Cuba's Oil Bust

April 24, 2013, 12:47 p.m. ET

Cuba's Oil Bust
By MARY ANASTASIA O'GRADY

Remember all the hype about Cuba drilling for oil in Caribbean waters
and American companies missing out on the bonanza because of the U.S.
embargo? Well, like all the other Cuban get-rich-quick schemes of the
past 50 years, this one seems to have flopped too.

Last week, Florida's Sun Sentinel reported that "after spending nearly
$700 million during a decade, energy companies from around the world
have all but abandoned their search for oil in deep waters off the north
coast of Cuba near Florida." Separately, CubaStandard.com reported on
Friday that "the shallow-water drilling platform used by Russian oil
company OAO Zarubezhneft will leave Cuban waters June 1, to be
redeployed to Asia."

According to the Sun Sentinel story, Jorge Piñon, an oil-industry guru
who had been cheering Cuba's exploration attempts, said "Companies are
saying, 'We cannot spend any more capital on this high-risk exploration.
We'd rather go to Brazil; we'd rather go to Angola; we'd rather go to
other places in the world where the technological and geological
challenges are less.'"

It wouldn't be the first time the dictatorship thought it had found a
short cut to wealth. In 1970 it put all its faith in the "ten-million
ton harvest," which promised to get the nation off Soviet dependency by
forcing every Cuban to work in the cane fields. It failed.

Then there was that cow, Ubre Blanca, literally "white udder" in
Spanish. She was a cross between two breeds and in 1982 Cuba claimed
that she produced a world-record of 24 gallons of milk in one day. When
she died, in 1985, Fidel Castro instructed Cuba's genetic scientists to
get to work on making more of her. Almost 30 years later Cuban
researchers were still at it. In June 2002, the Telegraph reported that
"Dr Jose Morales, the head of the White Udder cloning project, is
confident that a breakthrough is imminent. 'We're very close,' he said.
'We have big things coming. This project is very important to Comandante
Castro.'"

Then came promises of an oil boom and last week the predictable bust.
The Brazilian state-owned Petrobras had given up on deep-sea drilling in
Cuban waters in 2011. Repsol gave up in May 2012. The deep water
platform it was using was then passed to Malaysia's state-owned
Petronas, which also came up empty. Venezuela's PdVSA had no luck
either. In November Cuba announced that the rig that had been in use
would be heading to Asia. Last week came the end of shallow-water drilling.

The loss to the regime is not just about the foreign exchange that oil
implied. The threat of spills, as well as lost opportunity for American
companies, were ways for Cuba to engage the U.S. and perhaps even get
the embargo lifted without having to make any human-rights concessions.
Some Democrats, whose party is more often found in opposition to oil
exploration, tried to help. At a House subcommittee hearing in November
2011 on the matter, Rep. Ed Markey (D., Mass.) argued that "companies
like Exxon Mobil, Chevron and the ConocoPhillips " should be doing the
"first drilling" in Cuban waters. "I would hope that the Majority's
opposition to lifting the embargo against Fidel does not outweigh their
fidelity to creating more jobs for American businesses and American
workers in our own country."

For now Mr. Markey's dreams of helping the dictatorship are, at best, on
hold. And Cuba remains a tropical backwater whose only claim to fame is
its large collection of political prisoners.

http://online.wsj.com/article/SB10001424127887324474004578442511561458392.html