US fears Cuba oil drilling, Mexico suggests talks

Thu Apr 14, 2011 3:57pm EDT

* U.S worried over Cuban drilling 60 miles from Florida

* Cuba believes it has 20 billion barrels of offshore oil

* Cuban safety questioned after BP spill

By Tom Doggett

WASHINGTON, April 14 (Reuters) - A top U.S. official said on Thursday they were concerned about Cuba opening its offshore waters to oil drilling, while Mexico, which has a boundary dispute with the island nation, said the three countries should try to work out differences.

"For us it is an issue of concern," said U.S. Interior Secretary Ken Salazar about drilling in Cuban waters. "Obviously, because it's located 60 miles off the coast of Florida ... it's an issue that we're monitoring carefully."

In light of the BP Plc (BP.L)(BP.N) oil spill nearly a year ago, the U.S. is now worried that Cuba is unable to ensure its offshore drilling will be safe. Lax U.S. government oversight was faulted in the BP disaster.

Salazar spoke to reporters during a break at a day-long international conference sponsored by the U.S. Interior Department on best safety practices for drilling in deep waters.

Cuba was not among the dozen or so countries invited to the conference.

Cuba is eager to develop its oil resources in the Gulf of Mexico, which it estimates could total 20 billion barrels of crude. The United States pegs the total at a more modest 5 billion barrels.

Mario Budebo, an undersecretary at Mexico's Ministry of Energy, said his country had an offshore boundary dispute with Cuba and was less concerned about drilling safely in Cuban waters.

He said the three countries should "get together and have discussions" about Cuba's offshore drilling activities.

"That is still something that we have to deal with and put Cuba together (at) the table," said Budebo.

Salazar did not respond to Budebo's suggestion. When asked later if Salazar supported the idea, an Interior spokesperson referred the question to the U.S. State Department. The U.S. does not have full formal relations with Cuba.

But other Interior officials recently met with executives from Spanish oil giant Repsol YPF (REP.MC) about the company's plans to drill in Cuban waters.

Repsol, in a consortium with Norway's Statoil (STL.OL) and a unit of India's Oil and Natural Gas Corp, plans to start drilling offshore Cuba by the end of the summer. (Reporting by Tom Doggett in Washington; additional reporting by Jeff Franks in Havana; editing by Jeffrey Benkoe)

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