Russia’s Gazprom Plans Oil Drilling Near Florida

Published January 3, 2011

The competition for dominance in the oil-rich Gulf of Mexico heated up in mid-December with Russian energy giant Gazprom announcing plans to drill off the coast of Cuba near Florida.

Under an agreement with the Malaysian state-owned company Petronas, Gazprom Neft, the oil arm of Gazprom, will assist in operating offshore drilling platforms. Geologists believe the waters off Cuba’s northern coast could hold plentiful reserves.

Petronas reached an agreement with the Cuban government in 2007 to drill for oil and natural gas, and Gazprom will be the Malaysian company’s new partner. Gazprom bought a 30 percent stake in four offshore oil exploration blocks which Petronas has leased from the government in Havana. Drilling is expected to get underway sometime in 2011.

New Challenge for Gazprom
For the Russians, drilling in the Gulf of Mexico will be unlike anything they have done before. The Russians are used to drilling for oil on land in Siberia. Working on offshore rigs, with their unique safety issues, will present challenges. Working with Petronas is one way the Russians can obtain offshore drilling experience.

Estimates of the amount of oil in Cuban waters vary widely. The U.S. Geological survey puts the figure at 4.6 billion barrels; the Cuban government says there are as many as 20 billion barrels off the island’s coast. reports Cuba has divided its share of the Gulf into 59 blocks, and foreign oil companies have leased 21 of them. Seven exploratory offshore wells are expected to be in operation by 2014.

Other Nations Prepare to Drill
In their rush to drill for oil off Cuba’s coast, Gazprom and Petronas are joined by companies from Norway, India, Venezuela, Vietnam, Spain, and Brazil.

The Chinese also are getting in on the act by constructing a drilling platform for a Spanish company that plans to operate just 50 miles from Key West, Florida.

Obama Shuts Down U.S. Production
Growing interest in Cuba’s offshore oil reserves contrasts sharply with the Obama administration’s policy toward oil drilling in U.S. waters. The White House recently announced it is keeping both the Atlantic and Pacific coasts and the entire eastern Gulf off limits to drilling. In addition, new safety guidelines imposed in the wake of the Deepwater Horizon accident have all but ended deepwater drilling in the U.S. portion of the Gulf of Mexico.

“The Obama administration appears to be allergic to domestic energy production,” said Dan Simmons, director of state policy at the Institute for Energy Research. “This is tragic because energy production creates real jobs, jobs that so many Americans desperately need.”

“What further makes this a tragedy,” said Simmons, “is that other countries like Cuba and Brazil are going full speed ahead on offshore energy production. One could only hope that the administration would step up and allow new offshore oil exploration and job creation.”

Bonner R. Cohen, Ph. D. ([email protected]) is a senior fellow at the National Center for Public Policy Research in Washington, D.C.