Repsol well comes up dry, halts Cuba oil exploration
Spanish oil firm Repsol says it will stop looking for oil in Cuba after hitting a dry well drilled at a cost of more than US$100 million.
Repsol Chairman Antonio Brufau says the company decided not to make another attempt but that the Petroliam Nasional Berhad (Petronas) oil company from Malaysia is expected to start exploring for Cuban offshore oil soon.
Industry experts have said Repsol YPF SA was under contract to drill a second Cuban well but could get out of the deal by paying a penalty to an Italian company that owns the drilling platform used for Repsol's well.
Brufau didn't mention the penalty Tuesday in his comments about Cuba, which is desperate to strike oil amid economic hardship.
Repsol's exploratory oil well off the northern coast of Cuba proved a failure and will be capped and abandoned, the company disclosed in mid-May.
Repsol was evaluating the data it collected since the Scarabeo-9 rig arrived off the coast of Havana in January after a months-long, round-the-world trek from construction sites in China and Singapore.
Spokesman Kristian Rix said then that four of every five offshore wells come up dry.
The failed Repsol well does not mean that the rest of Cuba's offshore exploratory area, which has been estimated to hold five billion to nine billion barrels, is barren.
"I think it's disappointing news, but in my opinion it doesn't mean that the whole of the Cuban north belt is not a geological zone that in the future could produce a substantial amount of hydrocarbons," said Jorge Piñon, former president of Amoco Oil Latin America and now an energy expert at the University of Texas.
"It's disappointing, but it's not surprising," he added.
The massive Scarabeo-9 platform had to be constructed in Asia with less than 10 per cent US-made parts to avoid violating the embargo.
Cuba has been struggling to lift its weak economy out of the doldrums for years, and the prospect of oil riches is a major part of the country's master plan. A big find would also lessen Cuba's reliance on Venezuela, which gives Cuba US$3 billion a year in oil subsidies, but whose leader is ailing with cancer.
The failure of the well is also surely a letdown for Repsol, which has now come up empty in two Cuban wells drilled over the last decade. Repsol and its partners were leasing the rig for about a half-million dollars a day.
Rix declined to say how much has been spent to carry out the exploration.
Piñon said the typical cost of sinking a deep-water well in the Gulf of Mexico runs around US$100-150 million.
Diplomats and industry sources say the Scarabeo-9 rig will be rented out next by Malaysian oil company Petronas for exploration north of Cuba's Pinar del Río province, to the west of Havana.