Hopes, fears, doubts surround Cuba's oil future

MIAMI — One of the most prolific oil and gas basins on the planet sits just off Cuba's northwest coast, and the thaw in relations with the United States is giving rise to hopes that Cuba can now get in on the action.

It's a prospect welcomed by Cubans desperate for economic growth yet deeply concerning for environmentalists and the tourism industry in the region.

But a Cuban oil boom is unlikely anytime soon even if restrictions on U.S. businesses are relaxed because of low oil prices and far better drilling opportunities elsewhere.

"(Cuba) is not going to be the place where operators come rolling in," says Bob Fryklund, chief strategist for oil and gas exploration and production at the analysis firm IHS.

Although Cuba's oil and gas industry has long been open to foreign investment, the U.S. embargo has denied it some of the world's best deep-water drilling technology and expertise. As a result, Cuba produces just 55,000 barrels of oil per day. About one-third of that is produced by a Canadian firm called Sherritt International.

Cuba needs 155,000 barrels per day, and it fills the gap with oil from Venezuela, part of a trade agreement established under former Venezuelan President Hugo Chavez. By comparison, a single large oil platform in the deep water U.S. Gulf of Mexico can produce 200,000 barrels per day.

The few major exploration projects in Cuba in recent years have had little success. Most recently, the Spanish company Repsol abandoned a yearslong exploration project in 2012 when an offshore exploratory well failed to find much oil.

Fryklund says that U.S. oil services firms, which have been prevented from working in Cuba, could provide technology to operators in Cuba to help increase production somewhat. Also, U.S. refiners could find a new market in Cuba for gasoline and diesel or refining technology. Cuba has been struggling to find a partner to finance an upgrade an expansion of its largest refinery, in Cienfuegos.

But a factor that helped push Cuba to seek closer ties with the United States also could impede major oil exploration there: low oil prices.

A plunge of nearly 50 percent in the global price of oil has crushed the oil-dependent economies of Venezuela and Russia, threatening aid from Cuba's biggest benefactors.

"None of Cuba's friends have the financial capability to throw a safety net or a safety line to Cuba," says Jorge Pinon, former Amoco Oil Latin America president now at the University of Texas. Cuba suffered enormously when foreign aid dried up after the fall of the Soviet Union, and it wants to avoid similar economic pain now that Venezuelan aid is uncertain.

Low oil prices also force drillers to shy away from risky projects because the potential for a big financial return is so much smaller.

Even though Cuba sits relatively close to some of the biggest deep-water oil fields in the Gulf of Mexico, the geology under Cuba's waters is drastically different from that of the rest of the Gulf.

The U.S. Geological Survey estimates there are 4.6 billion barrels of undiscovered oil in Cuba — a substantial but not enormous amount because not all of that oil could possibly be produced. The U.S. Gulf of Mexico contains an estimated 10 times that much.

Also, there are also bigger and better-known fields in Mexico, which recently amended its constitution to allow foreign investment in its oil industry.

Cuba could offer very favorable terms to entice drillers to come, however, and smaller firms willing to take bigger risks may give Cuba a shot.

A major concern for environmentalists and the tourism industry in the region is Cuba's ability to drill at international safety standards, including its response to any spill, according to Bob Graham, who co-chaired the national commission on the Deepwater Horizon oil spill. They fear a spill could quickly spread to ecologically rich and economically important reefs and beaches in nearby Florida and throughout the Caribbean.

Under the U.S. embargo of Cuba, which remains in place, anything comprised of more than 10 percent U.S. parts cannot be sold to Cuba or a Cuban contractor. That covers almost all modern drilling systems, Graham says. "It's going to require some modification of the embargo to allow state-of-the-art equipment to be used for Cuban drilling."

The U.S. National Oceanic and Atmospheric Association has been working with the U.S. Coast Guard and other state and federal agencies to study the possible threats posed by offshore oil drilling near the Florida Straits and the Bahamas, says NOAA spokesman Ben Sherman. The agency also shares technical expertise on oil spill planning and response with Caribbean nations, including Cuba, Sherman says.

When William Reilly, Graham's co-chair on Deepwater Horizon spill commission and head of the EPA under President George H. W. Bush, presented the commission's final report to Cuban regulators in Havana, he found they had already made plans to follow the commission's recommendations with the resources they had. That included sending staff to Canada to learn English to improve communications in the event of an oil spill.

Reilly says Cuban officials had high hopes for their oil industry. A delegation had a telescope trained on an offshore rig that was exploring for oil and gas, though it could be seen without a telescope. "It was like a beacon of economic hope to Cubans in Havana," he says.

___

Fahey reported from New York. He can be reached at http://twitter.com/JonathanFahey . Jennifer Kay can be reached at http://twitter.com/jnkay .

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Why the Sony hack isn't big news in Japan

Japan's biggest newspaper, Yomiuri Shimbun, featured a story about Sony Corp. on its website Friday. It wasn't about hacking. It was about the company's struggling tablet business.

Over at newswire Kyodo News, just after the FBI formally blamed North Korea for the cyberattack, mega pop group AKB48 topped headlines online instead.

While American journalists have extensively covered the fallout from the unprecedented Sony hacking attack, it hasn't exactly been massive news in Japan. Stories certainly surfaced after President Barack Obama weighed in on the issue at his year-end press conference Friday. But overall it has received relatively modest attention, mostly in short stories on the inside pages of Japan's major newspapers.

This might all be perplexing to the rest of the world since Sony is one of Japan's most iconic global brands. Here are a few reasons why the story hasn't gotten major play in Japan's mainstream media:

SONY vs SONY PICTURES

While Sony Pictures is technically part of the Sony empire, it has long been run as an entirely separate U.S. company. So far, the Japanese media seems to view the hack as an American problem rather than a domestic one. Indeed, at Sony headquarters itself, officials have refused all comment and referred questions about Sony Pictures to the movie division's headquarters in Culver City, California.

"This is seen mainly as an attack on Hollywood," Damian Thong, a senior analyst at Macquarie Capital Securities in Tokyo, said earlier this week. "I feel they want to clean it up as fast they can and just get on with life."

The studio shelved the Christmas Day release of the North Korea spoof movie "The Interview" after the hackers threatened to attack theaters that showed the film. But for Japan, the movie's demise hardly matters. Sony Pictures never planned to show the film there.

NEWSPAPER DEMOGRAPHICS

Japan's newspapers, which have the highest daily circulations in the world, are inclined to avoid news that is technologically complex. Like hacking. Nobuyuki Hayashi, a veteran freelance tech journalist and consultant based in Tokyo, said the tendency stems from reporters and editors who often don't have a deep understanding of technology. And neither do their aging readers.

"If you are technically savvy and need information (about the Sony hack), you will get it from the Web news media," Hayashi said. "Some technically-savvy people subscribe to a printed newspaper as well, but that's only to read other kinds of news."

OTHER NEWS

It's been a newsy December in Japan, especially with national elections last weekend. Prime Minister Shinzo Abe's Liberal Democratic Party locked up a solid majority in the lower house and reaffirmed his hold on power for up to four more years. In addition to politics, the national chatter was focused on a big blizzard that hit the northern island of Hokkaido this week, dumping heavy snow, derailing trains and killing several people.

__

AP Business Writer Elaine Kurtenbach contributed to this report.

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N. Korea proposes joint probe over Sony hacking

SEOUL, South Korea — North Korea on Saturday proposed a joint investigation with the U.S. into the hacking attack against Sony Pictures Entertainment, warning of "serious" consequences if Washington rejects a probe that it believes would prove Pyongyang had nothing to do with the cyberattack.

The proposal was seen by analysts as a typical ploy by the North to try to show that it is sincere, even though it knows the U.S. would never accept its offer for a joint investigation.

U.S. officials blame North Korea for the hacking, citing the tools used in the Sony attack and previous hacks linked to the North, and have vowed to respond. The break-in resulted in the disclosure of tens of thousands of confidential Sony emails and business files, and escalated to threats of terror attacks against U.S. movie theaters that caused Sony to cancel the Christmas Day release of "The Interview," a comedy about a plot to assassinate North Korean leader Kim Jong Un.

On Saturday, an unidentified North Korean Foreign Ministry spokesman in Pyongyang proposed the joint investigation with the U.S., saying the North knows how to prove it's not responsible for the hacking. He also said Washington was slandering Pyongyang by spreading unfounded rumors.

"The U.S. should bear in mind that it will face serious consequences in case it rejects our proposal for joint investigation and presses for what it called countermeasures while finding fault with" North Korea, the spokesman said in a statement carried by Pyongyang's official Korean Central News Agency, or KCNA.

"We have a way to prove that we have nothing to do with the case without resorting to torture, as the CIA does," he said, adding that the U.S. lacks any specific evidence tying North Korea to the hacking.

Koh Yu-hwan, a professor at Seoul's Dongguk University, called the North's proposal a "typical" tactic the country has taken in similar disputes with rival countries. In 2010, North Korea proposed a joint investigation after a South Korean-led international team concluded that the North was behind a torpedo attack that killed 46 South Korean sailors, though Pyongyang denied its involvement. South Korea rejected the North's offer for the joint probe.

"They are now talking about a joint investigation because they think there is no conclusive evidence," Koh said. "But the U.S. won't accede to a joint investigation for the crime."

On Friday, President Barack Obama declared that Sony "made a mistake" in shelving the satirical film about a plot to assassinate the North Korean leader, and pledged that the U.S. would respond "in a place and manner and time that we choose" to the hacking attack on Sony that led to the movie's withdrawal.

"I wish they had spoken to me first. ... We cannot have a society in which some dictator someplace can start imposing censorship," Obama said at a year-end news conference, speaking of executives at Sony Pictures Entertainment.

Sony said it had had no choice but to cancel distribution of the movie because theaters were refusing to show it.

U.S. options for acting against North Korea are limited. The U.S. already has severe trade sanctions in place, and there is no appetite for military action. Even if investigators could identify and prosecute the individual hackers believed responsible, there's no guarantee that any located are overseas would ever see a U.S. courtroom. Hacking back at North Korean targets by U.S. government experts could encourage further attacks against American targets.

North Korea and the U.S. remain in a technical state of war because the 1950-53 Korean War ended with an armistice, not a peace treaty. The rivals also are locked in an international standoff over the North's nuclear and missile programs and its alleged human rights abuses.

Earlier Saturday, North Korea angrily denounced a move by the United Nations to bring its human rights record before the Security Council and renewed its threat to further bolster its nuclear deterrent against what it called a hostile policy by the U.S. to topple its ruling regime.

Pyongyang "vehemently and categorically rejects" the resolution passed by the U.N. General Assembly that could open the door for its leaders, including Kim Jong Un, to be hauled before the International Criminal Court for crimes against humanity, according to a Foreign Ministry statement carried by KCNA.

The Security Council is due to meet Monday to discuss Pyongyang's human rights situation for the first time.

The meeting caps almost a year of international pressure, and even though ally China could use its veto power to block any action against the North, the nonbinding resolution has broad support in the General Assembly and has drawn unusually strong and vitriolic protests from Pyongyang.

___

Associated Press writer Eric Talmadge in Tokyo contributed to this report.

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A Facebook TV show? HLN teams with social-media giant on pilot

Facebook is trying its hand at TV, teaming with Time Warner's HLN network to produce a pilot for a series that will use the popular social network to find and tell interesting stories.

"We don't and they don't want this to feel like 'The Facebook Show,'" said Kari Kim, vice president of development at HLN, in an interview. "It's really about the stories and how we are using their tools" to discover information and identify what's happening around the world.

Executives at the network, which is part of CNN Worldwide, said initial details remain sketchy. The pilot will make it to air in the first half of 2015, said Lila King, HLN's senior director of product strategy and partnerships, but the network remains uncertain so far as to what form the program will ultimately take.

Options ranging from a weekly format to a series of specials have all been discussed, said Kim. No hosts have been decided upon either.

Social-media outlets like Twitter and Facebook have all put forth the notion that the conversations they host about popular culture, celebrity and TV programming boosts the ratings of any show one can name. But Facebook's alliance with HLN suggests, in at least this one instance, that one of the big consumer-chatter giants sees a chance to generate more of the same with its own series.

"The initial ideas HLN came up with are very encouraging, and we are looking forward to getting to work and seeing what comes out of the production process," said Andy Mitchell, director of news and global partnerships at Facebook, in a prepared statement.

Facebook teams with HLN as the network moves forward with a broad reworking of its content that centers more around social media than the traditional news updates that were once its stock in trade. That process was interrupted earlier this year when parent Time Warner considered an arrangement that would have let Vice Media, which has a reputation for you-are-there video journalism that takes viewers to far-flung parts of the world, essentially take over HLN. The arrangement would have created a new venture in which Time Warner might have had an ownership stake, but the two sides remained far apart on several aspects of the potential deal, which fell apart.

Now HLN is returning to its mission: Sifting through tweets, memes, posts and more to find cultural shifts and interesting stories. Among the programs HLN put on its development slate last February were a show that counts down the most-talked about entertainment properties, a game show that uses search and tag terms and a third that looks behind the scenes at online phenomena. Albie Hecht, a Viacom programming veteran, is leading the effort. Hosts like Nancy Grace and Dr. Drew remain on air.

"As HLN refines their programming to reflect the social conversation, which happens at an unprecedented scale on Facebook, we are excited to produce a pilot that reflects Facebook on TV in a very unique and creative way," said Mitchell.

HLN's King said she reached out to major social-media outlets as soon as she joined the network in February. "I think Facebook was the first call I made," she said. "We've been trying to figure out what the right thing to do is, and I think we've hit on it." Viewers of the show can likely take to Facebook to register their opinions on the program when it actually surfaces.

© 2014 Variety Media, LLC, a subsidiary of Penske Business Media; Distributed by Tribune Content Agency, LLC

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Sony hit with fourth class action lawsuit over hacking attack

The litigation continues: Sony Pictures Entertainment now faces yet another class action lawsuit from ex-employees alleging that the studio failed to take adequate precautions to protect private information.

The lawsuit filed in federal court in Los Angeles on Thursday is similar to three others filed earlier this week. It alleges negligence on the part of SPE and violations of privacy laws.

SPE, which "engages in the entertainment industry as part of a vast multinational corporate conglomerate, knows or should know that it may be the target of the world's most sophisticated data hackers or cybercriminals," and it failed to take "adequate steps" to protect itself from the possibility of an attack, says the suit filed by Michael Levine, former technical director for Sony Pictures Imageworks from 2003 to 2012, and Lionel Felix, a former director of technology who ran IT infrastructure for Sony Pictures Digital Entertainment from 2001 to 2004.

The plaintiffs were represented by Michael Sobol and RoseMarie Maliekel of Lieff Cabraser Heimann & Bernstein.

© 2014 Variety Media, LLC, a subsidiary of Penske Business Media; Distributed by Tribune Content Agency, LLC

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Chrysler to recall about 288K Ram pickup trucks

DETROIT — Chrysler is recalling about 288,000 older Ram pickup trucks in North America and elsewhere because the rear axle can seize or the drive shaft can fall off.

The recall covers Ram 1500 pickups from the 2005 model year.

Chrysler says in documents posted Friday by U.S. safety regulators that the rear-axle pinion nut can come loose. That can cause problems that make the trucks spin out of control.

The recall comes after an investigation by the National Highway Traffic Safety Administration that began in June.

The agency found 15 complaints, including seven drivers who reported that the wheels locked at speeds over 50 miles per hour. Chrysler says there have been three crashes and one injury due to the problem.

The recall includes nearly 257,000 trucks in the U.S., another 22,000 in Canada, 8,800 in Mexico and 400 outside North America.

The affected trucks were made from Jan. 28, 2004 to Aug. 3, 2005, according to the documents.

In one complaint to NHTSA in February 2013, a pickup driver wrote that he was on an interstate highway when the drive shaft disconnected and the truck began to spin.

"It was five seconds of terror that I thought would surely end in disaster," the driver wrote. When the truck stopped it was blocking an entrance ramp, and the driver had to drag it to the shoulder in speeding traffic, the complaint said. Drivers who file complaints are not identified in NHTSA's database.

Dealers will install a fix at no cost to owners. The recall will begin in February. Customers can call Chrysler at (800) 853-1403 with questions.

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Harvard prof: Boston.com dis driven by cash-making clicks

The Harvard professor at the center of a $4 Chinese food bill dispute reported in a series of stories posted by the Boston Globe's 
Boston.com said yesterday he believes the extensive coverage was driven by a desire for cash-producing clicks, not balance.

"I recognize that the news business is tough. 
Boston.com's approach to the story gave them a much bigger story, more page views, more ad revenue. I want to see journalists and journalism thrive. But at what cost?" Ben Edelman, an associate professor at Harvard Business School, told the Herald in an email.

Edelman faced a torrent of stinging criticism on the Internet and social media after Boston.com revealed his emails demanding a refund from Sichuan Garden in Brookline over a $4 difference between his food bill and the restaurant's prices as advertised online.

During the reporting, Boston.com staffers noted on Twitter that they had ordered takeout from the restaurant and deputy editor Hilary Sargent, who wrote the stories, designed a T-shirt mocking Edelman and put it up for sale online.

A story by Sargent alleging the professor had sent a racist email to the owner of the restaurant was pulled shortly after it was posted and replaced by an editor's note saying that 
Boston.com could not verify Edelman had sent it. The professor denies writing or sending the email containing a racial slur, which was sent through an online form on the restaurant's website.

Sargent was suspended for five days as a result of the T-shirt incident and the website BostInno reported that she has been demoted from deputy editor to senior writer. Neither she nor Boston.com would comment yesterday.

But Edelman said, "Boston.com wanted to paint me as a bad guy, and in general it's their right to tell the story as they see fit. But my emails, right there for all to see, specifically indicated that I wanted the restaurant to refund all customers who had been overcharged. Somehow that key fact ended up totally missing from almost all the media coverage."

The professor said Boston.com was out to push an " 'Edelman is a jerk' narrative," that ignored previous efforts he had made in the areas of consumer protection and privacy. He added: "From my perspective, the most distressing aspect of the media coverage was how little attention the articles paid to my true motivations."

His track record of advocating for consumer causes, he said, shows he is "a reasonably nice guy, trying to make the world a better place in my own small way."

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Decision to reel back movies draws scorn

Hollywood's humiliating surrender to computer hackers was roundly mocked and ridiculed yesterday — as movie theaters were even forced to pull scheduled 10-year anniversary screenings of "Team America," just one day 
after Sony Pictures nixed "The Interview — in what experts called a stunning display of cowardice over the North Korea movies.

"The only safe country to write about now is Canada, because all they'll do is throw snowballs," said Alan Dershowitz of Harvard Law School. "I think the movie industry has failed miserably. ... When Salman Rushdie wanted to publish 'The Satanic Verses' and the Iranian Supreme Leader issued a fatwa, all the publishers got together and simultaneously published the book jointly. That's the opposite of what happened here — all the Hollywood studios ... were concerned about was their bottom line."

The latest capitulation to the cyberterrorists came yesterday when movie theaters planning to show "Team America: World 
Police" — a North Korea comedy by "South Park" creators Trey Parker and Matt Stone — announced they were dropping the screenings, claiming they were being canceled by Paramount Pictures, the studio that released the film. Paramount didn't respond to emails yesterday.

The pulling of the 10-year-old puppet film came just a day after Sony announced it wouldn't air "The Interview" starring Seth Rogen and James Franco in movie theaters or release it on DVD or online.

Terrorism expert Jim Walsh of the Massachusetts Institute of Technology told the Herald Sony's decision to wave the white flag could hurt other institutions in the long run.

"I think it's shocking that they would give in on this," Walsh said. "You have to think that that's going to catch the eye of some people and say, 'Hey, I can do the same.' I worry that this will inspire others to follow suit."

Some on Twitter lambasted the movie industry yesterday, offering alternative sanitized versions of film favorites under the hashtag #NewHollywood
Classics.

"'Dead Poets Society,' in which a young and energetic teacher learns to teach to the syllabus rather than speak out," tweeted 
@EdMorrissey.

"All the Presidents Men: Reporters are hunted down by heroic FBI agents & sent to jail for daring 'to fol-
low the money'" tweeted 
@DrewMTips.

Meanwhile, a U.S. official told The Associated Press yesterday that federal investigators have now connected the Sony hacking to North Korea. Publicly, however, White House 
officials have not drawn similar conclusions.

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Uber to roll with William Evans

The head of Uber's Boston office will meet with Boston Police Commissioner William Evans next week in the wake of four alleged sexual assaults connected to the global ridesharing giant.

On Wednesday, Alejandro Done, an Uber driver, was arraigned on rape and kidnapping charges after he allegedly attacked a female passenger who had requested a ride through the Uber app. The charges followed three separate police reports by women that they had been sexually assaulted in Boston by a driver after they requested an Uber ride early Sunday morning.

"We are meeting with Commissioner Evans next week about some potential opportunities to partner together," said Meghan Joyce, general manager of Uber Boston. "We have a number of different initiatives we are working on as we speak ... to proactively ensure that this is the safest system in the city."

An Uber spokesman said Done passed the company's background check. The assaults over the weekend remain under investigation, and BPD is looking into whether there is any connection between the Cambridge and Boston attacks.

According to authorities, at least two of the alleged assaults were committed by a driver who was not the person who had accepted the victim's ride request through the Uber app. The driver apparently knew where a victim would be expecting an Uber.

Joyce said the company is looking into how to address that issue.

She said the company will also start to add identifying stickers to its drivers cars so passengers know they are getting into an Uber vehicle.

Joyce spoke at a meeting of Mayor Martin J. Walsh's Taxi Advisory Committee yesterday, chaired by Christopher English, which has been working to develop new regulations for Uber, Lyft and the taxi industry. Rider safety dominated much of the discussion.

On Wednesday, Uber's newly hired head of global safety said in a blog post the company is undergoing a review of its safety standards. The post was in large part in response to an alleged rape in India that resulted in the province of Delhi banning Uber from operating.

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Innovation expansion urged: Four areas envisioned as new Boston ‘districts’

A task force appointed in September by Mayor Martin J. Walsh is eyeing four neighborhoods as potential innovation hubs, Boston's economic development czar said yesterday.

Although its final recommendations are not due until Jan. 30, the four areas most discussed by the Neighborhood Innovation District Committee are East Boston, the Bowdoin-Geneva and Fields Corner sections of Dorchester, and Dudley Square in Roxbury to Uphams Corner in Dorchester, said John Barros, who co-chairs the committee.

"Mayor Walsh sees an opportunity to bring the innovation economy into Boston's neighborhoods," said Melina Schuler, a spokeswoman for the mayor. "The recommendations being made by the Neighborhood Innovation District Committee are first steps in establishing how communities can participate and benefit from this new type of entrepreneurship and job creation."

While government can be the catalyst for that, the private sector "can make it real and sustainable," as has been the case with MassChallenge, said Scott Bailey, senior director of partnerships for the Boston-based startup accelerator and competition.

"The real challenge in any of these neighborhoods is how do you keep them included in what's going on in other places," Bailey said. "It's not about building a cluster and leaving it off on its own."

Charles Teague, CEO of Lose It!, a startup that makes software to help people lose weight, said when his company was looking for a location, it chose Boston's Innovation District because it was more affordable than Cambridge's Kendall Square and had a vibrant community of tech companies working on some of the same problems. He worries that sense of community could be "fragmented" if the city creates other innovation districts.

But Tim Rowe, founder and CEO of the Cambridge Innovation Center, said: "Innovation-driven prosperity can't remain the province of just a few neighborhoods. If Boston wasn't pursuing this, we'd be asking it to."

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