New Bill Would Let U.S. Companies Lease in Cuban Waters

Cuba - Florida Area of Interest
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House and Senate lawmakers offered legislation yesterday that would allow U.S. oil and gas companies to obtain leases in Cuban waters in the Straits of Florida, an area Cuba is developing in partnership with other countries but is off limits to U.S. firms.

Cuba is partnering with companies from China, India, Norway and Canada to exploit offshore resources, according to the U.S.-Cuba Trade Association and the legislation's sponsors. But U.S. firms cannot participate due to the trade embargo against the communist island nation.

The bill's lead sponsors -- Sens. Larry Craig (R-Idaho) and Jeff Flake (R-Ariz.) -- predicted the plan could win majority support in their respective chambers. Other Senate sponsors include Sen. Pete Domenici (R-N.M.), the chairman of the Energy and Natural Resources Committee.

Backers of the "Western Hemisphere Energy Security Act of 2006" said it is important to let U.S. companies have access to the resources. They also stressed that U.S. companies are best equipped to explore and develop oil and gas with environmental sensitivity in the waters roughly 50 miles from the Florida Keys.

"We are clearly putting this region of the world, this area of the Florida Straits at risk and the keys at risk," Craig said. "If oil is going to be developed 50 miles from them, it ought to be developed by the world's experts and the world's best, and that simply put is the United States and its companies."

The U.S. Geological Survey estimates that the North Cuba Basin's undiscovered resources are 4.6 billion barrels of oil and 9.8 trillion cubic feet of natural gas, mostly offshore.

"We are ... seeing competitors around the world, countries like China, being able to take advantage of the rich resources that are present off the coast and this legislation allows American companies to compete for that," said Sen. John Thune (R-S.D.), a cosponsor.

Craig said the bill could be part of the broad energy package Senate Republicans have been trying to assemble. "Whether it is folded in, or I offer it as a stand-alone or as a part of an appropriation bill, I do believe the Senate will vote on this," he said. "I believe we have a substantial majority vote."

He said Cuba wants U.S. firms to be involved in offshore development. The lawmakers also expressed concern about China's aggressive efforts to develop new supplies.

The trade association, which supports normalizing commercial relations, backs the bill. "To the extent we can support this legislation in Congress and encourage legislators to do so, we certainly are," said Kirby Jones, the group's president, in an interview. "It is the first time in my 30 years of following the issue that Cuba has something the U.S. needs: oil and gas in its waters."

Sen. Bill Nelson (D-Fla.), who opposes offshore drilling, has offered a bill with a very different goal. Nelson's measure seeks to block Cuba's offshore drilling by nullifying a 1977 agreement with Cuba that evenly divided the 90 mile straits. Nelson's office hopes the deal could be renegotiated to prevent oil rigs from being placed in what the senator says could be roughly 50 miles from Florida.

The Nelson bill would also deny U.S. visas to officials with foreign oil companies involved with production off Cuba's northern coast. "It is aimed at being a disincentive to these companies that are looking to do business with Cuba," Nelson spokesman Dan McLaughlin said.

Copyright 2006 E&E Daily. All Rights Reserved. Visit E&E Publishing for a free trial.


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