Drilling rig leaves Cuba, taking oil hopes with it

Thu Nov 15, 2012 4:03am IST

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* Rig used to drill three wells, all unsuccessful

* Cuba says may have 20 billion barrels offshore

* U.S. embargo makes it difficult to get rigs for Cuba

By Jeff Franks

HAVANA, Nov 14 (Reuters) - The Scarabeo 9, a Chinese-built offshore drilling rig that Cuba hoped would open a new era of oil production, sailed away from the island on Wednesday, taking with it the communist country's near-term dreams of energy independence.

The massive, multi-colored rig, owned by Italian oil services company Saipem, could be seen from Havana heading east through the blue waters of the Florida Straits en route, industry sources said, to West Africa.

It may be years before Cuba sees another rig like it.

The Scarabeo 9, designed to operate in water up 12,000 feet deep (3,650 meters), was used to drill three wells, all in more than a mile (1.6 km) of water off Cuba's north and west coasts - and all unsuccessful.

Cuba had hoped to tap into deepwater offshore fields it says may hold 20 billion barrels of oil and end its dependence on socialist ally Venezuela, which ships the Caribbean island 115,000 barrels of petroleum a day in an oil-for-services deal.

A consortium led by Spanish oil giant Repsol, which contracted the Scarabeo 9 from Saipem, hit the first dry hole last spring. That was followed by unsuccessful wells by Malaysia's Petronas in partnership with Russia's Gazprom Neft, and by Venezuela's state-owned PDVSA.

Little is known about the PDVSA well, but Repsol and Petronas both encountered very hard rock that slowed drilling and, in Petronas' case, made it impossible to produce hydrocarbons that were found.

The Malaysian firm is continuing to do three-dimensional seismic work searching for reservoirs of oil, but Repsol is leaving the island after 12 years.

Using a different rig, it drilled Cuba's first offshore well in 2004, where it said it found oil, but the find was not "commercial."

NO IMMINENT DRILLING PLANS

Other companies including Angola's Sonangol, India's ONGC and Petrovietnam hold offshore exploration leases in Cuba, but none are known to have any imminent drilling plans.

Jorge Pinon, a Cuba oil expert at the University of Texas in Austin, said it could be a decade or more before anyone takes another chance on Cuba's deepwater fields.

"This deal is done. It's going to take a long time before the next one," he said. "You could even be looking at 15 to 20 years if you put it all together."

He said the difficult geology encountered by Repsol and Petronas is discouraging, as is the fact that companies must pass through the crucible of long-hostile U.S.-Cuba relations.

The five-decade-long U.S. trade embargo against the island 90 miles (145 km) away makes it difficult to find a suitable drilling rig for Cuba. Would-be drillers face political pressure from U.S. opponents of the Cuban government.

"It's a difficult, tendentious process. There are a lot of other places in the world today where oil companies can go to explore - Brazil, Angola, the U.S. Gulf of Mexico, for example - so Cuba has lost its place in the pecking order," Pinon said.

Cuba's next best hope now lies with Russia's Zarubezhneft, which soon will begin drilling in shallower water about 200 miles (320 km) east of Havana.

It has contracted the Songa Mercur rig from Cypress-based Songa Offshore, which can drill in water up to 1,200 feet deep (365 meters).

The rig has been in Trinidad and Tobago being refitted with non-U.S. equipment to meet technology limitations imposed by the U.S. embargo.

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