President Barack Obama’s decision to normalize relations between the United States and Cuba may lead to more commercial opportunities for Americans within the island nation. But FuelFix.com reports you shouldn’t expect U.S. oil producers to move swiftly to take advantage of them.
Although geologists believe billions of barrels of crude may be lurking off Cuba’s coast in the Gulf of Mexico, oil companies have had a hard time finding that black gold. When Repsol, Petronas and other oil companies bored exploratory wells in 2012 and 2013, they turned up dry. In some cases, oil wasn’t found, and in others, the discovery was not big enough to justify commercial development.
That discourages other oil companies from plumbing Cuba’s coast, says Jorge Piñon, an oil industry veteran who directs the Latin America and Caribbean Energy Program at the University of Texas.
Some geologists “think it is worth going back and taking a second look, but now is not the time to do it,” he says. “Cuba has three big strikes against it.”
The poor performance of international oil companies in 2012, along with the collapse in crude prices and the high cost of doing business in Cuba, are factors dissuading deep-water drilling off the country’s coast, especially as Mexico auctions off competing territory in the Gulf of Mexico.
The Obama administration’s actions Wednesday do not explicitly authorize U.S. oil business in Cuba; rather, they focus mainly on re-establishing diplomatic relations and permitting more travel between the countries. But in outlining the changes, Obama stressed that “American businesses should not be put at a disadvantage.” Read the full story.
