December 17, 2012

Western Hemisphere Happenings: Cuba’s Continued Quest for Offshore Oil

Russia’s Zarubezhneft oil company has moved to shallower waters to continue drilling exploratory oil wells off Cuba’s coast, according to a report in the Washington Post on Saturday. The company’s new project comes after several failed attempts earlier this year to drill commercially-viable ultra-deep water oil wells off the Cuban coast. According to some estimates, there could be potentially 5 billion to 9 billion barrels of crude oil in deepwater off Cuba’s coast, a tenth of which may be commercially viable according to industry standards.

With fresh memories of the Gulf Coast Deepwater Horizon accident, U.S. government officials – including the U.S. Coast Guard – have been increasingly worried about offshore oil drilling in non-U.S. waters that could impact the U.S. coast if an accident occurs. Increased activity in Cuban waters is a particular concern for U.S. officials. A March 2012 The Washington Post report noted that Cuba’s capacity to respond to an offshore oil spill is extremely limited, with “only 5 percent of the resources needed to contain a spill approaching the size of the Deepwater Horizon disaster.” These concerns have also raised the question of how the United States could respond to an oil spill in Cuban waters given the state of U.S.-Cuba relations, including export restrictions that prohibit U.S. companies from providing equipment or otherwise performing response functions that could be construed as aiding the Cuban government.

In particular, the half-century old Cuban embargo obliges any company operating in Cuba to use only equipment that contains less than 10 percent U.S.-made parts in order to avoid sanctions. This means that companies operating in Cuba’s deepwater may not necessarily be using the most sophisticated or the safest tools and techniques shared by U.S. drilling companies. This might not be a concern in shallow water (several hundreds of feet deep), but in ultra deep water (depths beyond 1,500 meters), U.S. companies have a comparative advantage over many other international drilling companies. Moreover, deepwater drilling remains risky, even for U.S. companies. And while Zarubezhneft plans to drill in shallower water for its next project, it is still drilling in deep water: 6,500 meters.

Given that Washington does not maintain official diplomatic ties with Havana, it is unclear how the United States and Cuba would cooperate around an oil spill that could have economic and environmental implications for U.S. coastal communities, and it is something that should be a concern for U.S. officials as drilling continues off Cuba’s coast.

As Congress’s lame duck session draws to a close, it would be wrong to not make a final call for the U.S. Senate to ratifying the UN Convention on the Law of the Sea (UNCLOS), which would give the U.S. government much needed tools to secure its maritime interests, including those just off the U.S. Coast.

Ratifying UNCLOS would give the United States additional tools to manage these challenges that are quickly manifesting off the U.S. coast. For one, the hurdles that the United States may encounter in making overtures to Cuba in the wake of an oil spill off its coast may be blunted, as UNCLOS provides a basic framework for states – even states with very few or no diplomatic ties – to cooperate around shared environmental concerns. At the very least, ratifying UNCLOS would potentially give the United States added legitimacy in conducting oil spill responses in Cuba’s 200-natutical mile EEZ – Exclusive Economic Zone, even without a request for assistance from the Cuban government. Such flexibility would be critical for preventing a Cuban offshore accident from contaminating U.S. waters and coastal communities.