Wednesday, November 2, 2011From today's hearing in the U.S. House of Representative's Committee on Natural Resources:
Testimony on “North American Offshore Energy: Mexico and Canada Boundary Treaties and New Drilling by Cuba and Bahamas”
Wednesday, November 2nd, 2011
Thank you, Mr. Chairman.
It's truly a privilege to be here with all of you today.
My name is Mauricio Claver-Carone and I'm the Executive Director of Cuba Democracy Advocates, a non-profit, non-partisan organization dedicated to the promotion of human rights, democracy and the rule of law in Cuba.
I have held this position for seven years and throughout this time, I have been closely monitoring the plans, developments and geo-political motivations behind the Cuban regime's efforts to pursue offshore oil exploration.
However, it's important to note that despite the broad media attention given to the Cuban regime’s most recent plans, which we are discussing here today, its efforts to conduct offshore oil exploration date back almost 20 years. And ultimately -- all of them have been unsuccessful.
Please allow me to begin with some broader observations.
Cuba is a totalitarian dictatorship. It is the sole remaining dictatorship in the Western Hemisphere. Therefore, it should not be viewed through the same lens as its democratic neighbors, the Bahamas and Mexico -- nor should it be treated in the same manner.
The Bahamas and Mexico are allies of the United States. We share a relationship of trust and cooperation with these two friendly nations. Meanwhile, the Cuban regime remains under U.S. sanctions, which Congress codified into law under the 1996 Cuban Liberty and Democratic Solidarity Act, due to three fundamental reasons: 1. the brutal violations of the Cuban people's human, civil, political and economic rights. 2. its hostile anti-American policies. 3. the illegal expropriation of properties belonging to U.S. nationals.
Moreover, Cuba remains one of four countries designated by the U.S. Government as a state-sponsor of terrorism based on its harboring of fugitives (including the murderers of U.S. law enforcement officials); its unwillingness to cooperate with U.S. anti-terrorism efforts; its intelligence gathering and sharing with other rogue regimes; and its support for foreign terrorist organizations. The other three countries on the state-sponsors of terrorism list are Iran, Sudan and Syria.
Considering the background of Cuba's regime, a strong case can be made that it is not in our national interest to lift sanctions and assist yet another anti-Amly declassified documents by the Brazilian Foreign Ministry, in 1993 the Cuban regime first offered the government of then President Itamar Franco the "most promising" blocks for oil exploration to Brazil's national oil company, Petrobras, in exchange for their shunning of Cuban dissidents on the island and cancelling a meeting with Cuban exiles at the Brazilian Embassy in Washington, D.C. The Brazilian government complied with both, only to exit from Cuba empty-handed years later.
The Cuban regime found a new “partner” when Hugo Chavez rose to the presidency of oil-rich Venezuela in 1998. With the backing of Chavez and Venezuela’s state-oil company PdVSA, the Cuban regime resumed its diplomatic offensive signing highly publicized oil-leases with Spain's Repsol, Norway's Statoil, Russia's Gazprom, India's ONGC Videsh, Malaysia's Petronas, Canada's Sherritt, Angola's Sonangol, Vietnam's PetroVietnam and China's CNPC .
Only one company, however, has actually conducted any exploratory drilling -- Spain's Repsol in 2004. It found some oil, but not in any commercially viable quantities. It then pulled out of Cuba.
Similarly, after much initial fanfare, Canada's Sherritt and Brazil's Petrobras -- perhaps the most credible and respected of the region’s oil companies outside the United States -- publicly abandoned their efforts in 2008 and 2011, respectively, stating that Cuba offshore drilling was "not commercially viable" and citing "poor prospects."
Much of this can be attributed to U.S. sanctions, which dramatically drive up costs of production. The Cuban regime has itself admitted that U.S. sanctions make it commercially impractical to produce oil in its territorial waters. Keep in mind that even the largest neighboring foreign oil companies, Mexico's Pemex and Venezuela's PdVSA, refine the majority of their oil in the U.S. and then repatriate it, for they lack the domestic infrastructure to process their own heavy crude and the U.S.’s geographical proximity enhances profitability. As long as U.S. trade sanctions against Cuba’s regime are in place, producing and refining any oil found in Cuban waters in the United States isn’t an option.
That leads to a question: If off-shore drilling in Cuban waters is not commercially viable for the most respectable regional oil companies, which are located relatively close to Cuba and have the most experience in dealing with Cubans, is such drilling really viable for the Angolans, Malaysians or the Chinese? The answer is no.
Initially, we learned this in 2006, when the Cuban regime seemingly had convinced public p forward.
Curiously, this peculiar corporate trio was granted extensive oil-rights last year by Hugo Chavez to develop a block with 235 billion barrels of reserves in Venezuela’s oil-rich Orinoco belt. Reserves in that one Venezuelan block alone are believed to be 50 times greater than the best estimates in all of Cuba’s territorial waters. Some geo-political foul play can surely be deduced from the particularity and timing of this arrangement.
Despite the fact that Repsol still faces exploratory hurdles (and gargantuan production costs if oil is ever found), the United States is erring on the side of caution and licensing specialty oil spill mitigation firms to respond quickly in the case of an accident. This is also not a new phenomenon. The U.S. has been licensing such firms since at least 2001. Moreover, current U.S. law provides all of the necessary flexibility to do so.
While such precautions are necessary, efforts should also be made to prevent the Cuban regime from engaging in offshore exploration altogether. The anti-American nature of the Cuban regime will simply not provide the necessary safeguards regardless of the level of U.S. engagement on this issue. Thus, there is currently legislation filed with this goal in mind, including H.R. 2047, the Caribbean Coral Reef Protection Act, which targets U.S. visas and loans to the Cuban regime's foreign business partners, and H.R. 373, which amends the Outer Continental Shelf Lands Act to deny U.S. leases to foreign companies that engage in oil exploration with countries under U.S. sanctions, such as Iran and Cuba. Precaution might bring us temporary peace of mind, but prevention would better serve our long-term national interests.
Mr. Chairman, this concludes my testimony. Again, I truly appreciate the invitation and the opportunity to speak before you and the committee. I will be pleased to respond to any questions.
Capitol Hill Cubans