If Castro struck oil...

After decades of US economic embargo Cuba could still have the last laugh, reports Reed Landberg

Premier Oil says Cuba may have oil reserves in the billion-barrel range, and it doesn't believe the US embargo on trading with Fidel Castro's island can stop it from looking for them.

Premier is not one of the world's biggest oil companies. It has oil reserves of just 195 million barrels, a fraction of the 4.7 billion barrels held by BP.

It is not deterred by the so-called Helms-Burton law that bars US companies from trading with those who took over $1.8bn (pounds 1.2bn) of assets in Cuba formerly owned by the likes of Coca-Cola, Texaco and Colgate-Palmolive.

The potential oil fields Premier is exploring simply aren't the same kind of assets. "We are on very solid legal ground," said Richard Haythornthwaite, board director with Premier, in charge of exploration.

Cuba itself would be delighted if Premier's exploration proves successful. Cuba needs oil badly. It has struggled since its oil supplies dried up when the Cold War ended in 1989.

Lacking the patronage it built with the Soviet Union over three decades, Cuba's economy shrank 35 per cent in the following four years. Blackouts became routine, the US tightened its economic embargo through the Helms- Burton act, and predicting the downfall of President Castro became fashionable.

Now, a handful of oil companies led by Premier Oil and Canada's Sherritt International are spearheading a push to find huge petroleum deposits in the resource-poor Caribbean nation, a move that if successful would prove embarrassing to the US, and stoke tensions with the European Union.

"Finding oil would be like Christmas for Cuba," said Tony Kapcia, an expert on Cuba's modern history at the University of Wolverhampton. "Almost the last thing the US government wants at any stage is for Fidel Castro to survive yet another president's term and then to find oil on top of that."

In the next few weeks, London-based Premier is expected to go ahead with plans to drill a new well to probe for oil reserves under Cuba's land mass, company officials say.

Acknowledging the prospect is a long-shot, with odds of success of perhaps 20 to 1, Premier said it has identified underground rock structures that might contain between 500 million and a billion barrels of oil - a world- class find. "It is massive," said Mr Haythornthwaite. "If this comes in, Premier would be a fundamentally different company and Cuba would be a fundamentally different country."

The odds are against success. Cuba's last oil discovery in 1995 tapped oil so heavy it more resembled boot polish than fuels like the diesel and gasoline derived from crude petroleum. Major oil companies have looked at the nation's prospects and walked away.

"On the basis of the geology we've seen there's nothing we'd go for down there," said Rodney Chase, BP managing director in charge of oil exploration and production. "That doesn't mean there isn't opportunity for someone else."

Even so, Premier isn't alone in its interest in Cuba. Sherritt picked up more exploration turf in January from Talisman Energy even after Talisman lost $18m drilling there. It is also drilling a number of exploration wells, though its officials didn't return repeated telephone calls seeking a comment.

At Premier, executives are chasing a new geological theory with new drilling technology. Using data gathered by seismic tests, which use sound waves to chart underground rock structures, Premier believes it can identify previously unseen reservoirs beneath a layer of volcanic rock.

Years ago, rocks formed by volcanoes or super-heated salt sheets scattered seismic waves, preventing accurate mapping of what lies below. Now, though, Premier and others from the Royal Dutch/Shell Group to Anadarko Petroleum Corp are using computer technology made by the likes of Sun Microsystems to refine seismic images bounced off such rocks into something that can be interpreted.

That technology, referred to as a 3-D seismic, has revolutionised the search for oil and breathed new life into regions such as the Gulf of Mexico, where majors such as Shell and BP have made major finds.

"A couple of bright guys can come up with something everybody else has overlooked," said Bob Sprague, exploration director for Shell in Europe, adding that his company hasn't identified anything of interest in Cuba.

At Premier, Mr Haythornthwaite said the company is reviewing seismic data it gathered and is likely to approve a new drilling project in the next few weeks. The well would be cheap by industry standards - about $7m compared to the roughly $30m BP and Amoco spent for their wells tapping giant oil and gas reservoirs in Colombia.

Even he admits the well Premier would drill is apt to be dry. The potential rewards justify the risk, though.

"We see a formation, but we do not know if any oil is there," Mr Haythornthwaite said. "It has the potential to be one of the world's great remaining oil plays, and there's not a lot of them left in the world."

What makes this prospect so tasty is the proximity of the wells to the consumer. On its own, Cuba produces about 30,000 barrels of oil a day, about 10 per cent of what its own refineries consume, according to the Oil & Gas Journal.

Cuba needs the hard currency that's easily generated by oil sales because the US embargo blocks so many avenues to raising cash through other means. Its foreign debt has soared to $12bn last year from $8.7bn in 1993, the year after the Helms-Burton act passed.

More than a simple cash top-up, though, domestic oil supplies would give Cuba and its economy a level of stability the US has worked since 1959 to discourage, hoping Fidel Castro would fall from power. And to opponents of the current policy, it would be more evidence the US stance should change.

"If Cuba were to become self- sufficient in oil it would mean that US policy had failed," said Wayne Smith, who was an official at the US embassy in Havana until 1961 and now is an expert on the nation at the Center for International Policy, a Washington think tank. "The US interest in Cuba is the same as it is across Latin America: we don't want floods of boat people coming into the US. How does a policy that increases economic distress advance that aim? It doesn't."

The oil companies themselves are conscious of their role in the West's post Cold War policy towards former Soviet pawns. Charles Jamieson, chief executive of Premier, counts himself among a growing group of executives who believe doing business in rogue nations such as Cuba, Libya, Sudan and Iran is the best way to urge an electorate towards democracy.

"We believe that engaging these countries is better than not speaking to them," Mr Jamieson said. "We can be in these countries and make a difference."

Suggested Topics
Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Arts and Entertainment
Frank Turner performing at 93 Feet East
musicReview: 93 Feet East, London
News
Toronto tops the charts across a range of indexes
news

World cities ranked in terms of safety, food security and 'liveability'

Extras
indybest
Voices
A mother and her child
voices
Voices
The veterans Mark Hayward, Hugh Thompson and Sean Staines (back) with Grayson Perry (front left) and Evgeny Lebedev
charity appealMaverick artist Grayson Perry backs our campaign
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee