Saturday, May 16, 2009

cuba's undersea oil

WaPo | Deep in the Gulf of Mexico, an end to the 1962 U.S. trade embargo against Cuba may be lying untapped, buried under layers of rock, seawater and bitter relations.

Oil, up to 20 billion barrels of it, sits off Cuba's northwest coast in territorial waters, according to the Cuban government -- enough to turn the island into the Qatar of the Caribbean. At a minimum, estimates by the U.S. Geological Survey place Cuba's potential deep-water reserves at 4.6 billion barrels of oil and 9.8 trillion cubic feet of natural gas, stores that would rank the island among the region's top producers.

Drilling operations by foreign companies in Cuban waters are still in the exploratory stage, and significant obstacles -- technological and political -- stand between a U.S.-Cuba rapprochement eased by oil. But as the Obama administration gestures toward improved relations with the Castro government, the national security, energy and economic benefits of Cuban crude may make it a powerful incentive for change.

Limited commercial ties between U.S. businesses and the island's communist government have been quietly expanding this decade as Cuban purchases of U.S. goods -- mostly food -- have increased from $7 million in 2001 to $718 million in 2008, according to census data.

Thawing relations could eventually open up U.S. investment in mining, agriculture, tourism and other sectors of Cuba's tattered economy. But the prospect of major offshore reserves that would be off-limits to U.S. companies and consumers has some Cuba experts arguing that 21st-century energy needs should prevail over 20th-century Cold War politics.