China-made drilling rig to be in Cuba by end of 2011

HAVANA -- A Chinese-made oil rig is on schedule to arrive off Cuba and begin drilling before the end of 2011, a spokesman for Spanish oil company Repsol YPF said.

Spokesman Kristian Rix would neither confirm nor deny recent reports of delays as the Scarabeo-9 rig travels to the Caribbean island, but he said the project has always been based on a window of time and things are still on schedule.

Repsol holds the rights to an exploration block off Cuba covering more than 1,700 square miles (nearly 4,500 square kilometers), according to its 2010 annual report. Earlier this year it signed a contract with Italy's Saipem SpA to lease the Scarabeo-9 rig for drilling operations in Cuba.

"Where we're at at the moment is we're expecting the rig to arrive in Cuba just before the end of the year, and the plan as it stands is to begin drilling before the end of the year," Rix said.

According to geologic studies conducted by several institutions, some of them U.S.-based, Cuba's reserves in the Gulf of Mexico could be 5 billion to 9 billion barrels of crude.

The Cuban government has designated dozens of blocks in Gulf waters encompassing 43,200 square miles (112,000 square kilometers) where private energy companies plan to drill deep-water test wells.

None of the companies are American, due to Washington's decades-old embargo banning most U.S. business dealings with the communist-governed island, although some U.S. firms have expressed interest in the past.

Some environmental groups, U.S. politicians and academics have expressed concerns about drilling off Cuba after last year's Deepwater Horizon disaster that killed 11 workers and spilled more than 200 million gallons of oil into the Gulf of Mexico.

Repsol's 2010 annual report says the Sacarabeo-9 complies with U.S. specifications and technical requirements. Cuban officials have also said that the safest, most modern technology will be used.

Earlier this year, Cuba reported its 2010 production totaled 4 million tons of petroleum equivalent, which is oil plus natural gas. That is about 46 percent of its domestic consumption. The rest it obtains from Venezuela on preferential terms.