Will Russia-Cuba agreement produce significant US response?

Could Russian plans to help Cuba produce oil off its coast make the United States reconsider its Outer Continental Shelf leasing policy? US independent producers and others hope so.

Aug 11th, 2009

Could Russian plans to help Cuba produce oil off its coast make the United States reconsider its Outer Continental Shelf leasing policy? US independent producers and others hope so.

“More than anything, this agreement must not go unnoticed in Washington,” Independent Petroleum Association of America President Barry Russell said on Aug 4. “Both in the long and short-term, our energy priorities must focus on safely expanding American energy production, especially from the nation’s federal onshore and offshore lands that are owned by all Americans.”

Russell said that IPAA strongly urges US Interior Secretary Ken Salazar to move forward with a five-year OCS plan which opens deep oceans to responsible development. “Doing otherwise would be a blow to our struggling economy and a poor decision for our national security,” he warned.

Michael Whatley, vice president of the Consumer Energy Alliance, also said that it’s vital for Salazar’s new five-year OCS plan to open more US offshore tracts for responsible development, especially off Alaska’s coast.

‘Padlocked resources’

“As officials in Moscow and Havana work to expand energy production just miles from the Florida Keys, vast amounts of American energy resources, both onshore and offshore, remain padlocked by the federal government,” he noted.

Thomas J. Pyle, president of the Institute for Energy Research, suggested on Aug. 5 that Washington policymakers have focused more on governmental economic intervention, such as the cash-for-clunkers program, than sensible energy policies.

“Washington must get back to the basics, and focus on expanding freedoms and prosperity, not the size of government and our debt. This agreement between Russia and Cuba should serve as a wake-up call to Congress and this administration, especially Secretary Salazar, who is slow-walking a new offshore energy blueprint for the nation,” he said.

In at least one instance, two federal lawmakers may have anticipated the Russian-Cuban agreement. S. 1517, the OCS revenue-sharing bill which US Sens. Mary L. Landrieu (D-La.) and Lisa Murkowski (R-Alas.) introduced on July 27, contains two sections that neither senator emphasized at the time.

Contiguous zones

Section 6 would allow Americans to explore for oil, extract oil, and sell equipment for those activities in “any portion of any foreign exclusive economic zone that is contiguous to the exclusive economic zone of the United States.”

Section 7 mentions travel to, from, and within Cuba “in connection with exploration for and the extraction of hydrocarbon resources in any part of a foreign maritime exclusive economic zone” contiguous to the US EEZ.

A US Senate Energy and Natural Resources Committee source confirmed that the provisions are designed to let US companies compete as Cuba tries to develop its offshore resources.

That would require US recognition of the island nation’s government after more than 40 years. There have been rumors that the Obama administration pulled its initial proposal back so it can go further, possibly because of the Russia-Cuba offshore development deal.

Contact Nick Snow atnicks@pennwell.com

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