* Repsol has one-year contract for drilling rig
* Rig said under construction in China for work in Cuba
* Cuba estimates 20 billion barrels of oil offshore
By Jeff Franks
HAVANA, May 5 (Reuters) - Spanish oil giant Repsol YPF has contracted with a unit of Italian oil company Eni SpA (ENI.MI) for a drilling rig that some sources said was bound for operation in Cuba’s still untapped offshore fields.
A spokeswoman for Saipem, Eni’s offshore drilling unit, told Reuters Repsol has signed a one-year contract for the rig, which is under construction in China and expected to be finished by year’s end.
She would not confirm that it will be operated in Cuba, but advertisements on the Internet were seeking workers for a semi-submersible rig being built in China for work in Cuban waters.
A source involved in the project, who asked not to be named, said the jobs were posted for Milan-based Saipem (SPMI.MI). Cuban state oil company Cupet declined to comment.
Repsol (REP.MC) REP.N, which also refused to comment so far, drilled the only exploration well in Cuba’s part of the Gulf of Mexico in 2004 and said it found hydrocarbons.
Norway’s Statoil STL.OL STO.N and a unit of India’s Oil and Natural Gas Corp (ONGC.BO) later joined the partnership.
A second well has been awaited ever since, and, if successful, likely will open the door to full-scale exploitation of Cuba’s offshore.
Cuba estimates it has 20 billion barrels of oil in its part of the Gulf of Mexico, which abuts the oil-rich U.S. and Mexican zones of the gulf, and Havana views its possible production as a godsend.
The communist-led island produces about half its energy needs from onshore wells and gets the rest from oil-rich socialist ally Venezuela at favorable prices.
The general assumption in the oil business is that difficulties created by the U.S. trade embargo against Cuba have contributed to Repsol’s delay in sinking a second well.
The 48-year-old embargo limits the amount of U.S. technology that can be used. This complicates finding a rig because U.S. companies have long dominated the offshore oil business.
Also, companies doing business in the United States fear they could suffer official retribution there for operating in Cuba.
In recent weeks, sources have said Repsol appears finally to be moving ahead toward drilling a second and possibly third exploration well.
Some say they could start as early as next fall, others later.
“Things are moving forward, there will be no more delays,” one person close to the project told Reuters last week.
“We have instructions to prepare everything,” said another person who is involved in logistics for the project.
Saipem’s Scarabeo 9 rig is being built at Yantai Raffles Shipyards YRSL.NFF in Yantai, China, according to the shipyard’s website.
Earlier news reports in oil industry publications indicated work began on Scarabeo 9 in 2007 and the rig was initially scheduled for delivery in late 2009.
The reports do not mention Cuba, but say the rig, which has the latest technology and can operate in water depths to 3,600 meters (11,811 feet), is to be deployed in the Gulf of Mexico.
The employment ads do not say when the drilling rig is expected to go to Cuba, but they suggest some urgency, giving a May 25 deadline for applications and a starting date of “ASAP” — as soon as possible.
A human resources expert in the oil industry said offshore rig operators typically hire employees several weeks before the rig is to ship out, but added that sometimes the lead time for hiring can stretch to several months.
Cuba’s portion of the Gulf of Mexico has been divided into 59 blocks, of which 17 have been contracted to companies including Repsol and its partners, Malaysia’s Petronas, Brazil’s Petrobras (PETR4.SA) (PBR.N), Venezuela’s PDVSA and PetroVietnam.
Whether they will find as much oil as Cuba estimates is in dispute. The U.S. Geological Survey has estimated Cuba’s offshore fields hold 4.6 billion barrels of oil and 9.8 trillion cubic feet of natural gas.
Part of Cuba’s gulf zone is within 50 miles (80 km) of Florida, where U.S. politicians have raised fears that Cuban drilling could lead to an accident, like the current huge oil spill off the Louisiana coast.
Cuban oil officials have not commented on the U.S. spill, but in the past have only expressed impatience that their own country’s fresh drilling has not begun. (Additional reporting by Esteban Israel; Editing by Pascal Fletcher and David Gregorio)