In late January, Spain's Repsol began drilling in the Northbelt Thrust, a stretch of the offshore Caribbean that may contain 6 billion barrels of oil. Between now and next month, Repsol will learn whether its part of the Thrust has commercial oil. But the company will be judicious with any news (pictured above, Repsol rig), uncertain whether it will be greeted with the hoots and cheers with which the industry typically greets word of a fresh discovery.
The Northbelt Thrust falls into a curious category on the global oil patch. Like dark matter in the universe, it is a blank spot, one of a few places with big proven and potential reserves that are wholly ignored in official forecasts. For it is offshore from Cuba, a political pariah in the U.S.
Wall Street, major commercial consultant firms, and government energy agencies appear to feel uncomfortable lending serious public attention to Cuba's potential for big strikes this year, as I write at EnergyWire. For differing reasons, Venezuela, too, is part of this alter-reality.
I asked a senior Wall Street contact why his firm's reporting excludes Cuba and Venezuela. "They have no oil supply growth," he replied, which at the moment technically is true -- yet may turn out not to be in a matter of weeks in the case of Cuba.
Jorge Pinon, who worked for years as an Amoco executive in Latin America, told me that companies and firms are simply heeding U.S. political reality, starting with the role of Cuban-American Ileana Ros-Lehtinen as a leader of the Republican majority in the House of Representatives. He said:
When you have a Cuban delegation in Congress that is very powerful, and among them is the chairman of the House Foreign Relations Committee, you have to be extremely careful how you play Cuba.
Adalberto Roque AFP/Getty Images
Argentine President Cristina Fernandez de Kirchner, angry at a rising national oil bill and emboldened by her own populist fervor, has relieved Spain's Repsol of most of its shares of YPF, the country's biggest oil company. Repsol, which since 1999 has owned 57.4 percent of YPF, will now have about 6 percent.
Spain has lashed out, rating agencies are reconsidering political risk in Argentina, and analysts generally seemed to regard it as a bad move. Repsol has not said so since yesterday, but it naturally would be unhappy with Fernandez (pictured above).
Wherever the balance of fault lies, the biggest hit will be to Argentina's place in the global surge in oil production. Along South America's east coast, Brazil is already on the cusp of being among the world's premier oil producers, and, just to the north, crude has been found in French Guiana. Repsol itself is drilling in both Guyana and Cuba, both of which could become oil exporters.
As for Argentina, it currently produces about 570,000 barrels of oil a day. But industry experts say Argentina has the potential for much more since it has among the world's largest reserves of shale oil and shale gas -- the equivalent of 23 billion barrels of oil in a formation called Vaca Muerta. YPF has said that it will cost $25 billion to develop Vaca Muerta, reports Bloomberg BusinessWeek. YPF controls more than half the total - the equivalent of 13 billion barrels of oil.
Daniel Garcia AFP/Getty Images
Steve LeVine is the author of The Oil and the Glory and a longtime foreign correspondent.