Cuban+Oil+and+the+US+embargo,+Bloomberg,+Business+Day

Business Day, Johannesburg, 13 June 2006
=Need for Cuban oil a headache for White House=


 * Jay Newton-Small, Bloomberg**

HIGH oil prices are driving a wedge between energy companies and the Cuban-American community, two pillars of support for US President George Bush and his fellow Republicans.

Firms including Marathon Oil are lobbying congress to be allowed to bid for oil and natural-gas deposits in Cuban waters.

They are backed by Republican legislators bucking Bush by supporting legislation to exempt the oil firms from the 1962 Cuban trade embargo and a ban on drilling within 160km of US shores.

The US need for energy and the likelihood that foreign companies will rush in to drill justifies the exemption, advocates say.

“Are we supposed to sit by and let China drill in our own backyard?” asked senator Pete Domenici, chairman of the senate energy committee, a co-sponsor with 12 other legislators of legislation exempting the US energy companies.

Cuban-American groups, meanwhile, say the law would just prop up the government of President Fidel Castro; if anything, they want the embargo toughened.

“It is an assault on the embargo, masquerading as an attempt to get energy because we need energy,” says Jorge Sorzano, former head of the Miami-based Cuban American National Foundation, the largest anti-Castro group in the US.

“It’s hypocritical to want to go into Cuba and help Castro when we won’t even drill in our own waters first.”

US companies have long sought to loosen the embargo. While agricultural restrictions were eased in 2000, other attempts have been defeated by the political power of the Cuban-American community and the desire of both Republicans and Democrats to capture Florida’s 27 presidential electoral votes.

This time, though, the combination of public concern over high fuel prices and the oil industry’s political clout may increase prospects for success.

“When you have a strong domestic industry, whenever they get involved in the embargo, they win,” says Robert Muse, a Washington attorney who represents US companies with claims against Cuba.

“When the farmers got involved in 2000, they won. The energy industry has the same sort of clout, if not more so, in Washington. Plus, when you throw in the fuel prices, there’s real pressure.”

The US Geological Survey estimates there may be as many as 4,6-billion barrels of crude oil and 9,8-trillion cubic feet of natural gas in the northern Cuban basin — roughly equivalent to the estimated reserves in Alaska’s Arctic National Wildlife Refuge, which the Bush administration wants to open to exploration.

Cuba is auctioning 59 lots for exploration, some within 75km of Florida.

So far, 12 have been sold to Canada’s Sherritt International and Spain’s Repsol, in partnership with companies from Norway and India.

Sinopec, China’s second-largest oil company, also may bid, says Jose Borges, first secretary of the Cuban Interest Section, which represents the island nation in Washington because the US and Cuba do not have diplomatic relations. Cuba would welcome US companies in the Florida Straits, Borges says. Karen Matusic, a spokeswoman for the American Petroleum Institute, the Washington lobbying group for companies such as Irving, Texas-based Exxon Mobil and San Ramon, California-based Chevron, says her group supports the exemption legislation “in the context of increasing access to oil and gas reserves as a way to ensure US companies’ competitiveness globally”.

Roger Pinkerton, director of Gulf of Mexico exploration for Houston-based Marathon, wrote in a letter that “the north Cuba basin is just one in a long list of areas offshore where wrong-headed policies of the US government disallow exploration and production of oil”.

Meanwhile, legislators representing Florida’s nearly 1-million Cuban-Americans, who form a powerful Republican voting bloc, have introduced measures in the house and senate that would penalise any foreign company that signs drilling deals with Cuba by barring them from obtaining US business visas and loans.

Castro, “expresses his hatred of the US every day in every way, and for us to somehow think that to allow US companies to drill, it would be a benefit to the US, it would not”, says Republican representative Ileana RosLehtinen, a sponsor of one of the punitive measures.

“We’re certainly not going to let a megalomaniac, environment-destroying murderer like Fidel Castro drill 45 miles off Florida’s coast,” says Joe Garcia, a board member of the Cuban American National Foundation.

The Cuban-American political lobby has been waiting for more than 40 years for Castro to die or be removed. Barring companies from participating in the development of Cuban oil may put the US at a disadvantage when the ageing revolutionary finally loses his grip, says representative Jeff Flake, an Arizona Republican who is sponsoring house legislation similar to Domenici’s senate bill.

“It’s a far more likely scenario that Cubans transition in a way that we would like to see them, to democracy, if they have closer ties to us than to China,” Flake says.

“Who are we kidding here?”

In February, US oil and gas companies including Exxon Mobil attended a Mexico City conference on Cuba’s energy resources hosted by the US-Cuban Trade Association, a Washington-based nonprofit group that promotes trade between the two countries.

The meeting was interrupted in its second day by the US treasury department’s office of foreign assets control, which enforces the embargo.

The manager of the Mexico City Sheraton Hotel was forced to evict Cubans attending the conference because the hotel is owned by White Plains, New York-based Starwood Hotels & Resorts Worldwide, which is subject to US law barring commercial contacts with Cuba.

The Bush administration opposes drilling so close to Florida, says Dana Perino, a White House spokeswoman.

While it is too early to say if Bush would veto legislation exempting the US companies, he is “concerned about where the money would go: to a government that suppresses the rights of its people”, Perino says.

Muse, the Washington attorney, says that concern may be overstated, given the human-rights records of some countries that supply the US with oil. “We buy oil from Saudi Arabia, from Venezuela,” Muse says.

“To say we buy energy supplies only from countries that continue to meet human-rights standards is nonsense. We’ve never done that.”

Representative Clay Shaw, a Florida Republican, says the US decision in 2000 to allow the sale to Cuba of agricultural products — a market that grew to $800m last year — may prove a precedent for drilling. Although he has not endorsed the legislation proposed by either camp, he says Cuba’s oil may prove hard to resist, given the energy crunch and the competition from abroad.


 * From: http://www.businessday.co.za/articles/article.aspx?ID=BD4A215096**

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