Cuba’s Offshore Oil Development:
Background and U.S. Policy Considerations

Neelesh Nerurkar
Specialist in Energy Policy
Mark P. Sullivan
Specialist in Latin American Affairs
July 21, 2011
Congressional Research Service
7-5700
www.crs.gov
R41522
CRS Report for Congress
P
repared for Members and Committees of Congress

Cuba’s Offshore Oil Development: Background and U.S. Policy Considerations

Summary
Cuba is moving toward development of its offshore oil resources. While the country has proven
oil reserves of just 0.1 billion barrels, the U.S. Geological Survey estimates that offshore reserves
in the North Cuba Basin could contain an additional 4.6 billion barrels of undiscovered
technically recoverable crude oil. The Spanish oil company Repsol, in a consortium with
Norway’s Statoil and India’s Oil and Natural Gas Corporation, is expected to begin offshore
exploratory drilling in late 2011, and a number of other companies are considering exploratory
drilling. At present, Cuba has six offshore projects with foreign oil companies. If oil is found,
some experts estimate that it would take at least three to five years before production would
begin. While it is unclear whether offshore oil production could result in Cuba becoming a net oil
exporter, it could reduce Cuba’s current dependence on Venezuela for oil supplies.
In the aftermath of the Deepwater Horizon oil spill in the Gulf of Mexico, some Members of
Congress and others have expressed concern about Cuba’s development of its deepwater
petroleum reserves so close to the United States. They are concerned about oil spill risks and
about the status of disaster preparedness and coordination with the United States in the event of
an oil spill. Dealing with these challenges is made more difficult because of the longstanding poor
state of relations between Cuba and the United States. If an oil spill did occur in the waters
northwest of Cuba, currents in the Florida Straits could carry the oil to U.S. waters and coastal
areas in Florida, although a number of factors would determine the potential environmental
impact. If significant amounts of oil did reach U.S. waters, marine and coastal resources in
southern Florida could be at risk.
With regard to disaster response coordination, the United States and Cuba are not parties to a
bilateral agreement on oil spills. While U.S. oil spill mitigation companies can be licensed by the
Treasury and Commerce Departments to provide support and equipment in the event of an oil
spill, some energy and policy analysts have called for the Administration to ease regulatory
restrictions on the transfer of U.S. equipment and personnel to Cuba that would be needed to
combat a spill. Some have also called for more formal U.S.-Cuban government cooperation and
planning to minimize potential damage from an oil spill. Similar U.S. cooperation with Mexico
could be a potential model for U.S.-Cuban cooperation, while two multilateral agreements on oil
spills under the auspices of the International Maritime Organization also could provide a
mechanism for some U.S.-Cuban engagement on oil pollution preparedness and response.
To date in the 112th Congress, three legislative initiatives have been introduced taking different
approaches toward Cuba’s offshore oil development. H.R. 372 would authorize the Secretary of
Interior to deny oil leases and permits to those companies that engage in activities with the
government of any foreign country subject to any U.S. government sanction or embargo. S. 405
would require companies conducting oil operations off the coast of Cuba to submit an oil
response plan for their Cuba operations if they wanted to lease drilling rights in the United States.
The bill would also require the Secretary of the Interior to begin efforts toward the development
and implementation of oil spill response plans for nondomestic oil spills in the Gulf of Mexico,
including recommendations on joint contingency plan with Mexico, Cuba, and the Bahamas. H.R.
2047 would impose visa restrictions on foreign nationals and economic sanctions on companies
that help facilitate the development of Cuba’s offshore petroleum resources. For additional
information on Cuba, see CRS Report R41617, Cuba: Issues for the 112th Congress.

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Cuba’s Offshore Oil Development: Background and U.S. Policy Considerations

Contents
Introduction ................................................................................................................................ 1
Cuba’s Oil Sector ........................................................................................................................ 1
Current Situation................................................................................................................... 1
Offshore Development .......................................................................................................... 3
The Repsol Project .......................................................................................................... 3
Other Offshore Projects................................................................................................... 4
Outlook for Cuba’s Offshore Production ......................................................................... 6
Implications and Considerations for U.S. Policy.......................................................................... 7
Oil Spill Risks....................................................................................................................... 7
Risks of a Spill in Cuban Waters ..................................................................................... 7
Risks that Oil Spilled in Cuban Waters Reaches the United States ................................... 8
Assets at Risk If Spilled Oil Reaches U.S. Waters............................................................ 9
Disaster Coordination Between the United States and Cuba................................................. 10
U.S.-Mexico Cooperation as a Potential Model ............................................................. 11
Cooperation through Multilateral Agreements ............................................................... 13
Debate Over U.S. Investment in Cuba’s Energy Sector ........................................................ 14
Boundary Issues.................................................................................................................. 15
Legislative Initiatives ................................................................................................................ 16
111th Congress..................................................................................................................... 17
112th Congress .................................................................................................................... 17
Conclusion................................................................................................................................ 18

Figures
Figure 1. North Cuba Basin......................................................................................................... 2
Figure 2. Cuba’s Offshore Blocks................................................................................................ 5

Contacts
Author Contact Information ...................................................................................................... 18

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Cuba’s Offshore Oil Development: Background and U.S. Policy Considerations

Introduction
Long dependent on oil imports, Cuba has invited foreign companies to explore for and produce
petroleum in its north offshore region, which potentially could hold almost 5 billion barrels of
reserves. One of those companies, Spain-based Repsol, is expected to start exploratory drilling in
late 2011. A number of other companies, all government-owned national oil companies except for
Repsol, are also considering exploratory offshore drilling in Cuban waters. Exploratory drilling in
Cuba falls within 50 miles of the Florida coast.
Cuba’s offshore development so close to the United States raises implications for U.S. policy
focusing on oil spill risks and the status of U.S.-Cuban cooperation on preparedness and response
in the case of a major oil spill. The Deepwater Horizon oil spill in the U.S. Gulf of Mexico
heightened concerns about oil spill risks and raised the potential of U.S.-Cuban engagement
regarding a potential oil spill in Cuban waters. However, the prospects for addressing these
concerns are complicated by longstanding U.S. policy to isolate communist Cuba.
This report first examines Cuba’s oil sector, including current production and consumption levels.
It then looks at Cuba’s offshore development, including the Repsol project, other offshore
projects involving state-owed foreign oil companies, and the outlook for Cuba’s offshore oil
production. The report then analyzes considerations for the United States raised by Cuba’s
offshore oil development, examining oil spill risks and environmental dangers if spilled oil
reaches U.S. waters, the status of disaster coordination between the United States and Cuba, and
potential approaches on the issue. The report then examines the debate over broader U.S.
involvement in Cuba’s offshore oil development, and touches on two outstanding boundary issues
related to Cuba’s offshore oil development. Finally, the report examines legislative initiatives that
have been advanced to deal with Cuba’s offshore oil development.
Cuba’s Oil Sector
Current Situation
Cuba currently has proven oil reserves of 0.1 billion barrels and natural gas reserves of 2.5 trillion
cubic feet.1 These are located on shore or near shore, and were the focus of oil exploration and
production until recently. The U.S. Geological Survey estimates that the offshore North Cuba
Basin could contain an additional 4.6 billion barrels of undiscovered technically recoverable
crude oil resources, as well as 0.9 billion barrels of natural gas liquids and 9.8 trillion cubic feet
of natural gas.2,3 More than 70% of that oil may be in a portion of the North Cuba Basin
stretching from about 70 miles west of the west end of the island for about 300 miles eastward in
a narrow band known as the North Cuba Foreland Basin (see Figure 1). Separately, Cuban

1 Unless otherwise noted, data on oil volumes in this report come from the Energy Information Administration’s
International Energy Statistics, see http://tonto.eia.doe.gov/cfapps/ipdbproject/IEDIndex3.cfm.
2 Christopher J. Schenk et al., Assessment of Undiscovered Oil and Gas Resources of the North Cuba Basin, Cuba,
2004
, U.S. Department of the Interior, U.S. Geological Survey, World Assessment of Oil and Gas Fact Sheet, February
2005. http://walrus.wr.usgs.gov/infobank/programs/html/factsheets/pdfs/2005_3009.pdf.
3 For an explanation of reserves and resources terms and concepts, please see CRS Report R40872, U.S. Fossil Fuel
Resources: Terminology, Reporting, and Summary
, by Gene Whitney, Carl E. Behrens, and Carol Glover
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officials claimed in 2008 that Cuban offshore resources could be as much as 20 billion barrels of
undiscovered crude, but in April 2011 Cuban officials lowered those estimates to five to nine
billion barrels.4
Figure 1. North Cuba Basin
(Three areas comprising the North Cuba Basin assessed by the USGS)

Source: U.S. Geological Survey, “Assessment of Undiscovered Oil and Gas Resources of the North Cuba Basin,
2004,” (February 2005). http://walrus.wr.usgs.gov/infobank/programs/html/factsheets/pdfs/2005_3009.pdf.
Adapted by CRS.
Notes: “AU” are Assessment Units.
Cuba produced 51 thousand barrels of oil a day (Kb/d) in 2010 from the onshore or shallow, near
shore fields. The output is mostly heavy, sour (sulfur-rich) crude that requires advanced refining
capacity to process.5 Cuba currently accesses offshore fields located near its northern coast
through horizontal drilling from onshore rigs. Canadian companies Peberco and Sherritt
developed near-shore assets from onshore block 7 (see Figure 2), but the Cuban government
terminated that lease in 2009.
Cuba consumed 165 Kb/d of oil in 2009, down from 225 Kb/d two decades ago. Cuban domestic
production increased and consumption fell after the Soviet Union curtailed its support for Cuba in
the early 1990s. Most of Cuba’s oil today is used for power generation, with relatively small
amounts used for transportation. This implies net imports of 114 Kb/d. This comes from
Venezuela, which has stepped into the former Soviet Union’s role as a patron of the Cuban

4 Leslie Moore Mira, “Cuba lowers its resource estimate to 9 billion barrels: official,” Platts Commodity News, April 5,
2011.
5 Energy Information Administration (EIA), “Country Analysis Brief: Caribbean,” U.S. Department of Energy.
November 2009, http://www.eia.doe.gov/emeu/cabs/Caribbean/OilProduction.html.
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government. According to the official agreement between the two nations, Venezuela provides
Cuba with oil at indexed prices and with long-term financing for up to 40% of oil imports at
subsidized interest rates.6 Cuba compensates Venezuela at least in part through offering medical
and education services, including sending doctors to Venezuela.
According to the U.S. Energy Information Administration, Cuba currently has about 300 Kb/d of
simple crude refining capability. However, not all of this is currently producing and Cuba has a
limited amount of additional complex capacity to process the heavy sour crudes it produces. A
significant amount of the oil going into power generation is burned directly as crude instead of as
refined products, which can damage power plants. Of Cuba’s imports, roughly 60% are refined
products, mostly distillate and residual fuel oil. The rest is crude oil.7
Petroleos de Venezuela S.A. (PdVSA), Venezuela’s state-owned national oil company (NOC), is
helping Unión Cuba Petróleo (Cupet), Cuba’s NOC, to expand and upgrade Cuba’s refining
capacity. Their Cuvenpetrol joint venture brought online the previously defunct Cienfuegos
refinery in 2007, and they are pursing further expansion there with the assistance of the China
National Petroleum Corporation (CNPC) and Chinese lenders.8 Renovations at the Hermanos
Diaz refinery and construction of a new refinery at the port of Matanzas are also planned. The
upgrades may help Cuba process more of its own heavy crudes, which could be especially useful
if production increases, as well as for processing crude imported from Venezuela.
Offshore Development
The Repsol Project
Repsol YPF, a publicly traded oil company based in Spain, will begin drilling an offshore
exploratory well in Cuba’s exclusive economic zone (EEZ) in 2011. The project, called the
Jagüey prospect, is within 50 miles south of Key West, FL, according to Repsol officials. This is
not Repsol’s first offshore exploration venture in Cuba. It drilled Cuba’s only prior deepwater
well, Yamagua-1, in 2004 in offshore block 27, roughly 20 miles northeast of Havana.9 Repsol
discovered petroleum resources, but deemed them commercially insufficient to justify
producing.10
In its current project, Repsol leads a consortium which also includes Norway’s NOC, Statoil, and
India’s NOC, the Oil and Natural Gas Corporation (ONGC).11 Repsol has a 40% stake in the

6 Bureau of Western Hemisphere Affairs, “Background Notes: Cuba,” U.S. Department of State, March 25, 2010.
7 Imports data is for 2007, the most recent available figures from EIA.
8 “CNPC Secures Cuban oil contract,” China Economic Review, November 24, 2010.
9 “Exploration and Production: Operations,” Repsol YPF, 2005 (accessed 11/8/2010), http://www.repsol.com/es_en/
corporacion/accionistas-e-inversores/inf_economicofinanciera/informes_financieros/HTML/AreasNegocio/04/
default.aspx?Pagina=16.
10 Repsol, “Global Presence: Cuba,” Repsol, April 30, 2010. http://www.repsol.com/es_en/corporacion/conocer-repsol/
presencia-global/cuba.aspx.
11 Statoil is also looking to explore for oil in the Bahamas, where it has partnered with the Bahamas Petroleum
Company. However, following the Deepwater Horizon oil spill, the Bahamian government suspended the consideration
process for all oil exploration and drilling applications until the country has stringent environmental protocols in place
to mitigate against a catastrophic oil well leak.
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venture, with the other two partners each holding a 30% stake. The consortium has rights to six
exploration blocks located off Cuba’s northern shore (see Figure 2).
Repsol has collected seismic data and now awaits arrival of offshore oil rig Scarabeo-9, which it
has contracted to carry out exploratory drilling from its owner, Italian oil services provider,
Saipem.12 Scarabeo-9 was built at a shipyard in Yantai, Shandong province, China. According to
reports, the only major U.S. made component in the rig is the blowout preventer (which is the
type of equipment which failed during the Deepwater Horizon oil spill).13 The rig has moved to
Singapore, where its marine and drilling systems will be completed before it travels to Cuba.14
Originally expected to be completed in September 2009, Scarabeo-9 has been delayed several
times. Among the more recent delays, its arrival was pushed back when a leak was discovered on
the way to Singapore.15 The rig is now expected to arrive in Cuba in September or October.16
Repsol has committed to Cuban authorities to drill one exploratory well, and may add additional
wells depending on its results.17 Scarabeo-9 may drill additional wells for other companies with
Cuban offshore exploration and production licenses, and Malaysia’s NOC Petronas is reportedly
next in line, according to Repsol officials. According to Cuban officials, there are plans for five
wells to be drilled between 2011 and 2013.18
Other Offshore Projects
Other foreign companies have five other lease agreements for offshore blocks in Cuba, and at
least one more is being negotiated. Lease holders are conducting seismic surveys, and may be
preparing for exploratory drilling. Apart from Repsol, the companies are all state-owned. Some of
the NOCs’ governments, including Brazil, Russia, and China, have recently made loans to Cuba
to support development of infrastructure as well as energy, minerals, and agriculture sectors.19
Separate from its consortium with Repsol, ONGC contracted for two additional blocks in 2006
(see Figure 2). It may be preparing to move from seismic analysis to exploratory drilling as it has
already started soliciting bids for necessary equipment.20 Malaysia’s NOC, Petronas, has
partnered with Russian NOC Gazprom, in a contract on four blocks off the western coast of Cuba.
(Gazprom and Petronas have also partnered to develop the Badra field in Iraq.21) They are
studying seismic data and could begin drilling as early as 2011.22 Vietnam’s NOC, PetroVietnam,

12 Saipem is a subsidiary of publicly traded Italian oil major ENI S.p.a.
13 Daniel Wallis, “Cuban oil rig set to cause waves in Washington,” Reuters, May 17, 2011.
14 “CIMC Raffles Delivers Scarabeo 9 to Saipem,” Rigzone, October 7, 2010.
15 Jeff Franks, “Arrival of Cuba offshore oil rig delayed again,” Reuters, February 22, 2011.
16 16 Daniel Wallis, “Cuban oil rig set to cause waves in Washington,” Reuters, May 17, 2011.
17 Jeff Franks, “Repsol moving ahead with Cuba oil plans,” Reuters, April 5, 2011.
18 Carlos Batista, “Cuba to drill five new oil wells by 2013,” AFP, April 5, 2011.
19 Note that Brazil’s national oil company, Petrobras, has subsequently withdrawn from its offshore lease. Kate Joynes-
Burgess, “Russia Comes to Cuba’s Aid with Economic Deal,” IHS Global Insight Daily Analysis, July 20, 2009. Bert
Wilkinson, “Caribbean: China Consolidates Influence as U.S. Frets,” Inter Press News Service, May 28, 2009. Daniel
McCleary, “Brazil to Loan $300M to Cuba to Refurbish Port of Mariel,” Dow Jones International, July 13, 2009.
20 ONGC Videsh Limited, “Tender for Supply of Sub-sea Well Heads and Large OD Casting Pipes for Block-N34 and
N-35 of Cuba Off-shore,” press release, February 8, 2010, http://www.ongcvidesh.com/TenderFiles/31.pdf.
21 “Gazprom Neft Heads for Cuba,” International Oil Daily, Energy Intelligence Group, October 6, 2010.
22 Gazprom has taken a 30% stake in the blocks originally contracted just to Petronas in a 2007 agreement with the
(continued...)
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holds contracts for four offshore blocks west of Cuba.23 PetroVietnam may partner with Russian
NOC Zarubezhneft, which has separate contracts for onshore and near shore blocks. Venezuela’s
NOC, PdVSA, has a license to explore four western offshore blocks. Finally, Angola’s NOC,
Sonangol, signed an agreement to operate two offshore blocks in December 2010.24
Figure 2. Cuba’s Offshore Blocks

Source: Adapted by CRS from Jorge R. Piñon, Presentation given at the Inter-American Dialogue, Washington
DC, October 8, 2010.
Notes: Petronas took on Gazprom as a partner in its Cuba offshore project in November 2010. . Petrobras
(Brazil) signed an agreement for exploration of block N37 in October 2008, but announced its withdrawal in
March 2011.
Chinese NOC, CNPC, is in negotiations for Cuban offshore blocks.25 Chinese companies have
never previously drilled off Cuba’s coast, though CNPC does operate some onshore production in

(...continued)
Cuban government. “Gazprom Takes State In Cuban Offshore Blocks,” Rigzone, November 16, 2010.
23 PetroVietnam, “E&P Worldwide – Caribbean & South America,” PetroVietnam, accessed Nov 11, 2010.
http://pvep.com.vn/Default.aspx?pageid=122&action=view&flash=cuba.
24 “Sonangol Signs Deal With Cuban Oil Company,” Angola Press Agency, December 20, 2010.
25 Linda Hutchinson-Jafar, “China’s CNPC in talks for possible Cuba oil block,” July 13, 2011.
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Cuba. (Even Scarabeo-9, though it was built in China, is neither owned nor leased by a Chinese
company.) As mentioned above, CNPC is also helping Cuba refurbish its Cienfuegos refinery.
Petrobras, Brazil’s NOC, had signed an agreement in 2008 for offshore block N37, off Cuba’s
northern coast. 26 Based on seismic data it collected as well as other company priorities, Petrobras
decided to relinquish its contract in March 2011. Company statements indicated that it would
rather focus on oil prospects in Brazil.27
Outlook for Cuba’s Offshore Production
Without additional information on Cuban resources, it is speculative to judge how much could be
produced and when output growth would occur. Exploratory drilling from Repsol and others
could provide more information on the potential for Cuban output. If oil is found, some experts
estimate that companies would have to invest in developing production capacity for at least three
to five years before production could begin.28 However, production could be delayed due to a
number of factors, such as the availability of offshore oil field development services.
Development will take place at a slower rate than might otherwise be the case due to U.S.
sanctions, which prohibit involvement from U.S. companies and prohibit use of equipment with
more than 10% U.S. content.29 Once production starts, it will likely grow slowly over the course
of years. For the foreseeable future, any incremental increase in Cuban production is likely to be
small relative the roughly 85 million barrel a day global oil market.
Some analysts have argued that Cuba could produce enough oil to become an oil exporter;
however, this remains very speculative at this juncture. First, it is unclear how much oil is
available or how quickly it can be produced. Second, Cuba would need to offset the roughly 130
Kb/d of oil it currently imports before becoming a net exporter. Third, current Cuban oil
consumption may grow, especially if the economy grows or the government loosens control over
oil use as more domestic production becomes available.
Cuba is still likely to trade more oil—especially as refining capacity increases—but its net trade
balance for oil may not necessarily shift to a significant oil export surplus. It depends on how
much oil is found and developed and what happens to domestic Cuban demand. What is more
certain is that lower net import needs may reduce Cuba’s dependence on imports from Venezuela.

26 Rosa Tania Valdes, “Lula, Fidel Castro hold ‘emotional’ meeting,” Reuters, February 24, 2010.
27 Marc Frank, “Petrobras has relinquished Cuba oil block -official,” Reuters, March 10, 2011.
28 Jorge Piñon, Cuba’s Energy Crisis: Part III, Cuba Transition Project, part of the Institute for Cuban and Cuban-
American Studies at University of Miami, January 26, 2006, http://ctp.iccas.miami.edu/FOCUS_Web/Issue72.htm.
29 See 15 CFR 734.4, which sets forth the 10% de minimis U.S. content provision in the Export Administration
Regulations.
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Implications and Considerations for U.S. Policy
Oil Spill Risks30
The Deepwater Horizon oil spill in the U.S. Gulf of Mexico heightened concerns over the
potential of an oil spill in Cuban waters and the risk such a spill could affect Florida’s waters and
coastal areas.31 Current plans for drilling in Cuba fall within 50 miles of the Florida coast. Were
an oil spill to occur in these areas, it could have environmental impacts in the United States. Oil
can be spilled from acute exploration and production accidents, through longer-term discharge
from operations, or through transportation accidents, such as a tanker collision or pipeline
rupture.
Risks of a Spill in Cuban Waters
In U.S. waters, oil extraction operations are primarily governed by regulations, implemented and
enforced by the Department of the Interior’s Bureau of Oceans Energy Management, Regulation,
and Enforcement (BOEMRE).32 In addition, several statutes, including the Clean Water Act and
the Oil Pollution Act, establish a liability regime for oil spills. Offshore exploration and
production operations in non-U.S. waters may not be governed by analogous regulations or fall
under a liability structure that creates an incentive to minimize oil spills. Since the Repsol project
is only the second deepwater well to be drilled in Cuba’s EEZ,33 Cuban officials may still be
developing regulations to prevent offshore drilling accidents and contingency plans to address
accidents if they do occur.34 However, as the recent U.S. experience in the Gulf of Mexico
illustrates, even the long-time existence of regulations and regulator may not always prevent an
oil spill.
According to a 2008 American Petroleum Institute study of U.S. offshore oil spills, the largest
cause of spilled oil is loss of well control or “blowouts” at offshore platforms.35 Currently, only
exploration wells are planned in Cuba. Their results will be analyzed before production wells and
transportation infrastructure is considered. However, there have been major oil spills from
exploratory wells in the past. Two of the largest accidental oil spills in world history resulted from

30 This section is uses research and analysis from CRS Specialists Peter Folger, Jonathon Ramsuer, and Harold Upton.
31 For background on the Deepwater Horizon Spill itself, see CRS Report R41262, Deepwater Horizon Oil Spill:
Selected Issues for Congress
, coordinated by Curry L. Hagerty and Jonathan L. Ramseur.
32 In July 2010, the Secretary of the Interior changed the name of the Minerals Management Service (MMS) to Bureau
of Oceans Energy Management, Regulation, and Enforcement (see Order No. 3302). MMS/BOEMRE’s responsibilities
are outlined in 30 C.F.R. § 250.
33 “Significant Discoveries Marked ‘04,” Explorer (Magazine of the American Society of Petroleum Geologists),
January 2005.
34 The International Maritime Organization (IMO) sent a technical assistance mission to Cuba in June 2010 to evaluate
the level of preparation to respond to the Deepwater Horizon oil spill. The mission made several recommendations for
Cuba to improve its national contingency plan, including the development of a training plan. See IMO, “Cuba, Misión
de Asesoría Técnica,” June 5-13, 2010, prepared by Klaus Essig.
35 The Department of Interior defines a “loss of well control” as “uncontrolled flow of formation or other fluids,
including flow to an exposed formation (an underground blowout) or at the surface (a surface blowout), flow through a
diverter, or uncontrolled flow resulting from a failure of surface equipment or procedures”. Also see Dagmar Schmidt
Etkin, “Analysis of U.S. Oil Spillage,” American Petroleum Institute, August, 2009. http://www.api.org/ehs/water/
spills/upload/356-Final.pdf.
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blowouts at exploratory wells in the Gulf of Mexico – the Deepwater Horizon oil spill in the U.S.
Gulf of Mexico and the 1979 Ixtoc oil spill in Mexico’s section of the Gulf of Mexico.
It is difficult to assess the likelihood of a spill. According to Saipem, Scarabeo-9 is built to
Norwegian standards, including extra equipment to shut off blown-out wells beyond what is
required in the United States.36 Repsol has significant offshore experience, including projects in
the U.S. Gulf of Mexico. It has had issues with oil spills, which is not abnormal for an oil
company.37 Among other Cuban lease holders, Statoil has extensive offshore experience,
including projects in the U.S. Gulf of Mexico, and are generally seen as accomplished offshore
operators. Petronas, ONGC, and PetroVietnam also have offshore experience. PdVSA does not,
but its offshore project appears the furthest from seeing drilling activity among existing licenses.
Cuban officials claim they are taking necessary regulatory precautions, including incorporating
safety practices from the United Kingdom and the United States.38
Risks that Oil Spilled in Cuban Waters Reaches the United States
If an oil spill were to occur in the waters northwest of Cuba, currents in the Florida Straits could
carry that oil to U.S. waters and coastal areas in southern and south eastern Florida.39 However,
any environmental impact to Florida would depend on many factors at the time of a spill,
including size and location of the oil spill, ocean conditions in the area, prevailing wind direction
and velocity, temperature of the water and the air, the type of oil spilled, and effectiveness of any
cleanup efforts. The wide variety of factors render impossible a precise description of the
environmental impact were an oil spill to occur in Cuban waters.
Even if prevailing winds and current conditions favored rapid transport of spilled oil to the
Florida coastline, other factors would also affect the rate of spill dispersal and, in part, determine
how much of the spill reached the U.S. coast. The physical and chemical characteristics of an oil
spill change over time, a process known as “weathering.” How much weathering takes place after
a spill occurs would affect the nature of the oil and the degree of impact. How fast oil spreads
depends on volume spilled and the viscosity of the oil.40 As the spill spreads out, the lighter and
more volatile components of the oil would evaporate at a rate that depends on water and air
temperature, as well as wind speed and wave action.41 Over time, and depending on waves and
turbulence at the sea surface, the spill would start to break up, or disperse. Other factors, such as

36 Construction of the rig was originally ordered by Norwegian firm Frigstad, but the contract was later transferred to
Saipem. See more details on Scarabeo 9’s specification at Saipem’s website, available at http://www.snamprogetti.it/
media_gallery/brochure/Scarabeo9.pdf.
37 Repsol, “Corporate Responsibility 2009,” Repsol, April 26, 2010. http://www.repsol.com/es_en/corporacion/
responsabilidad-corporativa/informe-responsabilidad-corporativa/default.aspx. Note that Repsol, along with U.S. firm
Pride of North America, is currently under investigation by a Spanish court for an offshore oil spill in the
Mediterranean. Repsol officials have described the spill as “a minor one-time incident which was solved and cleaned
up within days.” (Martin Robert, “Spain court probes Repsol oil spillage: report,” Reuters, July 2, 2010.)
38 Desiree Connor, “Cuba says safety a priority in offshore oil plan,” Reuters, May 12, 2011.
39 Waters in the Florida Straits between Cuba and Florida move eastward from the Gulf of Mexico into the Atlantic
Ocean, feeding the Gulf Stream. This is the Florida Current, which stretches east and north through the Florida Straits
and up the western side of the North Atlantic.
40 International Tanker Owners Pollution Federation Limited (ITOPF), Fate of Marine Oil Spills, Technical
Information Paper No.2, United Kingdom, 2002, http://www.itopf.com/_assets/documents/tip2.pdf.
41 Ibid. Refined petroleum products, such as kerosene and gasoline, might evaporate completely. Heavier oils, or the
heavier components of crude oil, may not undergo much evaporation; however, they may clump together and sink.
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oxidation, biodegradation, interaction with sediments, all contribute to the changing character of
an oil spill over time and during its transport by ocean currents and winds.42
Finally, the extent of any cleanup activities will influence how much of the spill persists in the
environment. In general, the faster and more expansive the cleanup effort, the more likely it may
limit damage to the environment. (See “Disaster Coordination” below for a discussion of policy
related to preparedness and response in the event of an oil spill.)
Assets at Risk If Spilled Oil Reaches U.S. Waters
If significant quantities of oil did reach U.S. waters, risks to the marine and coastal resources of
Southern Florida could be of particular concern. The coastal and ocean resources of the region
provide recreational, commercial, and ecological benefits to both local communities and the
nation.
One of the more vulnerable areas that could be at risk is the Florida Keys and adjacent areas. The
Florida Keys National Marine Sanctuary includes state and national parks, wildlife refuges,
ecological reserves, research areas, and sanctuary preservation areas. North of the Florida Keys
are the Everglades and Biscayne National Parks. As one moves up Florida’s east coast, barrier
beaches backed by lagoons and wetlands dominate the geography. And then there are the densely
populated areas of Miami-Dade, Broward, and Palm Beach Counties.
The Florida Keys and adjacent areas comprise diverse and interrelated marine systems. The
Florida reef is the most extensive living coral reef in North American waters, stretching for 325
miles. Reefs, sea grass beds and mangroves in the region provide habitats for many marine
animals, including a number of threatened and endangered species. These coral reefs and related
coastal ecosystems are valuable because they provide protection from erosion and flooding,
especially from severe storms such as hurricanes.
Depending on timing, size, and location, an oil spill can cause significant harm to individual
organisms and entire populations in marine and coastal habitats.43 Spills can cause impacts over a
range of time scales, from days to years, or even decades for certain spills. Acute exposure to an
oil spill can kill organisms or have non-lethal but debilitating affects on organism development,
feeding, reproduction, or disease immunity. Ecosystems in which they exist can also be harmed.44
Certain habitats in the area—such as coral reefs, mangrove swamps, and salt marshes—are
especially vulnerable.45 Long-term, chronic exposure, as occurs from continuous oil releases such
as leaking pipelines, offshore production discharges, and non-point sources (e.g., urban runoff)
can see impacts spread from sea life to the survival and reproductive success of marine birds and
mammals.46

42 Ibid.
43 National Research Council (NRC), Oil in the Sea III: Inputs, Fates, and Effects, National Academies of Science, p. 4.
44 Ibid., p. 127. These “sub-lethal” effects can occur at concentrations that are several orders of magnitude lower than
concentrations that cause death.
45 Ibid., p. 120.
46 Ibid., p. 134. However, due to the increasing complexity of factors over time, studies on chronic effects are often met
with debate and some controversy.
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Southern Florida’s natural resources are closely integrated with its economic interests. Southern
Florida supports significant tourism as well as commercial and recreational fishing. Florida’s
tourism industry directly employs more than a million people. The 84 million tourists that visited
Florida in 2008 spent around $65 billion.47 The Deepwater Horizon spill illustrated that an oil
spill can significantly harm the tourism industry of affected areas. A well-publicized oil spill can
even weaken tourism in a nearby area, regardless of the actual threat to human health created by
the spill.
Disaster Coordination Between the United States and Cuba
In light of oil spill concerns, there has been increased public interest on the status of coordination
between Cuba and the United States. Coast Guard officials reportedly are reviewing U.S.
contingency plans in the event of an oil spill in Cuban waters,48 and a number of analysts and
policy groups are encouraging U.S.-Cuban engagement on the issue.49
Currently the United States and Cuba are not parties to a bilateral agreement on oil spills. In the
aftermath of the Deepwater Horizon spill, however, U.S. officials in Havana kept the Cuban
government informed about the oil spill in working-level discussions. With Cuba’s interest in
developing its offshore oil resources so close to the United States, some analysts have called for
more institutionalized or formal U.S.-Cuban cooperation and planning to minimize potential
damage from an oil spill. Given the comprehensive U.S. economic sanctions on Cuba, some
analysts have called for the Administration to amend or rescind regulations that restrict the
transfer of equipment, technology, and personnel that would be needed to combat an oil spill in
Cuba.50 Some energy analysts assert that foreign oil companies operating in Cuba need to have
full access to technology and personnel in order to prevent or manage a spill.51 Some maintain
that U.S. embargo has forced drillers to use second-hand equipment to avoid buying from U.S.
companies.52
U.S. oil spill mitigation service companies can be licensed through the Treasury Department’s
Office of Foreign Assets Control (OFAC) and the Department of Commerce’s Bureau of Industry
and Security (BIS) to provide oil spill prevention and containment support to companies
operating in Cuba. At least two U.S. companies so far have received such licenses. According to
the Department of State, the United States expects any foreign oil company engaged in oil
exploration activities in Cuba to have adequate safeguards in place to prevent oil spills and
contingency plans to address a spill should it happen.53

47 These are 2008 figures provided by ‘Visit Florida,’ the state’s official tourism marketing corporation.
http://media.visitflorida.org/research.php.
48 Lesley Clark, “U.S. Wary of Cuba’s Drilling Plans, The Chief of the Miami Coast Guard Office Says His Agency Is
Reviewing Response Scenarios for a Possible Spill Out of Cuba,” Miami Herald, October 1, 2010; William Gibson,
“Coast Guard Braces for Potential Cuban Oil Spill,” South Florida Sun-Sentinel, March 23, 2011.
49 For example, see As Cuba Plans to Drill in the Gulf of Mexico, U.S. Policy Poses Needless Risks to Our National
Interest
, Center for Democracy in the Americas, February 2011, available at http://democracyinamericas.org/pdfs/
Cuba_Drilling_and_US_Policy.pdf.
50 Jorge R. Piñon and Robert L. Muse, “Coping with the Next Oil Spill: Why U.S.-Cuba Environmental Cooperation is
Critical,” U.S. Cuba Relations at Brookings, Issue Brief No. 2, May 2010.
51 Clifford Krauss, “Cuba’s Oil Plans for Deep Waters Raise Concerns,” New York Times, September 30, 2010.
52 “U.S. Embargo May Hinder Oil Spill Response in Cuba Waters: Driller,” Platts Commodity News, May 1, 2011.
53 U.S. Department of State, “Cuba: Oil Exploration, Question at the July 16, 2010 Daily Press Briefing,” July 19,
(continued...)
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Since 2001, a Florida-based company, Clean Caribbean & Americas, has received U.S. licenses to
send technical advises and trainers to assist foreign oil companies in Cuba to prepare to respond
to a large oil spill. The actual material and equipment is stored in Fort Lauderdale and would be
sent to Cuba by air and sea in the event of a major oil spill.54 For a Tier 1 oil spill, one that is
small and localized, foreign oil companies drilling offshore in Cuba would maintain their own
capabilities and equipment. For a Tier 2 oil spill, involving larger quantities of oil that could
spread beyond the immediate vicinity where the spill took place, near shore oil operators and the
Cuban government would supply equipment to help respond to the spill. A much larger Tier 3 oil
spill, like a major tanker accident or an offshore well blowout, would require international
assistance, like that provided by Clean Caribbean & Americas, which would move equipment into
Cuba.55 This type of oil spill response mechanism for large Tier 3 spills is a typical arrangement
that has developed internationally over the past 30 years. CCA’s President Paul Schuler maintains
that involvement of Cuban and U.S. agencies in drills and exercises would enhance preparedness
and response to a potential oil spill in Cuba.56
In late May 2010, OFAC also approved a license for the Texas-based International Association of
Drilling Contractors (IADC) to travel to Cuba to discuss safety and mitigation of environmental
hazards with Cuban authorities. After the meeting in August 2010, IADC President Lee Hunt
maintained that the Cubans are eager to work with U.S. industry to ensure safer drilling.57 OFAC
also reportedly approved a license for IADC to allow Cuban officials to participate in a May 2011
conference in Trinidad and Tobago that it was sponsoring on the topic of improving industry oil
industry environmental practices. A panel was specifically planned on Cuba’s offshore drilling at
the May 12-13, 2011 conference.58
U.S.-Mexico Cooperation as a Potential Model
U.S. cooperation with the Mexican government on oil spills could serve as a potential model for
U.S.-Cuban government engagement on disaster preparedness and coordination. The United
States and Mexico negotiated a cooperation agreement in 1980 regarding pollution caused by oil
and other hazardous substances. The agreement called for the two countries to establish a joint
contingency plan in order to ensure an adequate response to spills.59 The joint plan that was
developed – known as Mexus Plan – sets forth standard operating procedures in case of pollution
incidents that threaten the coastal waters or marine environment of the border zone of both

(...continued)
2010. OFAC licenses cover travel and any financial transactions while BIS licenses cover the export of commodities.
54 Telephone conversation with Paul A. Schuler, President, Clean Caribbean & Americas (CCA), November 3, 2010.
For further background on the work of CCA in Latin America and the Caribbean, see its website at
http://www.cleancaribbean.org/cgi-bin/loadAll.cgi?toget=2index.
55 For an explanation of the tiered oil spill response categories, see International Petroleum Industry Environmental
Conservation Association (IPIECA), “Guide to Tiered Preparedness and Response,” IPIECA Report Series Vol. 14,
2007.
56 Telephone conversation with Paul A. Schuler, November 3, 2010. Also see “Florida Firm Ready to Clean Up in
Event of Cuba Oil Spill,” CubaNews, December 2010, pp. 14-15.
57 Monica Hatcher, “Cuba Drilling Poses Spill Issue Group Says Trade Embargo Could Hinder a Response by the
U.S.,” Houston Chronicle, September 5, 2010. For further background on IADC, see http://www.iadc.org/.
58 “U.S. Gives Permission for Cubans to Attend Drilling Conference,” Platts Commodity News, April 28, 2011; See the
agenda of the IADC conference, available at http://www.iadc.org/conferences/Environment_2011/.
59 U.S. Department of State, “Mexico, Pollution: Marine Environment, Agreement signed at Mexico City, July 24,
1980,” TIAS, 10021.
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countries. The plan lays out the organization of the response teams for each country, including the
federal and state agencies involved. It provides for joint response teams to be formed and
activated when needed, and provides for coordination, planning, and logistics of the joint
response. The U.S. response team is coordinated by the Coast Guard’s Assistant Commandant for
Marine Safety and Environmental Protection.60
Following the model of U.S.-Mexican cooperation on oil spills could ensure optimal bilateral
engagement with Cuba on oil spill contingency planning. Such a model would likely first entail
the negotiation of a cooperation agreement on oil spills followed by the development of a joint
contingency plan. Even before an agreement and plan are in place, initial discussions and
dialogue on the issue could increase preparedness in the case of a spill. Once the agreement and
joint plan are in place, regular meetings and periodic exercises could provide for the maintenance
of the joint contingency plan.
As with U.S.-Mexican cooperation, the Coast Guard would likely play a leading coordinating
role. Such Coast Guard cooperation with Cuba on oil spill preparedness and response would
likely be made easier because of the Coast Guard’s existing cooperation with Cuba on migration
and drug trafficking issues.61
The final report of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore
Drilling, issued in January 2011, maintained that since Mexico already drills in the Gulf of
Mexico and Cuba has expressed an interest in deepwater drilling in the Gulf of Mexico, that it is
in the U.S. national interest to negotiate with these countries to agree on a common, rigorous set
of standards, a system of regulatory oversight, and operator adherence to an effective safety
culture, along with protocols to cooperate on containment and response strategies in case of a
spill.62 Mexican officials have also called for discussions between the three countries.63
Some energy analysts have also argued that the Bahamas should also be included in any
movement in cooperation on oil spill response preparedness between Cuba and the United States
since that country also is looking to eventually develop its deepwater oil and natural gas potential
and because of the close location of many Bahamian islands to Cuba and the United States.64
As noted below, legislation has been introduced in the 112th Congress, S. 405 (Nelson), that,
among its provisions, would require the Secretary of the Interior to work toward the development
and implementation of oil spill response plans for spills in the eastern Gulf of Mexico. This
would require recommendations on a joint contingency plan with Mexico, Cuba, and the
Bahamas.

60 United States Coast Guard, “Mexus Plan, The Joint Contingency Plan Between the United Mexican States and the
United States of America Regarding Pollution of the Marine Environment by Discharges of Hydrocarbons and Other
Hazardous Substance,” February 25, 2000.
61 For background on U.S. cooperation with Cuba on migration and drug trafficking, see CRS Report R41617, Cuba:
Issues for the 112th Congress
.
62 National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, Deepwater, The Gulf Oil
Disaster and the Future of Offshore Drilling,
Report to the President, p. 254 and p. 300. See the full text of the report at
http://www.oilspillcommission.gov/sites/default/files/documents/DEEPWATER_ReporttothePresident_FINAL.pdf
63 Tom Doggett, “U.S. fears Cuba oil drilling, Mexico suggests talks,” April 20, 2011.
64 Jorge R. Piñon, “Joint Spill Planning,” Oil & Gas Journal, March 7, 2011.
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Cooperation through Multilateral Agreements
Both Cuba and the United States are signatories to multilateral agreements that commit the two
parties to prepare for and cooperate on potential oil spills. This includes the International
Convention on Oil Pollution Preparedness, Response, and Cooperation (OPRC), which was
adopted under the auspices of the International Maritime Organization (IMO) in 1990 and entered
into force in 1995. The convention was adopted in response to a U.S. environmental initiative in
the aftermath of the 1989 Exxon Valdez oil spill. Under the convention, parties are required to
establish measures for dealing with pollution incidents, either nationally or in co-operation with
other countries.65 The IMO is given a central role under the convention in providing information
services, education and training, and technical services and assistance.
Both Cuba and the United States are also parties to the Convention for the Protection and
Development of the Marine Environment of the Wider Caribbean Region, known as the
Cartagena Convention, which was adopted in 1983 and entered into force in 1986. The agreement
includes a Protocol Concerning Co-operation in Combating Oil Spills in the Wider Caribbean
Region. The protocol calls for an exchange of information among the signatories regarding
contacts, laws, regulations, institutions, and operational procedures relating to the prevention of
oil spill incidents and to the means of reducing and combating the harmful effects of oil spills. It
also states that parties to the agreement should conclude appropriate bilateral or multilateral
subregional arrangements as necessary to facilitate implementation. It obligates each party to
assist other parties in response to an oil spill incident according to these arrangements.66
Short of direct U.S.-Cuban bilateral engagement on oil spill preparedness and coordination, these
two multilateral agreements could provide a mechanism for some U.S.-Cuban cooperation on oil
spills. For example, in order to implement the Cartagena Agreement’s protocol on oil spill
cooperation in the Caribbean, the IMO maintains a regional activity center in Curaçao,
Netherlands Antilles, known as the Regional Marine Pollution Emergency Information and
Training Center for the Wider Caribbean (RAC/REMPEITC-Caribe). The Center’s objective is to
strengthen the operational effectiveness of the Cartagena Agreement and OPRC through the
provision of technical services, training activities, information sharing, and exercises.67 The
United States and Cuba could work through the IMO and its regional center in Curacao to engage
on oil spill preparedness and coordination.
As noted above, the IMO sent a technical mission to Cuba in June 2010 to evaluate the Cuba’s
preparedness to respond to the Deepwater Horizon oil spill. The mission made several
recommendations for Cuba to improve its national contingency plan to respond to oil spills,
including the development of a training plan and increased cooperation with the IMO’s regional
training center in Curaçao (such as attending meeting, participating in projects, and receiving
IMO assistance through this regional institution).68

65 U.S. Congress, Senate, “International Convention on Oil Pollution Preparedness, Response, and Co-operation,
1990,” 102d Congress, 1st Session, Treaty Doc. 102-11, August 1, 1991 (Washington: GPO).
66 U.S. Department of State, “Marine Pollution, Wider Caribbean Region, Convention between the United States of
America and Other Governments, Cartagena, March 14, 1983,” TIAS 11085.
67 See the website of the IMO’s regional Caribbean center at http://cep.unep.org/racrempeitc.
68 IMO, “Cuba, Misión de Asesoría Técnica,” June 5-13, 2010, prepared by Klaus Essig, pp. 41-42.
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Debate Over U.S. Investment in Cuba’s Energy Sector
Since the United States imposed comprehensive economic sanctions on Cuba in the early 1960s,
most financial transactions with Cuba have been prohibited, including U.S. investment in Cuba’s
offshore energy sector. The Cuban Assets Control Regulations (CACR, found at 31 CFR 515),
first issued by the Treasury Department in 1963, lay out a comprehensive set of economic
sanctions against Cuba, including a prohibition on most financial transactions. The CACR have
been amended many times over the years to reflect changes in policy and remain in force today.
The Cuban Liberty and Democratic Solidarity Act of 1996 (P.L. 104-114), enacted in the
aftermath of Cuba’s shooting down of two U.S. civilian planes in February 1996, codified the
Cuban embargo, including all the restrictions under the CACR. The codification is especially
significant because of its long-lasting effect on U.S. policy toward Cuba. The executive branch is
prohibited from lifting the economic embargo until certain democratic conditions are met. The
CACR still provides the executive branch with the ability to modify the embargo restrictions, but
the President cannot suspend or completely terminate the Cuban embargo regulations without
first determining that a transition government or democratically-elected government is in power
in Cuba.69
Some U.S. business and policy groups have called on Congress and the Administration to allow
U.S. oil companies to become involved in Cuba’s offshore oil development. Several legislative
initiatives were introduced in the 111th Congress (S. 774, H.R. 1918, and S. 1517) that would
have specifically authorized such activities and amended U.S. law to allow for travel for such
activities (see “Legislative Initiatives” below). A major business argument in favor of U.S.
involvement in Cuba’s offshore energy sector is that U.S. failure to enter into the Cuban market
completely hands over potential investment opportunities to foreign competitors.70 As mentioned
above, national oil companies from Russia, China, Venezuela, and elsewhere have been investing
in Cuba’s energy industry. In a 2009 report, the Brookings Institution offered several additional
reasons for U.S. involvement in Cuba’s offshore development. The report maintains: that it would
help reduce Cuba’s dependence on Venezuela for its oil imports; that it would increase U.S.
influence in Cuba if U.S. companies had a significant presence in the county; that U.S. companies
have the expertise to develop Cuba’s offshore oil and gas in a safe and responsible manner; and
that it is preferable to have U.S. companies involved because they have higher standards of
transparency than some foreign oil companies.71
On the opposite side of the policy debate, a number of policy groups and Members of Congress
oppose engagement with Cuba, including U.S. investment in Cuba’s offshore energy
development. A legislative initiative introduced in the 111th Congress, H.R. 5620, would go
further and impose visa restrictions and economic sanctions on foreign companies and its
executives who help facilitate the development of Cuba’s petroleum resources. The bill asserts
that offshore drilling by or under the authorization of the Cuban government poses a “serious
economic and environmental threat to the United States” because of the damage that an oil spill

69 For background, see U.S. Government Accountability Office, U.S. Embargo on Cuba” Recent Regulatory Changes
and Potential Presidential or Congressional Actions,” September 17, 2009; and Dianne E. Rennack and Mark P.
Sullivan, U.S.-Cuban Relations: An Analytic Compendium of U.S. Policies, Laws, & Regulations, The Atlantic
Council, Washington, DC, March 2005.
70 Jake Colvin, “The Case for Business,” in 9 Ways for US to Talk to Cuba & For Cuba to Talk to US, The Center for
Democracy in the Americas, Washington, DC, 2009.
71 “Cuba: A New Policy of Critical and Constructive Engagement, Report of the Brookings Project on U.S. Policy
Toward a Cuba in Transition,” Brookings Institution, April 2009.
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could cause. Opponents of U.S. support for Cuba’s offshore oil development also argue that such
involvement would provide an economic lifeline to the Cuban government and thus prolong the
continuation of the communist regime. They maintain that if Cuba reaped substantial economic
benefits from offshore oil development, it could reduce societal pressure on Cuba to enact
market-oriented economic reforms. Some who oppose U.S. involvement in Cuba’s energy
development contend that while Cuba might have substantial amounts of oil offshore, it will take
years to develop. They maintain that the Cuban government is using the enticement of potential
oil profits to break down the U.S. economic embargo on Cuba.72
Boundary Issues
There are two boundary issues related to Cuba’s development of its offshore hydrocarbon
resources. The first involves a 1977 bilateral agreement that delineated a maritime boundary
between Cuba and the United States in the Straits of Florida and eastern Gulf of Mexico. The
second involves an undelineated section of the Gulf of Mexico known as the eastern gap with
claims by the United States, Mexico, and Cuba. (See Figure 2, which shows both the maritime
boundary between the United States and Cuba and the eastern gap area.)
When the United States and Cuba negotiated the 1977 maritime boundary agreement, U.S.
policymakers viewed it as important to avoid maritime enforcement problems and to establish an
agreed limit for fisheries and continental shelf activities (such as exploitation of hydrocarbon
resources). Both countries, which have opposing coasts ranging from between 77 and 90 miles
apart, agreed to the provisional application of the agreement pending permanent entry into force
following the exchange of instruments of ratification. While the boundary agreement was
submitted to the U.S. Senate in January 1979 for its advice and consent to ratification, and the
Senate Foreign Relations Committee subsequently reported the treaty favorably in August 1980,
the Senate has not ratified it. According to the Department of State, final action has been deferred
because of the political relations between Cuba and the United States, not because of any stated
objection to the boundary.73 Nevertheless, Cuba and the United States have exchanged diplomatic
notes every two years extending the provisional application of the agreement for a two-year
period. The most recent exchange of notes occurred May 20, 2010, with an effective date of
January 5, 2010. As noted in State Department testimony to the Senate Foreign Relations
Committee in June 1980, the provisional application of the agreement falls under the President’s
authority to establish boundaries, pending the full Senate’s consideration of the treaty.74 The
treaty itself, in Article V, included a provision stating the parties agreed to apply the terms of the
agreement provisionally, and according to the Department of State, this “constituted an executive
agreement within the body of the treaty.”75

72 Frank Calzón, “Search for Oil Won’t Cure the Economy,” Miami Herald, October 1, 2010.
73 U.S. Department of State, Bureau of Oceans and International Environmental and Scientific Affairs, “Limits in the
Seas, No. 110, Maritime Boundary: Cuba – United States,” February 21, 1990.
74 U.S. Congress, Senate Committee on Foreign Relations, Three Treaties Establishing Maritime Boundaries Between
the United States and Mexico, Venezuela, and Cuba
, (to accompany Execs. F, G & H, 96-1), 96th Cong., 2nd sess.,
August 5, 1980, Executive Rept. No. 96-49, p. 19.
75 Ibid., p. 26. Also for a discussion of the provisional application of treaties, see U.S. Congress, Senate Committee on
Foreign Relations, Treaties and Other International Agreements: The Role of the United States Senate, committee
print, prepared by the Congressional Research Service, 106th Cong., 2nd sess., January 2001, S. Prt. 106-71
(Washington: GPO, 2001), pp. 113-114.
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Some Members of Congress have called on the Administration to rescind the provisional
application of the 1977 boundary agreement with the view that it would likely curtail Cuba’s
offshore oil development. U.S. withdrawal from the agreement, however, would have no practical
effect on Cuba’s offshore oil development. According to then-National Security Adviser James
Jones in late September 2010, withdrawal from the agreement would have no discernable effect
on the Cuban government and could create further boundary claim disputes for the United
States.76
The eastern gap – an undelineated area of the Gulf of Mexico beyond the 200-mile exclusive
economic zones of Cuba, Mexico, and the United States – could potentially hold large amounts of
oil, although to date there is little hard data to confirm this. The demarcation of the area is open
for negotiations among the three countries, but will likely await an improvement in relations
between Cuba and the United States.77 A potential model for these negotiations is a treaty signed
in 2000 between the United States and Mexico for a western gap in the Gulf of Mexico.78
Negotiations involving three countries, however, would likely be more complicated than a single
bilateral agreement with Mexico. In May 2009, Cuba made a submission to the U.N. Commission
on the Limits of the Continental Shelf (CLCS) regarding the eastern gap, but all three states –
Cuba, Mexico, and the United States – maintained that the submission did not prejudice the final
delimitation of the outer continental shelf agreed to by these states.79
Legislative Initiatives
Legislative initiatives in the 111th Congress, none of which received consideration, focused on
two approaches toward Cuba’s offshore oil development. The first approach would have allowed
for U.S. investment in Cuba’s offshore energy development, while the second approach would
have imposed sanctions on individuals and foreign companies that helped the development of
Cuba’s offshore petroleum resources.
In the 112th Congress, the two legislative initiatives introduced to date also take contrasting
approaches to Cuba’s offshore oil development, but would not include U.S. investment in Cuba’s
offshore energy development. The first approach would allow for the sanctioning of companies
involved in Cuba’s offshore oil development if the companies also wanted to conduct
hydrocarbon operations in U.S. offshore waters. The second approach would impose
requirements on companies conducting hydrocarbon operations off the coast of Cuba if the

76 Lesley Clark and Sara Kennedy, “Cuba Ready to Drill for Oil Deeper Than BP,” Miami Herald, September 30, 2010.
77 Jorge R. Piñon and Jonathan Benjamin-Alvarado, “Extracting Cuba’s Oil and Gas: Challenges and Opportunities,” in
Cuba’s Energy Future, ed. by Jonathan Benjamin-Alvarado, Brookings Institution Press, Washington, DC, 2010. p. 31.
78 The Senate Committee on Foreign Relations reported the treaty favorably in September 2000, and the full Senate
agreed to the resolution of advice and consent to ratification on October 18, 2000. See U.S. Senate, Treaty with Mexico
on Delimitation of Continental Shelf
, 106th Congress, 2nd sess., July 27, 2000, Treaty Doc. 106-39; and U.S. Congress,
Senate Committee on Foreign Relations, Treaty with Mexico on Delimitation of the Continental Shelf, 106th Cong., 2nd
sess., September 29, 2000, Exec. Rept. 106-19.
79 The role of the CLCS is to facilitate the implementation of the U.N Convention on the Law of the Sea with regard to
the establishment of the outer limits of the continental shelf beyond 200 nautical miles. The Commission considers data
and other material submitted by coastal states concerning the outer limits of the continental shelf and makes
recommendations to coastal states on such matters, but without prejudice to the question of delimitation of the
continental shelf between states with opposite or adjacent coasts. See the homepage of the CLCS, available at
http://www.un.org/Depts/los/clcs_new/clcs_home.htm.
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companies also wanted leases for oil and gas development in U.S. waters, and would also require
the development and implementation of oil spill response plans for nondomestic oil spills in the
Gulf of Mexico, including a joint contingency plan with Mexico, Cuba, and the Bahamas.
111th Congress
In the 111th Congress, legislative initiatives reflected two contrasting policy approaches toward
Cuba’s development of its offshore oil reserves. One approach would have allowed for U.S.
involvement in Cuba’s offshore oil sector, while the other approach would have imposed
sanctions on foreign companies and individuals who assisted the development of Cuba’s
petroleum resources.
Reflecting the first approach, S. 774 (Dorgan), H.R. 1918 (Flake), and S. 1517 (Murkowski)
would have authorized U.S. companies to work with Cuba for the exploration and extraction of
oil, and to export without license all necessary equipment to Cuba. The bills would have amended
the Trade Sanctions Reform and Export Enhancement Act of 2000 or TSRA (P.L. 106-387, Title
IX) to provide for a general license for travel by persons engaging in hydrocarbon exploration
and extraction activities. H.R. 1918 would have gone further and allowed for the importation of
hydrocarbon resources from Cuba. In addition to these initiatives that specifically would have
authorized involvement in Cuba’s offshore energy sector, several other broader legislative
initiatives in the 111th Congress that would have lifted all economic sanctions on Cuba by default
would have allowed for U.S. investment in Cuba’s energy sector.
In contrast, reflecting the second approach, H.R. 5620 (Ros-Lehtinen), the Caribbean Coral Reef
Protection Act of 2010, would have imposed visa restrictions and economic sanctions on foreign
nationals who helped facilitate the development of Cuba’s petroleum resources. The initiative
would have amended the Cuban Liberty and Democratic Solidarity Act of 1996 (P.L. 104-114) to
exclude from the United States certain aliens (and their spouses, minor children, or agents) whose
companies invested $1 million or more that contributed to the ability of Cuba to develop its
offshore petroleum resources. The bill also would have provided for the imposition of sanctions if
the President determined that a person had made an investment on or after January 10, 2005 of $1
million or more (or any combination of investments that equaled or exceeded $1 million or more
in any 12-month period) that contributed to the enhancement of the Cuba’s ability to develop its
offshore petroleum resources. If such a determination were made, the President would have been
required to propose two or more sanctions from a menu of sanctions listed in the bill.
112th Congress
Interest in Cuba’s offshore oil development continues in the 112th Congress, with interest focused
on a potential oil spill. To date, three legislative initiatives have been introduced that take
different approaches.
H.R. 372 (Buchanan), introduced January 26, 2011, would amend the Outer Continental Shelf
Lands Act to authorize the Secretary of the Interior to deny oil and gas leases and permits “to
persons who engage in activities with the government of any foreign country that is subject to any
sanction or an embargo” by the U.S. government. The intent of the legislation is to provide a
disincentive to companies involved, or contemplating becoming involved, in Cuba’s oil
development, although the scope of the legislation is much broader and could affect other oil
companies, including U.S. companies, not involved in Cuba. Because the bill does not define
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“sanction,” the term could be used to refer to such U.S. restrictions as export controls or limits on
foreign assistance. With this use of the term, many countries worldwide could be construed as
being subject to a U.S. sanction, and as a result, any energy company that engages in activities
with one of these countries could be denied an oil and gas lease in the United States under the
proposed legislation.
S. 405 (Nelson), introduced February 17, 2011, would require a company that is conducting oil or
gas operations off the coasts of Cuba to submit an oil response plan for their Cuba operations and
demonstrate sufficient resources to respond to a worst case scenario if the company wanted to
lease drilling rights in the United States. The bill would also require the Secretary of the Interior
to carry out an oil spill risk analysis and planning process for the development and
implementation of oil spill response plans for nondomestic oil spills in the Gulf of Mexico. The
Secretary of the Interior would be required, among other things, to include recommendations for
Congress on a joint contingency plan with the countries of Mexico, Cuba, and the Bahamas to
ensure an adequate response to oil spills located in the eastern Gulf of Mexico.
H.R. 2047 (Ros-Lehtinen), the Caribbean Coral Reef Protection Act of 2011 (identical to a bill
introduced in the 111th Congress and noted above), was introduced May 26, 2011, and would
impose visa restrictions on foreign nationals and economic sanctions on companies that help
facilitate the development of Cuba’s offshore petroleum resources. The bill would exclude from
the United States aliens who invest $1 million or more that contributes to the enhancement of the
ability of Cuba to develop its offshore oil resources. It would also require the imposition of
sanctions (two or more from a menu of listed sanctions) if the President determined that a person
had made an investment of $1 million on or after January 10, 2005, that contributed to Cuba’s
offshore oil development.
Conclusion
Concern over Cuba’s offshore oil development is likely to continue, especially if exploratory
drilling begins as anticipated in 2011. An oil spill in Cuban waters potentially could carry oil to
U.S. waters and coastal areas in Florida, and potentially could threaten marine and coastal
resources. While the U.S. government has licensed some companies to provide oil spill
prevention and containment support to companies operating in Cuba in the event of a large spill,
policymakers may want to review whether U.S.-Cuban government engagement is warranted in
order to maximize preparedness and response in the event of a major spill. Legislative initiatives
already have been introduced in the 112th Congress reflecting contrasting approaches toward
Cuba’s offshore development.

Author Contact Information

Neelesh Nerurkar
Mark P. Sullivan
Specialist in Energy Policy
Specialist in Latin American Affairs
nnerurkar@crs.loc.gov, 7-2873
msullivan@crs.loc.gov, 7-7689


Congressional Research Service
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