Engineering News

Chinese Firm to Start Work on Refinery in Nicaragua
May 2, 2012

The long-promised scheme to build a giant oil and gas refinery in Nicaragua appears to be finally taking shape.

An official from the country's state oil company, Petronic, said on 27 April that a Chinese engineering company was set to start construction on the refinery this week. Petronic director Francisco Lopez said that the works would require an initial investment of USD233 million, funded with Venezuelan support.

The 150,000 barrels per day facility is to be located at Puerto Sandino, on Nicaragua's Pacific coast, 60km from the capital city, Managua. China Camc Engineering has been contracted to build this phase of the facility.

Shen Wen, vice-president of the Chinese firm, said that the storage tanks to be constructed in this phase of the project would be capable of holding over 1 million barrels of oil, and would serve as a reserve for both Nicaragua and neighbouring countries. 

The refinery to be named El Supremo Sueno de Bolivar (Bolivar's Supreme Dream) has been backed by Venezuela, which is the driving force behind the Petrocaribe regional oil scheme. The new refinery is planned to serve the Petrocaribe member states, according to statements made by Rafael Ramirez, Venezuelan energy and oil minister, in October 2011 (seeNicaragua: 25 October 2011: ).

Significance: As with many announcements on major energy infrastructure projects by Venezuelan-driven regional groups, notably ALBA, but also Petrocaribe, the Nicaraguan refinery project has been long anticipated but with little indication as to practical moves towards fruition.

The Petronic announcement that work is to commence imminently signals a change to that, especially given the participation of China in the project, and will provide a major boost to refining capacity in Central America. That could to give Nicaragua both greater energy security, and enhanced geopolitical significance in Central America. However, given that the total cost of the refinery is estimated at USD6 billon, financing will remain a challenge, casting doubt as to whether it will ever be completed.

Source: Global Insight

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