* Drilling of exploration wells scheduled over 2011-2012
* Estimates vary for Cuba's Gulf of Mexico oil reserves
* China-built rig expected on island by early 2011
(Repeats for broader distribution)
By Marc Frank
HAVANA, Aug 17 Cuba plans to drill seven
exploratory oil wells in its Gulf of Mexico waters over the
next two years, according to a U.S. organization that visited
the Communist-ruled island to discuss energy development.
Sarah Stephens, executive director of the Center for
Democracy in the Americas, said meetings between energy experts
she brought to the island in July and Cuba's state oil monopoly
Cubapetroleo (CUPET) left no doubt about the Caribbean nation's
determination to develop its offshore oil reserves.
"Repsol, a Spanish oil company, is paying an Italian firm
to build an oil rig in China that will be used next year to
explore for oil off the shores of Cuba," she told Reuters in a
written response to questions.
"Whether it's available in commercially viable amounts we
do not yet know. We were told by sources in Cuba that seven
such wells will be drilled over 2011-2012. If this drilling
finds significant oil, you could have production taking place
as early as 2014 and as late as 2018," Stephens said.
Her non-profit group, based in Washington D.C., says it
works to improve U.S. policy toward the Americas including
Cuba. It opposes existing U.S. sanctions against the island.
Cuba's government has declared its interest in developing
the country's offshore oil resources but rarely gives details
of its plans in public.
The energy analysts on the trip to Havana included Michael
A. Levi, Director of the Program on Energy Security and Climate
Change at the Council on Foreign Relations, Ronald Soligo from
Rice University, and Lisa Margonelli, Director of the Energy
Policy Initiative at the New America Foundation.
Cuba estimates it has up to 20 billion barrels of oil in
its offshore areas, but the U.S. Geological Survey has
estimated a more modest 4.6 billion barrels and 10 trillion
cubic feet of gas.
Mexico and the United States, which share the Gulf of
Mexico with Cuba, have been producing oil and natural gas from
under its waters for decades.
Cuba currently produces about 60,000 barrels of oil per day
(bpd), all from onshore wells. It receives about 115,000 bpd
from ally Venezuela on favorable terms.
OIL EXPLORATION MOVES
Speculation about Cuba's deep water exploration plans and
statements concerning imminent drilling have increased since
Repsol YPF (REP.MC) drilled the only offshore well in Cuba's
untapped waters in 2004. It said at the time it had found
hydrocarbons, but not in a commercially viable amount.
Industry sources blame delays in further oil development on
problems with financing and fear of sanctions under
Washington's 48-year-old trade embargo on Cuba, which also put
a 10 percent cap on use of U.S. technology on the island.
But they say it appears serious exploration will finally
get under way next year.
Part of Cuba's Gulf of Mexico zone is within 50 miles (80
km) of Florida, where U.S. politicians have raised fears that
Cuban drilling could lead to an accident like the huge BP
(BP.L) (BP.N) oil spill off the Louisiana coast.
Norway has been training Cuban personnel for offshore oil
exploration for a number of years.
U.S. President Barack Obama's administration has said it
would allow U.S. companies that handle accidental oil spills to
operate in Cuban waters should the need arise.
The China-built drilling rig is expected to arrive in Cuban
waters early next year and companies have begun preparations to
drill once the Scarabeo 9 rig gets to the island.
Preparatory work was moving ahead at the port of Mariel,
just west of Havana, the staging area for drilling operations,
diplomatic and industry sources said.
Cuba has divided its share of the Gulf into 59 blocks, 21
of which are already under lease to seven companies.
Repsol has announced that its consortium with Norway's
Statoil (STL.OL) and ONGC Videsh Ltd (ONGC.BO), a unit of
India's Oil and Natural Gas Corp, will drill at least one well
early next year. The Indian firm has started accepting bids to
sink another well on two blocks it is exploring separately.
Diplomats in Havana have said Malaysia's Petronas (PETR.KL)
is also planning to use the China-built rig.
Petronas, which has four Cuba exploration blocks, has
conducted seismic work and built offices for a battery of
employees who will come to Cuba for the project.
Venezuela's state oil company PDVSA has said it plans to
sink its first exploratory well in Cuba's offshore next year.
Other companies with blocks there are Vietnam state oil and
gas group Petrovietnam and Brazil's Petrobras (PETR4.SA), while
firms from Russia, China and Angola are in the process of
negotiating exploration rights.
(Editing by Pascal Fletcher and Jim Marshall)