(FORTUNE Magazine) – SOMETIME LATER this year, less than 70 miles from Florida, a consortium of Spanish, Indian, and Norwegian companies will probably start drilling for oil. It could mark the beginning of a Cuban oil rush--one that American oil companies won't be able to join, despite their proximity to the action. And that has some U.S. oil industry executives and lobbyists seething, especially since the American Association of Petroleum Geologists calls the offshore Cuban oil deposits a "significant find."

The reason U.S. oil companies can't play in these waters, of course, is the 45-year-old embargo--designed to isolate Fidel Castro--that prohibits Americans from doing business with Cuba. It's an irksome irony. And the Cuban exile community in south Florida remains a formidable political force. However, emboldened by a newly Democratic Congress and the potential for regime change in Cuba, industry lobbyists are promoting bills that would exempt U.S. oil companies from the sanctions. One, by Senator Larry Craig (R-Idaho), failed to get out of committee last year. But Craig plans to reintroduce it in the Senate as part of a larger energy bill, says spokesman Dan Whiting. A House version sponsored by Jeff Flake (R-Arizona) would allow the sale of U.S. oil services and equipment to the foreign companies already exploring in Cuba. It may also be revived.

"This is not the 1960s, when the Kennedy administration was protecting the U.S. from a possible missile attack," says Charles Drevna, executive vice president of the National Petrochemical and Refiners Association, which represents more than 450 companies. "These resources will be developed and produced--the question is by whom. Prohibiting U.S. companies from developing resources [right offshore] is an Alice in Wonderland approach to policy that must be revisited."

Whoever pumps the Cuban crude, it could be a huge boon to the struggling island country. With Castro sidelined by illness and Cuba's economy in shambles, a major oil find--estimated by the U.S. Geological Survey at 4.6 billion barrels, nearly two-thirds the amount in the Arctic National Wildlife Refuge--could give Havana a new lease on life. "Cuba could be a major regional player in oil," says Jorge Piñon, an oil expert at the University of Miami and a former president of Amoco Oil Latin America.

Cuban oil was first discovered in Varadero in 1971 with help from the Soviet Union. Production stayed at a measly 18,000 barrels a day or so until Canada's Sherritt International arrived in 1992 and started joint production with Cuba Petróleo. Even today Cuba's oil production is puny--just 68,000 barrels a day, compared with more than ten million by Saudi Arabia, the world's largest producer. And it's entirely onshore.

But in 2004, Spain's Repsol YPF found signs of oil in deep water offshore. Last year India's ONGC Videsh and Norsk Hydro of Norway joined Repsol to explore its six blocks. ONGC also secured concessions for two more blocks. Separately, Malaysia's Petronas and Venezuela's state-owned PDVSA each have won concessions for four more blocks. China also has exploration rights, and Chinese oil giant Sinopec has been leasing rigs to Sherritt and others.

Even if the choicest blocks have been taken, there would still be opportunity for U.S. companies if the embargo were lifted tomorrow. And Cuban officials say U.S. companies would receive the same treatment as others. "American energy companies and investment are welcome in our country," says Ernesto Plasencia, Cuba's commercial attaché in Washington, D.C.

Len D'Eramo, a spokesman for Exxon Mobil, whose refinery was nationalized by Castro, doesn't deny interest in Cuban oil but says, "Cuba is a U.S.-sanctioned country, and we are not permitted to operate there."

The offshore blocks are in the seismic-study stage, but the Repsol consortium hopes to start exploration and drilling this year. Oil experts say production is at least three years away. By then, there will be a new administration in Washington, D.C.--perhaps one that is less staunchly pro-embargo.