Cuba's oil bid angers U.S.

Feb. 4, 2006, 12:17AM

Cuba's oil bid angers U.S.
Island nation trying to lure energy partners from America
By ELIZA BARCLAY
Copyright 2006 Houston Chronicle

MEXICO CITY - A move by Cuba to interest American energy companies in
investing in the communist nation resulted in a quick rebuke by the U.S.
government.

After Friday's meetings between Cuban energy officials and members of
the American energy sector at the Sheraton Maria Isabel Hotel, the U.S.
government informed the hotel's parent company, Starwood Hotels &
Resorts, that its Mexican subsidiary was not allowed to have the Cubans
as guests.

There is a 45-year-old U.S. embargo designed to undermine Fidel Castro's
communist government.

"U.S. law prohibits U.S. persons or entities to supply services to Cuban
nationals, persons or entities," said Judith Bryan, spokeswoman for the
U.S. Embassy in Mexico City. "The Sheraton (Maria Isabel Hotel) is
subject to U.S. law because it is a subsidiary of a U.S. company."

The management of the hotel and Starwood could not be reached for comment.

This left the conference and the 16 Cubans participating in it
scrambling for new accommodations. Late Friday, Alamar Associates, the
Washington, D.C.-based conference organizer, announced it would hold the
last day's sessions in a Mexican-owned hotel in the city, said Kirby
Jones, president of Alamar.

During Friday's session, Cubans were offering a rare view of their
energy sector.

Hindered by its lack of technology, capital and modern offshore oil
rigs, Cuba is actively pursuing foreign investors for new
joint-partnership agreements. The Cuban National Oil company, Cuba
Petroleo or Cupet, already has signed joint-venture agreements with
Canada, China, Spain and Brazil for exploration and services.

During the sessions, the normally close-lipped Cuban government
officials spoke enthusiastically about the prospects there.

"U.S. oil suppliers and services providers are invited to participate in
Cuba's oil sector," said Manuel Marrero, a principal specialist for
Cuba's economic ministry.

The Caribbean nation has intensified its search for outsiders to develop
oil fields off its northern and western coasts, not far from the tip of
Florida. But Marrero acknowledged the daunting legal hurdles that stand
between business partnerships between American companies and Cupet.

"When we can look for services and suppliers in Houston, we certainly
will," Marrero said.

The Americans were non-committal about the opportunities in Cuba if the
embargo is ever lifted.

"We're just here gathering information," said Joseph Newhart, with Exxon
Mobil Exploration's new venture special project's division.

Newhart said the presentations left many questions, including whether
there is credible evidence backing the Cuban government's claim that
there are big oil deposits offshore.

"The presentations were good, but we need more technical information
like all the seismic data," Newhart said.

Earlier in the day, one Texan official expressed the hope that the
sanctions would be lifted in the near future.

"America has what Cuba needs in terms of food, and Cuba has what America
needs in terms of oil," said Ruben Bonilla, the chairman of the Port of
Corpus Christi Commission. "The energy sector is the next cornerstone in
ending the embargo."

Bonilla said Corpus Christi and Houston would both benefit from trade
with Cuba.

"We already receive oil from Venezuela, which has been very profitable,
though that's a country that the United States also hasn't been getting
along with," Bonilla said.

Daunting barriers
But for now the legal barriers are daunting. Greta Lichtenbaum, an
attorney for the Washington firm of O'Melveny & Myers that focuses on
regulations governing international business and trade, didn't see how
energy companies could get permission to do business with Cuba. "Barring
a regime change in Cuba, I can't imagine why they would license such
activity," she said.

The U.S. government approved a 2000 law that allowed food and
agricultural products to be sold to Cuba on a cash basis after similar
meetings the year before between Cuban and U.S. officials. But
Lichtenbaum notes there's a difference between investing in Cuban oil
production and sales of U.S. agricultural products.

"An investment in Cuba would be a lot more controversial," she said.

Jones of Alamar Associates was more hopeful that some deals could be
done under the current law.

But those who were there Friday said it's too early to know if they care
about what Cuba has to offer.

"It's hard to gauge what the opportunities are in Cuba," said Mike
Martinez, with the Houston-based Bay-Inelectra, a construction firm that
builds refineries.

Chronicle reporter Purva Patel in Houston contributed.

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