Bahamas Expects to Strike Oil After Cuba Exploration Failed

Bahamas Petroleum Co., the only explorer searching for oil off the Atlantic archipelago, expects to find crude even after efforts off nearby Cuba failed.

A seismic study by Bahamas Petroleum, or BPC, showed that the Great Bahama Bank may have oil at shallower water depths, making it easier to drill, and a layer of salt keeping the crude in place, Chief Executive Officer Simon Potter said in London.

BPC is looking for a partner to raise at least $100 million to drill the country’s first exploration well in about 27 years. It holds five licenses covering more than 4 billion barrels of potential oil resources and is seeking three more with Statoil ASA. The nation in March allowed exploration to go ahead on the condition a referendum be called before the first oil is pumped.

“Let’s go and bake the cake, let’s establish commercial reserves,” Potter said in an interview. Should a discovery be made, “there’ll be a much more positive issue to be managing.”

Oil extraction off the Bahamas, a tourism-based economy, may help the nation reduce its mounting debt burden. Government borrowings rose to 53 percent of gross domestic product last year from 32 percent in 2007, according to a December report by Moody’s Investors Service.

BPC’s planned well, to be started in about a year’s time, will target a “distinct” structure about 12 miles (19 kilometers) from Cuba, Potter said.

The shares rose 1 percent to close at 5 pence in London.

Commercial Quantities

While Cuba’s national oil company, known as Cupet, has been pumping oil from the Caribbean island for decades, foreign explorers including Repsol SA, Petroliam Nasional Bhd. and Petroleos de Venezuela SA have failed to find commercial quantities of crude.

OAO Zarubezhneft, a Russian state-owned oil producer, suspended drilling at its well off Cuba following a technical malfunction, Songa Offshore SE, the rig operator, said April 4. The well is the nearest to BPC’s planned drilling location.

“Zarubezhneft was targeting similar deep” geology, Potter said. There are “concerns in Cuba that they won’t have time to get this deep” before releasing the rig in June, he said.

Irina Brichkalevich, a spokeswoman for the Moscow-based company, declined immediate comment.

“It’s the same geology but in a different structural context,” Potter said. “We already understand that there is a working hydrocarbon system here.”

BPC has studied results from the Bahamas’ Doubloon Saxon-1 well, which was drilled to 21,740 feet (6,630 meters) in 1986 by a former unit of Tenneco Inc. That well found oil traces about 25 miles from BPC’s planned well location.

Cash Reserves

About 15 companies have visited BPC’s data room, open for almost a year, to study a partnership. The Isle of Man-based company, which had more than $21 million in cash as of Dec. 31, expects renewed interest after the Bahamas government gave the go-ahead to exploration.

Before 2009, BPC was known as Falkland Gold & Minerals Ltd., which failed to find economically viable mineral deposits in the South Atlantic archipelago.