Wednesday, June 18, 2008

McCain, offshore drilling, China and Cuba

So the latest thing that has people on the far left and far right screaming is that McCain wants to lift ban on offshore drilling. The Right says he needs to drill ANWAR too, the Left says it proves he's not serious about the environment or global warming.

To me, it proves he's very much a genuine centrist. A centrist is willing to compromise, which always infuriates the extremists who are unwilling to bend.

I've been maintaining that many of the environmentalists are really just leftists wanting to use environmental causes to fight capitalism. Here is a good example. They don't want to let us drill off our coastlines, but they say nothing about Cuba hiring China to drill for oil just outside of where our drilling rights end. From last Friday's Nealz Nuze:


Yesterday Florida Senator Mel Martinez said that China drilling off the coast of Cuba was merely an urban legend. So because we here at the Neal Boortz Show are so incredibly fair and balanced ... we have tried to get to the bottom of this mystery. Here's what we found.

All the way back in 2004, China's Petrochemical Corporation known as Sinopec signed a memorandum of understanding with Cuba's national oil company, known as Cupet to explore four oil blocks in Cuba. Keep in mind that both of these companies are owned by their communist governments. China's Sinopec conducted six months of geological studies of the four Cuban blocks. This was the first attempt by Sinopec, China's second largest oil and gas company, to enter oil and gas exploration and production in Cuba.

Then in 2005, China's Sinopec signed an agreement with the Cuban government to jointly produce oil in Cuba off the coast of Pinar del R�o. Ok so let's get this straight. The governments of China and Cuba enter into a production sharing agreement ... what exactly does that mean? This is when the Cuban government awards the execution of exploration and production activities to an international oil company like Sinopec. The contractor bears the mineral and financial risk of the initiative and, when successful, recovers capital expenditure and costs incurred in the year (cost oil) by means of a share of production.

So now, for your reading pleasure (and Mel Martinez's) is a timeline of China's oil exploration efforts in Cuba. This is from the World Security Institute ...


January 31: Cuba and China signed a contract in Havana providing for the Asian giant's participation in extracting oil from a deposit off the island's north shore, the press reported. The deal is between Cubapetroleos and the Chinese oil company Sinopec, said the official daily newspapaer Granma. In December, Fidel Castro announced discovery of oil at a site offshore from Santa Cruz del Norte, some 55 kilometers (33 miles) east of Havana. The deposit is believed to hold some 100 million barrels of "light" crude, or the equivalent of 14 million tons. (EFE, Prensa Latina, 31/1/05)
February 8: China's oil giants began cultivating their virgin soil in Cuba. China Petroleum & Chemical Corporation (Sinopec), as the first comer, has inked a contract with Cuba Oil Company (Cubapetroleo) to jointly exploit oil in the Caribbean country. Under the terms of their contract, the two sides will join forces to prospect and exploit a potential oil-producing region. Chinese experts believe it is a significant beginning of the cooperation between China and Cuba in the petroleum industry. (SinoCast, 8/2/05)
March 22: Chinese oil drilling equipment has begun arriving in Cuba as state-run Cubapetroleo (Cupet) and its foreign partners prepare to significantly increase drilling along the northwest coast, industry sources said. "Four service units and a small rig have arrived and we are waiting for more," said a Cuban oil service manager, asking his name not be used. There are currently five rigs operating along the northwest heavy oil belt, an 80-mile (128-km) stretch of coast in Havana and Matanzas provinces from whence come all of Cuba's 70,000 to 80,000 barrels per day of heavy crude at 8 API to 18 API and with a high sulfur content. The poor-quality oil is burned in modified power plants and factories. (Reuters, 22/3/05)

April 6: The operator of China's second-largest Shengli oilfield is stepping up overseas exploration, spending more on such ventures this year as the world's No. 2 oil user grapples with falling reserves, officials said. Shengli Oilfield Administration Bureau, a unit of state-run Sinopec Group, will spend about $40 million drilling for oil and gas in Cuba, Iran and central Asia in 2005, company officials said. "This will be the heaviest spending in a year and we expect the pace to continue in the next few years," a Shengli executive told the press. Shengli, which is among the first Chinese companies to venture abroad, will sink a total of eight wildcat and appraisal wells this year, four in Kazakhstan, two in Iran, and one each in Cuba and Kyrgyzstan. (Reuters, 6/4/05)

November 24: PetroChina Great Wall Drilling Co., Ltd. and Petroleum Company of Cuba held a ceremony for signing two drilling service contracts on November 3, 2005. It is the second-time cooperation between Great Wall Drilling Co., Ltd. and Petroleum Company of Cuba after the signing of a one-year petroleum service agreement on one 1500HP drilling rig and one 2000HP rig on April 8 this year. The contract signed this time includes three 2000HP drilling rigs. The contract has a period of one year and a value of over US$24 million. The project will be launched in January 2006. (China Chemical Reporter, 24/11/05)

December 22: Sinopec of China signed an agreement earlier this year to jointly produce heavy oil with Cupet in westernmost Pinar del R�o province, with drilling expected to begin in 2006. (The Oil Daily, 27/12/05)

Still not convinced Senator Martinez? Here are some more reports from 2005 from the Energy Intelligence Group and National Post's Financial Post & FP Investing in Canada.

... China is seeking oil everywhere and Cuba is no exception. Three large Chinese companies, SINOPEC, Petro China and CINOOC - China National Offshore Corporation, are involved in a large agreement, perhaps already underway, for coastal and deep-water explorations. Most significant to this topic, especially in light of other Chinese investment in Cuba, is the fact that Sinopec, China's second largest oil company, has stated a goal of helping boost Cuba's domestic oil production and producing 60% of its oil needs by 2006 ... Additional plans for exploration and development of other blocs of potential reserves were announced by two other Chinese oil companies, China National Petroleum Corp. and China National Offshore Oil Corp., after talks with CUPET, Cuba Petroleum. Some exploration will be in coastal regions but much, based on the better quality of the oil, will take place in off-shore deep waters.

Let's cut to the chase ... and pardon me if I scream here:

The point isn't that China is not presently drilling for oil within 90 miles of the U.S. The point is that they CAN! --- and, thanks to the Democrat congress --- we CAN'T.

Democrats would like us to wrangle over what IS happening. The issue is what CAN happen. They can drill. We can't. They're planning to. We aren't. Even government educated Democrat myrmidons can understand that.

So Cuba, with China's help (and the help of the Leftists in the USA), can drain the oil reserves WE don't ALLOW ourselves to drill, by drilling on the edge where our water rights end. The Commies win, we loose. Because we LET them.

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