Cuba's hopes for energy independence suffered another blow on Monday when its state oil company said the island's latest offshore oil well was not successful.
Cubapetroleo said the well drilled by Malaysia's state-owned Petronas in partnership with Russia's Gazprom Neft found oil but in a geological formation so tightly compacted that oil and gas could not flow through it in "significant quantities."
"It cannot be qualified as a commercial discovery," the company said in an announcement in the Communist Party newspaper Granma.
It was the third failed well in three attempts in Cuba's part of the Gulf of Mexico, where the communist country has said it may have 20 billion barrels of oil.
The government led by President Raul Castro needs the oil to free it from dependence on socialist ally Venezuela, which under an oil-for-services deal sends Cuba about 115,000 barrels of oil daily.
With Venezuelan President Hugo Chavez battling cancer and facing re-election in October, the future of his oil largess for Cuba is uncertain.
Cuba produces about 50,000 barrels a day from onshore wells, but it consumes an estimated 147,000 barrels daily and refines most of the rest for sale to other Caribbean countries.
Spanish oil company Repsol hit a dry hole in Cuban waters in May and said it would likely pull out of the country after 12 years of operations, two unsuccessful wells and expenditures of $125 million.
Its first well, drilled in 2004, found oil but, like the Petronas well, was deemed not commercially viable.
Repsol's recent well, drilled north of Havana in partnership with Norway's Statoil and ONGC Videsh, a unit of India's ONGC, found no hydrocarbons at all.
Cubapetroleo said the Petronas well, completed on July 31, was drilled west of the Cuban capital in 7,408 feet (2,258 meters) of water, much deeper than Cuban and Petronas officials previously had suggested.
EXTENDED OIL ZONE
It said the oil that was found "could extend to other zones" in the four offshore blocks leased by the two companies and perhaps beyond.
Petronas and Gazprom would continue to study data collected during the drilling and conduct more seismic studies, Cubapetroleo said.
Despite the three failed wells, Cuba oil expert Jorge Pinon at the University of Texas in Austin said it is likely Cuba does have offshore oil, but that finding and producing it will take years.
"The bottom line is that Cuba is not going to get any economic benefit from an oil find any time soon. This is a long-term exercise - it's going to take a long time to get results," he said.
One problem facing Cuba is that its potential fields are mostly in what the oil industry calls "ultra-deep water," which requires specialized drilling rigs not readily available to the island because of technology limitations imposed by the longstanding U.S. trade embargo.
Repsol spent years finding and waiting for the newly-built Scarabeo 9 rig as it was constructed in China. It is owned by Italian oil service company Saipem.
The rig will now go to Venezuela's PDVSA to drill a well at Cuba's western tip, Cubapetroleo said, but after that its future is not clear.
The Scarabeo 9 is contracted to stay in Cuba only until July 2013 and could leave earlier if no other company wants it.
Once it is gone, it will take a while to find another deepwater rig to continue the exploration of Cuban fields.
"Whatever the scenario on this (Petronas) well and PDVSA's is totally irrelevant in the short-term since the Scarabeo 9 will be gone," Pinon said.
Several other companies hold exploration blocks in Cuban waters, but none are known to have firm drilling plans. Petrovietnam has said it would wait to see the results of these first wells before deciding what to do in its three exploration blocks.
ONGC Videsh has said it is seeking partners to share the high cost of drilling its two blocks.
Cuba's offshore drilling has stirred environmental concerns in Florida, where fears that a repeat of the 2010 BP blowout in the U.S. Gulf of Mexico could damage the state's beaches and coral reefs.
The BP well spewed nearly 5 million barrels of oil into the gulf and onto hundreds of miles of beaches in Florida and other states. Cuban officials say they have taken all precautions to guard against a similar accident.