Ramirez Confirms Petrocaribe's Refinery Plans
October 25, 2011
Petrocaribe ministerial summit meeting in the Nicaraguan capital of Managua yesterday (24 October) heard that the Venezuelan-backed Petrocaribe oil scheme was planning to build new oil refineries in Cuba and in Nicaragua. That was confirmed by Venezuela's Minister of Energy and Oil, and head of PDVSA, the state-owned oil company, Rafael Ramirez.
Speaking at the opening session of the summit, Ramirez specified that Petrocaribe would construct the refinery, to be named El Supremo Sueno de Bolivar, on Nicaragua's Pacific coast. The refinery will have a capacity of some 150,000 barrels per day. Petrocaribe provides subsidised Venezuelan oil to its 18 member states through Central America and the Caribbean, including Nicaragua, Cuba, Jamaica, the Dominican Republic, Haiti, and Guatemala. Ramirez also noted that Petrocaribe has supported an increase in electricity generation in member countries including Nicaragua, which has gained 291MV of generation capacity through Petrocaribe support.
Significance:The refinery project appears to be an attempt to kick-start an already planned facility whose first construction phases were inaugurated in July 2007, but stalled. The prospect is attractive to both Venezuela and Nicaragua. For the former, because of a shortages in its own refining capacity, and because Nicaragua as a fellow member of the ALBA group of left-wing countries is a key strategic ally. For Nicaragua, which lacks adequate refining capacity, the attractions are clear. However, whether or not the construction of the facility will go ahead within the short-to-medium term must be considered doubtful. Pronouncements on grandiose projects are a feature of Petrocaribe summits, but past evidence is that such projects do not always get off the ground. In that context, the prognosis for a rapid start to construction on the Nicaraguan refinery is probably not good, especially given that Venezuelan financial backing for the scheme could well be stretched between now and elections in that country which could take as soon as October 2012.
Source: Global Insight
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