One of those companies, Spain-based Repsol, is expected to start exploratory drilling in early 2012. Finally, the report examines legislative initiatives that have been advanced to deal with Cuba's offshore oil development. The USGS 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. 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). 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. 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. (See " Oil Spill Preparedness and Response " below for a discussion of U.S. policy related to preparedness and response in the event of an oil spill.) 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. Oil Spill Preparedness and Response

In light of oil spill concerns, there has been increased congressional and public interest on the status of oil spill preparedness and response and coordination between Cuba and the United States. A number of analysts and policy groups have been encouraging U.S.-Cuban engagement on the issue, while some policy groups maintain that the United States should focus on preventing Cuba from engaging in offshore oil exploration altogether. The Obama Administration has been making efforts to prepare for a potential oil spill in Cuban waters that could affect the United States. With Cuba's movement toward 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. 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. This would require recommendations on a joint contingency plan with Mexico, Cuba, and the Bahamas. 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. 5620 , would have gone further by imposing visa restrictions and economic sanctions on foreign companies and their executives who help facilitate the development of Cuba's petroleum resources. Another approach, reflected by S. 405 , would impose requirements on companies conducting hydrocarbon operations off the coast of Cuba if the 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 111 th Congress, legislative initiatives reflected two contrasting policy approaches toward Cuba's development of its offshore oil reserves. 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. H.R. H.R. U.S. officials have also engaged with Repsol, and will be inspecting the oil rig before it enters Cuban waters.
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 early 2012, and several other companies are considering such 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.
In the aftermath of the Deepwater Horizon oil spill, 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 preparedness and coordination in the event of an oil spill. Dealing with these challenges is made more difficult because of the long-standing 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.
The Obama Administration has been making efforts to prepare for a potential oil spill in Cuban waters that could affect the United States. This has included: updating oil spill area contingency plans covering Florida and developing a broader offshore drilling response plan; engaging with Repsol over its oil spill response plans (including plans to inspect the oil rig that Repsol will use); and licensing U.S. companies to provide personnel and export equipment needed for oil spill preparedness and response. 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 for oil spill preparedness and response. Some have also called for direct U.S.-Cuban government cooperation to minimize potential oil spill damage, looking at U.S. cooperation with Mexico as a potential model as well as information sharing and cooperation through multilateral channels under the auspices of the International Maritime Organization. In contrast, some policy groups call for the United States to focus on preventing Cuba from engaging in offshore oil exploration altogether.
In the 112th Congress, five legislative initiatives have been introduced taking varying approaches toward Cuba's offshore oil development, and there have been two oversight hearings. H.R. 372 would authorize the Secretary of the 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, among its provisions, would require the development of oil spill response plans for nondomestic oil spills in the Gulf of Mexico, including recommendations for a 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. S. 1836 and H.R. 3393 would provide that foreign offshore oil developers would be liable for damages from oil spills that enter U.S. waters.
This report is current through November 2011. For further developments and the final status of legislative initiatives discussed in this report, see CRS Report R41617, Cuba: Issues for the 112th Congress.