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Tuesday, July 7, 2009

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Bahamas cautioned about Cuban oil poaching By INDERIA SAUNDERS ~ Guardian Business Reporter ~ Inderia@nasguard.com: A top energy expert is advising the government to closely monitor Cuba's oil drilling exercises, even as the minister responsible confirms an existing boundary dispute. It all has the makings for a potentially explosive territorial war with millions of dollars in oil royalties hanging in the balance. It's an "interesting possibility that Cuba's North Belt Thrust (a potential area for drilling) could extend into The Bahamas' [Exclusive Economic Zone]," Jorge Piñón, a University of Miami energy fellow and former Amoco Corp. Development Company Latin America president, told Guardian Business this week. He points to The Bahamas' Cay Sal Bank as the area of vulnerability. It's an uninhabited area of 100 small islands between Andros and Cuba. It's also very close to where both Cuban and Bahamian research indicates significant oil reserves lie just beneath the ocean's floor. "Developments certainly should be monitored," he told Guardian Business yesterday. His caution comes as Cuba readies itself for oil exploration, having leased offshore drilling rights for its northwest shores. While the country itself is without the technological wherewithal for deep-water drilling, it has signed leases with China as well as companies from Spain and Canada. It's an issue heating up for The Bahamas, given any findings from Cuban explorations near the disputed area poses a major issue for both countries now searching those deep, blue waters for the kind of independent wealth an oil strike brings. Environment Minister Earl Deveaux said yesterday the country had also received proposals for oil drilling, but added that no further leases would be granted until existing territorial disputes are resolved. It's a matter that has everything to do with this nation's EEZ, which represents the area of sea the country has special rights over as it pertains to exploration and the use of marine resources. "There is a current moratorium until the boundaries are clearly agreed," said Deveaux, making no specific mention of Cuba. "The problem arises when there are conflicts in national boundaries or other unresolved issues." His statement follows the May joint venture announcement from license holders BPC Limited and new partner StatoilHydro. Together they are seeking to explore oil possibilities in The Bahamas. That hinges entirely on winning government OK to explore previously untouched waters. Specifically, the approval would be for oil explorations in the southwest Bahamas — in what they term potentially oil-rich fields lying beneath Bahamian waters. It's the same area that Cuba has granted approvals of its oil explorations. Still, drilling stemming from that partnership isn't set to kick off for another five to six years at a minimum, say BPC officials. "It's going to be quite a while yet," spokesman Idris Reid told Guardian Business in an earlier interview. "It isn't just a question of setting up oil rigs and drilling. There is a lot of research to do [and] there'll be research for four to five years at least and nothing in terms of drilling." Lease holder BPC is just one of several companies that have been granted leases in the last several years, though it is the first major one to be granted in the past two decades. Energy officials insist that research is essential in determining the amount of oil potential that presently lies in Bahamians waters. But the timeline they have in mind may ultimately give Cuba the inside edge as it readies to drill in those disputed waters by next year. Even if they stay on their side of any watery divide, the development of so-called directional drilling allows them to drill down diagonally and into Bahamian seabed. The result would be to tap millions of dollars in oil revenues this country is hoping to profit from in the form of royalties. Those are taxes applied to private-sector drilling. Thursday, June 25, 2009