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Russian drilling in Cuba delayed by US embargo

13th July 2012

Zarubezhneft’s drilling project off Cuba put on ice due to US embargo regulations

Russian drilling in Cuba delayed by US embargo
Under the standing US embargo on Cuba, rigs can only have 10 per cent of their parts manufactured in the US.

Russian oil firm, Zarubezhneft’s plans to explore its first well off the northern coast of Cuba have been halted, following reports that its rig is in violation of a five-decade US economic blockade on the Latin American island.

The state-run company obtained the concession to explore Cuban offshore oil fields in 2009 and initially planned to start drilling in August. But the date has been pushed back to November and could suffer further delays, according to reports. The firm plans to drill at a site called Block L near the Cuban coastal town of Cayo Santa Maria.

Cuba, which relies heavily on energy imports from Venezuela, hopes to ease that dependence and boost its economic prospects by exploring its northern coastal waters. These are said to hold substantial and high quality reserves, estimated between five and 10 bn barrels and with low sulphur content.

Last month Zarubezhneft hired a rig to probe undersea oil fields off the Latin American country from Cyprus-based drilling operator Songa Offshore for USD 88m, a loan covering the use of one of the two semisubmersibles owned by the company, the Songa Mercur.

The rig was built at Russia’s Vyborg Shipyard and designed by Friede & Goldman (F&G 9500 Enhanced Pacesetter). The drill is fitted with two GE 752 traction motor mud pumps and five caterpillar generators made by US company Halliburton. Under the standing US embargo on Cuba, rigs can only have 10 per cent of their parts manufactured in the US.

Several companies have signed deals to explore Cuba’s promising northern coast. The Songa Mercur project is the second recent Russian project in Cuba, as Gazprom Zeft recently took over drill Scarabeo 9 from Spanish company Repsol. The rig is being held in Trinidad since 1 July, pending the commencement of drilling operations.

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