June 25, 2009
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PDVsA to Buy 49 Percent of Dominican Refinery

Venezuela has agreed with the Dominican Republic to acquire a 49 percent stake in the country's Refidomsa oil refinery after the Dominican government bought out the half share in the plant held by Royal Dutch Shell Plc, Venezuela's oil minister said.

Minister Rafael Ramirez said late on Friday that Venezuela's state oil company PDVSA was drawing up the details for the Venezuelan acquisition of the stake in the 34,000 barrels per day (bpd) refinery, which would then be expanded.

"We've agreed to acquire a 49 percent stake ... and then the idea is to expand it (the refinery)," he told reporters in St. Kitts and Nevis at the end of a one-day summit meeting of the Venezuelan-backed PetroCaribe regional energy alliance.

He did not mention a price tag or any other details of the terms of the planned acquisition.

Ramirez said the idea was to integrate the Dominican Republic refinery into a network of refineries being upgraded or built by Venezuela as part of PetroCaribe, which allows small, oil-importing Caribbean and Central American states to buy Venezuelan crude and refined products on easier terms.

In December, Royal Dutch Shell announced it had completed its sale of its 50 percent shareholding in Refidomsa (Refineria Dominicana de Petroleo S.A.) for $110 million.

PetroCaribe, created by Venezuelan President Hugo Chavez in 2005, has planned eight refinery expansion and construction projects in the Caribbean and Central America that involve a total of 580,000 bpd of refining capacity.

The projects are due to be completed by 2012 at a cost that Ramirez has estimated at $24 billion.

But some analysts question whether PetroCaribe and its main backer and funder Venezuela can deliver on this ambitious promised regional refinery expansion program given the sharp fall off in oil prices over the last year.


Oil prices have dropped by more than half from record highs near $150 a barrel last July, squeezing oil income revenues for OPEC member Venezuela, South America's biggest oil producer that is also a leading supplier to the United States.

PetroCaribe's pipeline of refinery projects includes Cuba's now-reactivated 65,000 bpd Cienfuegos refinery, which is due to be expanded to 150,000 bpd.

A Cuban-crewed PetroCaribe tanker, the Sandino, was currently loading 385,000 barrels of oil at Venezuela's Guaraguao terminal at Puerto La Cruz for delivery to the Cuban Cienfuegos refinery.

Venezuelan and Cuban officials told the PetroCaribe summit by video link-up from Guaraguao that this would be the third Venezuelan tanker shipment to the Cienfuegos plant since its reactivation. It would bring such shipments to date to the restarted Cienfuegos refinery to 1 million barrels.

The Sandino, and another oil tanker, the Petion, form part of the TransAlba Venezuelan-Cuban shipping venture that services the PetroCaribe alliance.

The other planned PetroCaribe refinery projects are construction of a new 150,000 bpd refinery in Cuba, expansion of another older Cuban refinery to 50,000 bpd capacity, and the building of new refineries in Nicaragua (75,000 bpd and 75,000 bpd), Haiti (20,000 bpd) and Dominica (10,000 bpd).

In addition, PetroCaribe was scheduled to expand an existing Jamaican refinery to 50,000 bpd.

At the summit in St. Kitts, PetroCaribe leaders agreed on steps to improve the operation of the energy alliance by pooling and bolstering the organization's financing, which also includes funds for social and development projects.

Venezuela, which declares its oil output at a little over 3 million bpd, is currently supplying 121,000 bpd to PetroCaribe members and 92,000 bpd to Cuba.


Copyright 2009 Reuters. All rights reserved.



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