Sunday, November 23, 2008

Cuba to triple oil refining with Venezuelan ally

Cuba to triple oil refining with Venezuelan ally

HAVANA, Oct 28 - Revolutionary allies Cuba and Venezuela will pour
billions of dollars into downstream oil projects in Cuba with the goal
of tripling its refining capacity to 350,000 barrels per day (bpd) by
2013, Cuban state-run radio said on Tuesday, citing the country's Basic
Industry Minister.

Minister Yadira Garcia's announcement came despite falling oil prices
which are expected to slow Venezuela's plans to build around a dozen
refineries in the region.

But oil-rich Venezuela is expected to prioritize Cuban investments in
Cuba, which currently has the capacity to refine 130,000 bpd, local
experts said.

Garcia said the two countries planned to build a new refinery in central
Matanzas province in addition to expanding a joint venture refinery in
central Cienfuegos province and doubling the capacity of a refinery in
eastern Santiago de Cuba.

The Cienfuegos refinery, opened a year ago, is producing 65,000 bpd,
with plans to eventually produce 150,000 bpd and feed a series of joint
venture petrochemical industries at a coast of $3.6 billion.

Investment in the refinery expansion in Eastern Cuba, begun earlier this
year with the goal of reaching 50,000 bpd, was recently put at $850
million by Venezuela.

Garcia's announcement of plans to build a refinery in Matanzas was the
first made in Cuba, though it was previously announced in Venezuela with
a capacity of 150,000 bpd and price tag of $4.3 billion.

Cuba consumes a minimum 150,000 bpd of petroleum products, of which up
to 92,000 bpd comes from Venezuela. The rest is pumped from the
northwest coast along with natural gas for power generation.

Under President Hugo Chavez, Venezuela has become a close ally of Cuba
which is an enthusiastic supporter of Chavez's regional integration
proposal, the Bolivarian Alternative for the Americas, aimed at
countering U.S. influence in the region.

As part of bilateral integration efforts, Venezuela is revitalizing
Cuba's downstream operations and plans to use the island as a bridge to
supply the Caribbean with crude and derivatives with preferential financing.

The increased refining capacity would also be in place to process
increased Cuban production if drilling in its Gulf of Mexico waters,
scheduled to begin next year, proves fruitful.

In addition to the Cienfuegos refinery, the two countries have formed
joint ventures to operate a Soviet-built supertanker port on the
northern coast, a cross-country pipeline from the port to the refinery,
and a joint tanker company to move petroleum products in the Caribbean.

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