Sun, Feb 05, 2006 page7

• US oilmen investigate the Cuban alternative

  • NY TIMES NEWS SERVICE
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  On the heels of US President George W. Bush's call to shift away from reliance in the US on Middle East oil, a contingent of Texas oilmen and elite bureaucrats from Havana gathered at the Sheraton Hotel on Friday to discuss a nervy alternative: Cuba.

  In a challenge to Washington's 45-year trade embargo against Fidel Castro's government, Cuban officials are courting US energy companies to produce oil in its territorial waters.

  Late Friday, an agency of the US Treasury Department, the Office of Foreign Assets Control, asked Starwood Hotels, the American company that owns the Sheraton Hotel where the three-day meeting was being held, to require the Cuban delegation to leave, the event organizers said.

  "It's outrageous that I, as an American citizen, can't go and talk to someone on Mexican soil," said Kirby Jones, a former World Bank official and the organizer of the meeting for the Washington-based US-Cuba Trade Association. Jones said the US executives would try to meet with Cubans yesterday morning at another venue.

  Government officials said the US had asked the hotel to remove the delegation because the law prohibited US companies from supplying services to Cuban individuals or companies.

  Norberto de Sousa, the manager of the Sheraton Maria Isabel Hotel, declined to comment on Friday night. Representatives from Starwood could not be reached for comment.

  Some of the largest US oil companies, including ExxonMobil and Valero Energy, were meeting with Cuban officials on what was thought to be neutral ground in the cradle of Mexican capitalism, a short stroll on Paseo de la Reforma from a Starbucks, the US embassy and Mexico's stock exchange. The oil-importing Port of Corpus Christi and US shipping and oilfield equipment companies also sent representatives.

  Although Cuba has suffered from energy shortages since the former Soviet Union halted subsidized oil shipments, its potential as an oil producer has caught the attention of geologists and wildcatters. According to the US Energy Information Administration, Cuba's proven oil reserves of 750 million barrels exceed those of Sudan, an African nation that has lured large non-American investments to its oil industry despite US economic sanctions in place since 1997.

  "We have absolutely no limitations on working with American oil companies. The barriers, unfortunately, come from the other side," Alberto Wong Calvo, director of hydrocarbons at Cuba's National Office of Mineral Resources, said.

  Oil production in Cuba has surged since the country opened the industry to foreign investment in the 1990s, with operations by two Canadian companies, Sherritt International and Pebercan, helping to increase output to about 70,000 barrels a day in 2005 from a nadir of 18,000 barrels a day in 1992. Cuba consumes more than 150,000 barrels a day, with Venezuela providing a lifeline with imported oil on favorable financial terms.

  Of course, the US economic embargo on dealings with Cuba currently prohibits energy companies from reaching exploration deals with Union Cubapetroleo, Cuba's national oil company. But executives who attended the conference said they were encouraged by the recent relaxation on restrictions of US food exports to Cuba and the competitive implications of Chinese rigs searching for oil this year in Cuban waters off the Florida straits.

  "It's a difficult road ahead, but we're in the same neighborhood," said Amado Duron, director of operations at Valero Energy, the San Antonio-based refining company that could profit from processing Cuban oil at its refineries in Texas, Louisiana or the Caribbean island of Aruba. ?
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