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Want to drill in Cuban waters? Perhaps forget doing business in the United States then…

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September 30, 2011

WASHINGTON (Dow Jones)–More than 30 House lawmakers are urging Spanish energy company Repsol YPF S.A. (REP.MC) to abandon its plan to drill for oil in Cuban waters, saying such a move will bolster the financial strength of the Castro regime and could expose Repsol to criminal and civil liabilities in U.S. courts.

In a letter sent to Repsol’s chairman this week, the lawmakers say they “urge Repsol to reassess the risks inherent in partnering with the Castro dictatorship, including the risk to its commercial interests with the United States.”

Repsol spokesman Kristian Rix said the company “is abiding by U.S. embargo legislation, and our drilling plans are in accordance with” safety standards put in place after the Deepwater Horizon oil spill.

repsol ypfOpposition to Repsol’s drilling plans ramped up in recent weeks, as the Spanish company prepares to begin drilling off Cuba’s north coast by the end of the year. A Chinese-built drilling rig that Repsol will use for the project is currently en route from Singapore to Cuba. The rig is expected to arrive in Cuban waters in November or December.

Repsol’s exploratory drilling marks an important step in Cuba’s effort to develop its offshore oil resources, in part to wean itself off imports from Venezuela. U.S. officials believe Cuba’s waters could contain more than 5 billion barrels of undiscovered oil.

Repsol’s plans have divided U.S. lawmakers, regulators and drilling experts. Some lawmakers want to block Repsol from pursuing its oil-drilling plans, saying profits will be shared with the Castro regime. Rep. Ileana Ros-Lehtinen (R., Fla.), who chairs the House Foreign Affairs Committee, introduced a bill earlier this year to impose export sanctions and other penalties on companies investing in Cuba’s oil sector.

Ros-Lehtinen is also one of the lawmakers urging Repsol to pull out of Cuba’s waters.

Oil-industry experts, on the other hand, are more concerned about the safety of Cuba’s drilling activity. They want the U.S. government to grant an exemption under its embargo against Cuba that would allow U.S. companies to be able to respond to potential spills.

Earlier this month, BP oil-spill commission co-chief Bill Reilly and a delegation of oil experts went to Cuba to evaluate the country’s plans for developing its oil resources. Reilly helped to draft a report earlier this year that recommends U.S. officials work with Cuba and Mexico to develop shared standards for drilling in the Gulf of Mexico.

Reilly didn’t go to Cuba as a representative of the U.S. government.

-By Tennille Tracy, Dow Jones Newswires

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