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Disappointing month for foreign investment in Cuba

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• A version of this post ran on the author's blog, thehavananote.com. The views expressed are the author's own.

It’s not been a banner week – or month – for Cuba on the trade, investment, and economic front.

After its second attempt in 10 years to find commercial quantities of oil in Cuban deep water in the Gulf of Mexico – its latest well came up dry – Spain’s Repsol is “almost certain” it won’t try again.  Repsol has the option to drill again later this year before the Italian-owned Scarabeo rig – which, due to the US embargo, had to be specially built with no more than 10 percent of American parts for exploration in Cuba – moves on to Brazil.  Next up are two Malaysian and Russian firms, whose explorations this summer could be crucial to Cuba’s near-to-mid-term hopes of accessing undersea reserves it estimates to be as high as 20 billion barrels (the US estimates it to have around 5 billion). 

As Jorge Pinon, a former oil executive and an expert on Cuba’s oil prospects, points out, once the only rig in the world that can drill in Cuban waters without violating the US embargo moves on, it could be years before it’s available and another player is willing to invest millions in the gamble – especially when larger reserves beckon elsewhere around the world.  The prospect of an energy-independent Cuba was intriguing from a geopolitical standpoint, and surely a blow to Cuba’s hopes of digging out of its continuing economic troubles.   Just as some wondered if success in the Gulf could derail the economic reforms underway out of necessity, it might soon be time to ask if failure could spur on the painfully slow pace of the reforms.

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