CARACAS, Wednesday July 31, 2013 | Update

Venezuela, Ecuador resume refinery project

CNPC addition means capital injection

Maduro and Correa are to discuss energy plans (AVN)
Wednesday July 31, 2013  11:31 AM
A project by state-run oil holding Petróleos de Venezuela (Pdvsa) and Petroecuador to build the "Eloy Alfaro" Pacific refinery in Ecuador postponed commissioning from 2015 to 2017, waiting for China National Petroleum Corporation (CNPC) to provide most of the necessary capital.

Precisely, a meeting this week in Caracas between Ecuadorian President Rafael Correa and his Venezuelan counterpart Nicolás Maduro was good to resume the bilateral energy cooperation agenda.

Correa explained last weekend that some issues, such as the Pacific refinery; the operation and implementation of the Unified System for Regional Compensation (Sucre); the development of an oilfield and trade of lube oils together with Pdvsa would be reviewed, daily newspaper El Comercio of Quito reported.

Pdvsa-Petroecuador stake in the Pacific refinery means that both state-run companies should provide 30% of the cost of the facilities. Until last year, Pdvsa reckoned that "Eloy Alfaro" Pacific refinery would cost USD 12.8 billion. As a result, Petroecuador and Pdvsa ought to provide USD 3.84 billion; CNPC would give the remainder.

In the initial shareholding, before the inclusion of the Chinese oil company, Petroecuador would be the owner of 51% of the shares, and the remaining 49% would go for Pdvsa.

Nevertheless, upon the addition of CNPC, Petroecuador will keep its owner share and the Chinese company will hold 30% of the stocks. This means that Pdvsa will become the minority shareholder with a partnership interest down to 19%.

The Pacific refinery is expected to process about 300,000 barrels per day of Ecuadorian oil, but also of Venezuelan oil from the Orinoco Oil Belt. The output will be shipped to China.

The inclusion of a capitalist partner to lever the project had been expected for over one year. In the middle of 2012, the very Venezuelan Minister of Petroleum and Mining and Pdvsa President Rafael Ramírez talked about the need to include a third partner, quite possibly China, for being the destination country of the oil supply.
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A group of some 60 Venezuelan economists from across the country and from different generations and backgrounds, has met regularly in the past couple of years and now has brought forth a document explaining the reasons of the current emergency and outlining specific proposals on how to address the serious economic crisis the country has plunged into over the last three years.

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