off Cuba?

There were reports in 2006 by Republicans in the US Congress that China was already actively drilling in coastal waters off of Cuba. While the reports were often disputed and eventually proven false, it is generally agreed that China does have rights to explore the areas, but that no significant work has yet begun there.

US Concerns on an oil agreement

While some lawmakers in the United States are feeling a bit jealous to not be taking part in the oil fields so close to the border, others are pushing for the US to take a bigger part in securing the area. The fifty billion dollar per year tourism-driven economy of Florida could be negatively affected if an oil spill occurs as the result of a China Cuba oil drilling deal. Of course, the country has maintained that it will take the utmost care in all oil-based operations in the Gulf.

Obama Responds

After decades of economic sanctions, known as the "Cuban Trade Embargo" President Obama signed into law the S.1517 bill, which eases restraints on travel and business between the US and Cuba (www.opencongress.org). Possibly in response to the threat of an imminent Cuba China deal, this legislation will pave the way for future agreements between the US and Cuba. In particular, Congress approved measures to allow personal travel for Cuban-American families and business travel for the marketing of agricultural and medical goods. In addition, more measures were taken to ease sanctions of educational travel, travel for medical business, and agricultural travel. In summary, the only China Cuba oil agreement that has been verified is that of exploration.

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UPDATE September 2010

Cuba is preparing to drill offshore for oil and gas early next year (2011).
The Spanish energy company REPSOL has a contract to drill the first of several wells. The rig is expected to begin drilling 20 miles North from Havana.
There's US opposition against the drilling, but some observers already say that the country probably can become a US oil supplier at the end of the embargo.

UPDATE November 2010

The Russian energy company GAZPROM has bought a stake in the Cuban offshore oil exploration blocks in the Gulf of Mexico. Cuba aims to drill seven exploration wells by 2014.

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