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Ecuador, Venezuela to build biggest oil refinery

Ecuadorian President Rafael Correa and his Venezuelan counterpart Hugo Chavez Tuesday signed an agreement on jointly building the biggest oil refinery on South America’s Pacific Coast.

Located in El Aromo in the coastal Ecuadorian province of Manabi, the refinery is expected to start operation in 2013 with a daily capacity of 300,000 barrels of oil, according to the agreement signed in El Aromo. It can produce gasoline, diesel, and liquefied gas from petroleum. The refinery is also capable of supplying fertilizers, plastics and polyethylene.

The initial capital for its construction is estimated at $30 million. The two countries said that Venezuela’s state-run oil firm PDVSA and its Ecuadorian counterpart Petroecuador will finance the total investment of $6.6 million, or they may open the project to international investment. At the launching ceremony, Correa said the project will save Ecuador $3 billion per year as it helps cut the country’s oil imports.

Chavez said PDVSA will own 49% of the stake of the refinery while the Petroecuador, 51% stake. Chavez also announced that he plans to build other refineries in Brazil and Nicaragua to keep Venezuela’s oil wealth away from the United States, where Venezuela currently runs seven refineries. Chavez said that his goal was to offer “energy security to all the people on the (South American) continent.” He also proposed to build a steel joint venture in Ecuador.

Correa welcomed Chavez’s proposal, saying such plans were motivated by his desire to seek regional unity instead of intention to interfere in other countries’ internal affairs. Nicaraguan President Daniel Ortega also attended the ceremony. (