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U.S., Cuba, Mexico urged to cooperate on Gulf drilling

HAVANA (Reuters) - Cuba’s oil industry wants to work with its counterparts in the United States and Mexico to promote safe drilling practices and avoid the kind of well blowout and spill seen recently in the Gulf of Mexico, a leading drilling industry expert said on Wednesday.

Lee Hunt, President of the Houston-based International Association of Drilling Contractors, told Reuters during a visit to Havana he would like to see Cuba’s state oil company join the organization to be able to exchange information with its neighbors on drilling techniques, safety and regulation.

“Cubapetroleo (CUPET) is interested in joining and we have an interest in them being a member of the international drilling community,” Hunt said in an interview, after two days of talks in Cuba with local industry officials and regulators.

The association officials, making their first visit to communist-ruled Cuba, said they were told the island was planning the drilling of seven test wells in 2011 and 2012 in Cuba’s offshore Gulf of Mexico acreage, confirming earlier reports of this development plan.

Spain's Repsol YPF REP.MC has announced that its consortium with Norway's Statoil STL.OL and ONGC Videsh Ltd ONGC.BO, a unit of India's Oil and Natural Gas Corp, will drill at least one well early next year using a Chinese built rig owned by Saipem, a unit of Italian oil company Eni SpA.

The three consortium companies and Saipem are all associates of the drilling contractors’ group, Hunt said.

“We are promoting the concept that there is one Gulf, shared by the United States, Mexico and Cuba and want a trilateral industry dialogue on safe practices to ensure unfortunate events such as have occurred in Mexico and more recently in the United States do not happen off the shores of Cuba,” Hunt said.

Due to the U.S. trade embargo against Cuba, the Houston-based Association of Drilling Contractors, representing 90 percent of the world’s drilling companies, will need approval from U.S. President Barack Obama’s administration for CUPET to actively join it as a member.

But exceptions for states under U.S. sanctions have been granted in the past, for example, to Iran’s oil company.

“It is in the interest of everyone to promote communications that will prevent blowouts, spills and fires,” Hunt said.

“A good relationship with the Cuban oil industry is very much in the interest of the American public as it will be drilling within 40 miles of Key West next year,” he added.

FEARS OF ANOTHER GULF SPILL

Florida politicians have raised fears that Cuban drilling could lead to an accident like the BP BP.LBP.N oil spill, the world's worst offshore oil accident, off the Louisiana coast in the Gulf of Mexico.

The Obama administration has said it would allow U.S. companies that handle and clean up accidental oil spills to operate in Cuban waters should the need arise.

Hunt said safety recommendations made by his organization to the U.S. administration in the wake of the BP spill were already in place in Cuba.

“The Cuban oil industry has put a lot of research, study and thought into what will be required to safely drill ... they are very knowledgeable of international industry practices and have incorporated many of these principles into their safety and regulatory planning and requirements,” he said.

CUPET estimates it has up to 20 billion barrels of oil in its offshore areas, but the U.S. Geological Survey has estimated a more modest 4.6 billion barrels and 10 trillion cubic feet of gas.

Cuba currently produces about 60,000 barrels of oil per day (bpd), all from onshore wells. It receives about 115,000 bpd from ally Venezuela on favorable terms.

The China-built drilling rig is expected to arrive in Cuban waters early next year and companies have begun preparations to drill once the Scarabeo 9 rig gets to the island.

Cuba has divided its share of the Gulf into 59 blocks, 21 of which are already under lease to seven companies.

Diplomats in Havana have said Malaysia's Petronas PETR.KL is also planning to use the China-built rig. Venezuela's state oil company PDVSA has said it plans to sink its first exploratory well in Cuba's offshore next year.

Other companies with blocks there are Vietnam state oil and gas group Petrovietnam and Brazil's Petrobras PETR4.SA, while firms from Russia, China and Angola are in the process of negotiating exploration rights.

Editing by Pascal Fletcher and David Gregorio

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