Cuba's energy plans have been hit a blow by Repsol's announcement that they will stop looking for oil in the area after spending more than $100 million on an exploratory drill that hit a dry well.
Cuba has been hoping that oil will be discovered which will help them to secure energy sources, and reinvigorate the struggling economy by attracting foreign investment secured against the discovery.
Antonio Brufau, chairman of Repsol said that "the well we drilled turned out dry and it's almost certain that we won't do any more activity there."
Repsol's withdraw has pinned all of Cuba's hopes on the Malaysian oil company, Petroliam Nasional Berhad (Petronas), who started drilling an exploratory well last week in the Florida Straits, about 180 miles southwest of Repsol's failed attempt.
Cuba is currently dependent on imported oil from Venezuela, who deliver about $3 billion of subsidised oil each year. Finding another source of cheap oil could be vital for Cuba as the deal with Venezuela might be called off if current president Hugo Chavez succumbs to cancer, or doesn't win in the October elections.
Repsol leased the drilling platform Scarabeo-9, the only platform in the world that is able to drill in Cuban waters without incurring sanctions from the US economic embargo on the island nation.
Scarabeo-9 was built in Asia using less than 10 percent US made parts which enables it to avoid violating the US embargo.
In the lease Repsol are contracted to drill a second well in Cuba, but will avoid this by paying a penalty to the Italian owners of Scarabeo-9; upon which the platform will head to Brazil, along with the hopes and dreams of the Cuban nation.
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com More